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

Multiple Choice Questions

1. Who helped Meriwether raise money for Long-Term?
(a) Warren Buffet.
(b) Salomon Brothers.
(c) No one.
(d) Merrill Lynch.

2. Who developed the Black-Scholes model?
(a) David Black.
(b) Myron Scholes.
(c) Jack Salomon.
(d) John Meriwether.

3. What did Meriwether warn his investors against in 1994?
(a) Further growth.
(b) Not investing enough with Long-Term.
(c) A repeat performance.
(d) His early retirement.

4. What did the traders accept about the financial models they used?
(a) They were imperfect.
(b) They were smarter than humans.
(c) They were expensive.
(d) They removed the element of surprise.

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

Short Answer Questions

1. Where did Meriwether work in 1979?

2. In 1994, why did the price of bonds drop?

3. During the time period in "Hedge Fund", how many people were millionaires due to the stock market?

4. What did Black and Scholes use to calculate market change?

5. Meriwether believed that risk and volatility were what?

(see the answer key)

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