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This quiz consists of 5 multiple choice and 5 short answer questions through The Fall.

Multiple Choice Questions

1. What models did Long-Term follow?
(a) Black-Scholes.
(b) All of these.
(c) Merton.
(d) Value-at-Risk.

2. When Russia first experienced turmoil, Long-Term was confident that what would happen?
(a) Spreads would never meet.
(b) The country would recover.
(c) Spreads would converge.
(d) Investors would back out.

3. How did regulators respond to the involvement of banks in the derivatives market?
(a) They were delighted.
(b) They encouraged it.
(c) They were worried.
(d) There were not concerned.

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

5. What type of government paper was bought in Italy?
(a) Floating rate.
(b) Italian money.
(c) Deeds to monuments.
(d) Fluctuating rate.

Short Answer Questions

1. How much equity did Long-Term have hold of in 1997?

2. What word did people often use to describe Long-Term?

3. What did the traders accept about the financial models they used?

4. In 1996, Long-Term had achieved thirty times its what?

5. What notable invention changed the face of trading in the 1970's?

(see the answer key)

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