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This quiz consists of 5 multiple choice and 5 short answer questions through At the Fed.

Multiple Choice Questions

1. In 1996, what was the second bank Long-Term approached about financing their credit?
(a) The Italian Republic of Banks.
(b) International Banking System.
(c) Union Bank of Switzerland.
(d) National Bank of Russia.

2. What did Long-Term think about the financial crisis that hit in August of 1998?
(a) It was serious but would recover.
(b) It was not serious.
(c) It was not serious but would not recover.
(d) It was serious and would not recover.

3. When the financial market in Russia collapsed, what were many in the market attempting to do?
(a) Leave the country.
(b) Release losing positions.
(c) Invest in Italy.
(d) Acquire losing positions.

4. How many banks stepped forward to help bail out Long-Term?
(a) 20.
(b) 30.
(c) 16.
(d) 2.

5. Who gains from working with hedge funds?
(a) Managers.
(b) Women.
(c) The government.
(d) Impoverished countries.

Short Answer Questions

1. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?

2. What was Long-Term's signature trade?

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

4. What did the Black-Scholes model believe was constant?

5. When did Long-Term start losing money?

(see the answer key)

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