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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 begin scrambling to raise money?
(a) August 24.
(b) August 10.
(c) August 30.
(d) August 2.

2. In 1996, Long-Term was two and a half times larger than what company?
(a) Bank of America.
(b) Lehman Brothers.
(c) Fidelity Magellan.
(d) Chase.

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

4. What typically happens to stock prices when a merger is revealed?
(a) They crash.
(b) They stay the same.
(c) They go up.
(d) They go down.

5. What did Rosenfeld and his friend develop?
(a) Energy drinks.
(b) Software.
(c) A financial museum.
(d) Energy bars.

Short Answer Questions

1. What did Scholes and Merton think of some of the private trades Long-Term made in 1998?

2. In 1994, what market did Long-Term begin to express an interest in?

3. What type of government paper was bought in Italy?

4. In 1998, Long-Term expected prices to do what?

5. Where was the Long-Term Capital Portfolio stored?

(see the answer key)

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