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This quiz consists of 5 multiple choice and 5 short answer questions through Bank of Volatility.

Multiple Choice Questions

1. When did Long-Term start losing money?
(a) When the Asian market collapsed.
(b) When arbitrage operations were suspended.
(c) When Meriwether opened a new company.
(d) When Warren Buffet spoke out against Long-Term.

2. How much money did Long-Term earn in 1996?
(a) $500 million.
(b) $100 million.
(c) $1 billion.
(d) $2.1 billion.

3. What was Long-Term's signature trade based on?
(a) Consistency of failure.
(b) None of these.
(c) Consistency of investments.
(d) Consistency of volatility.

4. What did the banks and investors use to estimate Long-Term's assets?
(a) Net worth of investors.
(b) History of investments.
(c) All of these.
(d) Their exposure.

5. How much money did Meriwether need to start Long-Term?
(a) $2.5 billion.
(b) $100,000.
(c) $50 million.
(d) $1 billion.

Short Answer Questions

1. Who suspended arbitrage operations in April 1998?

2. In 1998, Long-Term expected prices to do what?

3. By the end of 1996, what was the status of the credit financing Long-Term wanted?

4. What did Black and Scholes use to calculate market change?

5. In 1996, Long-Term was four times as large as what?

(see the answer key)

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