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

Multiple Choice Questions

1. In bond trading, what are loans backed by collateral called?
(a) Repo financing.
(b) Exclusive trades.
(c) Fair financing.
(d) Mini trades.

2. Where was the Long-Term Capital Portfolio stored?
(a) Switzerland.
(b) Bermuda.
(c) Cayman Islands.
(d) Germany.

3. What did Black and Scholes think price changes were?
(a) Smart corrections.
(b) Dangerous.
(c) Common occurences.
(d) Random events.

4. Who became the temporary CEO of Meriwether's group when scandal hit?
(a) J.F. Salomon.
(b) John Meriwether.
(c) Warren Buffet.
(d) Paul Mozer.

5. Where did Meriwether work in 1979?
(a) Long-Term.
(b) Lehman.
(c) Salomon Brothers.
(d) Merrill Lynch.

Short Answer Questions

1. What hedge fund caused a pound devaluation in Europe but made over a billion dollars?

2. What is the method of paying a percentage of a bond called?

3. How was Meriwether's career affected following the Treasury bill deal?

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

5. How much did Long-Term earn in its first year of operation?

(see the answer key)

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