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This quiz consists of 5 multiple choice and 5 short answer questions through Dear Investors.

Multiple Choice Questions

1. How much did Long-Term earn in its first year of operation?
(a) 75%.
(b) 5%.
(c) 28%.
(d) 10%.

2. What was Meriwether's team allowed to do, following the Treasury bill deal?
(a) Coach the office.
(b) Spread trades.
(c) Vacation in Italy.
(d) Set Treasury standards.

3. What models did Long-Term follow?
(a) Value-at-Risk.
(b) All of these.
(c) Black-Scholes.
(d) Merton.

4. In 1993, what was happening more than usual in America?
(a) Bankruptcy.
(b) Refinancing.
(c) Starvation.
(d) Day trading.

5. What was the end result of Meriwether's Treasury bill deal?
(a) It frightened his colleagues.
(b) It was not a notable deal.
(c) It lost a lot of money.
(d) It made a lot of money.

Short Answer Questions

1. Where was the Long-Term Capital Portfolio stored?

2. What did Black and Scholes think price changes were?

3. Why did Long-Term trade in Italy?

4. What were the models Long-Term used unable to predict?

5. Where was Robert C. Merton working when Meriwether hired him?

(see the answer key)

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