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This quiz consists of 5 multiple choice and 5 short answer questions through The Human Factor.

Multiple Choice Questions

1. What was the dollar amount of the premium Long-Term paid for its loan?
(a) $100 million.
(b) $1 billion.
(c) $200 million.
(d) $289 million.

2. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?
(a) The market was over-saturated.
(b) It was illegal to perform these trades.
(c) The market did not have enough players.
(d) Long-Term did not have investment capital.

3. In 1994, why did the price of bonds drop?
(a) The Fed lowered interest rates.
(b) There was too much wealth in America.
(c) Property value went down.
(d) The Fed raised interest rates.

4. In 1997, who awarded Long-Term the loan warrant it had requested?
(a) Bank of America.
(b) Chase.
(c) The Cayman Islands Commons.
(d) Union Bank of Switzerland.

5. What did Long-Term do with off-the-run bonds?
(a) Hold them for profit.
(b) Unload them quickly.
(c) Avoid them.
(d) Loan them to other firms.

Short Answer Questions

1. In 1994, what market did Long-Term begin to express an interest in?

2. What was the result for some banks due to their involvement in the derivatives market?

3. Where were Italian bonds sold by Long-Term?

4. During the financial crisis in 1998, what did the partners keep from the workers?

5. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?

(see the answer key)

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