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

Multiple Choice Questions

1. When did Long-Term start losing money?
(a) When Warren Buffet spoke out against Long-Term.
(b) When the Asian market collapsed.
(c) When Meriwether opened a new company.
(d) When arbitrage operations were suspended.

2. How much money did Long-Term earn in 1996?
(a) $100 million.
(b) $2.1 billion.
(c) $500 million.
(d) $1 billion.

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

4. Once crisis hit, how many weeks did it take for the partners to lose $3.6 billion?
(a) 1.
(b) 52.
(c) 5.
(d) 20.

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

Short Answer Questions

1. What did Meriwether do with his staff?

2. In 1993, what was happening more than usual in America?

3. In 1996, how much did Long-Term have in assets?

4. What determines the swap rate in a country?

5. Who suspended arbitrage operations in April 1998?

(see the answer key)

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