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

Multiple Choice Questions

1. What were the models Long-Term used unable to predict?
(a) Long-Term's exact income.
(b) Investor's exact return.
(c) All of these.
(d) Market collapse.

2. What did Long-Term avoid by working with derivatives instead of stocks?
(a) Fees.
(b) Disclosure.
(c) Outside interest.
(d) Profit.

3. What was the typical scenario for bond investors in 1994?
(a) Loss.
(b) Substantial gains.
(c) Minimal gains.
(d) Few invested in bonds.

4. In a letter to clients, to what did Long-Term attribute the decrease in profits?
(a) Irresponsibility in foreign nations.
(b) Widening spreads.
(c) Foolish investments.
(d) Poor margins.

5. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?
(a) The right to trade.
(b) Their office.
(c) Their relationships with bankers.
(d) Their workers.

Short Answer Questions

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

2. What models did Long-Term follow?

3. How long did Long-Term expect their investors to commit?

4. In 1993, what was happening more than usual in America?

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

(see the answer key)

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