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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 did Scholes and Merton think of some of the private trades Long-Term made in 1998?
(a) They were impressed.
(b) They supported them.
(c) They were excited.
(d) They did not support them.

2. What resource close to Long-Term began to experience financial difficulties following the financial problems in Russia?
(a) Latin America.
(b) Italy.
(c) Long-Term's management company.
(d) Long-Term's audit company.

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

4. What was the leverage of Long-Term, following its meeting with the Fed?
(a) 25-1.
(b) 100-1.
(c) 10-1.
(d) 50-1.

5. What was the dollar amount of the premium Long-Term paid for its loan?
(a) $100 million.
(b) $200 million.
(c) $1 billion.
(d) $289 million.

Short Answer Questions

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

2. Why did Long-Term trade in Italy?

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

4. What determines the swap rate in a country?

5. Where was the London office for Long-Term located?

(see the answer key)

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