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

Multiple Choice Questions

1. Once the financial market in Russia collapsed, what did people stop trading?
(a) Corn.
(b) Bonds.
(c) Commodities.
(d) Stocks.

2. What level of risk did Long-Term offer?
(a) Low.
(b) Medium.
(c) None.
(d) High.

3. Meriwether believed that risk and volatility were what?
(a) Unmanagable.
(b) Quantifiable.
(c) A part of life.
(d) Abstract ideas.

4. When markets get jumpy, what begins to rise?
(a) Option prices.
(b) Real estate.
(c) All of these.
(d) The price of gold.

5. What is the CFTC short for?
(a) Capitalism Fortune Trust Commonwealth.
(b) Counting Futures Trading Commodities.
(c) Commodities Futures Trading Commission.
(d) Commodities Finding True Commission.

Short Answer Questions

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

2. What was the credit limit on hedge funds?

3. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?

4. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?

5. What was the result for some banks due to their involvement in the derivatives market?

(see the answer key)

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