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

Multiple Choice Questions

1. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?
(a) None of these.
(b) Remain the same.
(c) Converge.
(d) Fluctuate drastically.

2. How much money did Rosenfeld's business bring in?
(a) Hundreds of thousands.
(b) Five million.
(c) Two million.
(d) A couple thousand.

3. What did Long-Term do when IOs started to fall?
(a) Explain the situation to investors.
(b) Lie to investors.
(c) Sell their shares.
(d) Buy them up.

4. What type of strategy did Long-Term employ?
(a) Low risk.
(b) Whatever was dictated by the market.
(c) Moderate risk.
(d) High risk.

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

Short Answer Questions

1. Who developed the Black-Scholes model?

2. Meriwether believed that risk and volatility were what?

3. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?

4. In bond trading, what are loans backed by collateral called?

5. What did the letter Meriwether sent to his clients claim it was difficult to do with Long-Term?

(see the answer key)

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