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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Who did most funds have to be registered with?
(a) SEC.
(b) CFTC.
(c) The Fed.
(d) Most funds did not have to be registered.

2. Why did Long-Term trade in Italy?
(a) Meriwether was Italian.
(b) The tax write-off opportunity.
(c) It was a safe market.
(d) The opportunity for big returns.

3. During the time period in "Hedge Fund", how many people were millionaires due to the stock market?
(a) 1 million.
(b) 6 million.
(c) 20 million.
(d) 5 million.

4. Once in business, what did Long-Term have an easy time getting from banks?
(a) Endorsements.
(b) Personal information.
(c) Workers.
(d) Money.

5. What was the end result of Meriwether's Treasury bill deal?
(a) It was not a notable deal.
(b) It frightened his colleagues.
(c) It made a lot of money.
(d) It lost a lot of money.

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

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

8. What percentage of Americans had no knowledge of Long-Term?
(a) 10%.
(b) 50%.
(c) 75%.
(d) 99%.

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

10. How much did banks and investors make in conjunction with Long-Term?
(a) 1-200 million.
(b) Several hundred thousand.
(c) 50 million.
(d) 1 million.

11. What notable company went bankrupt in the 1970's?
(a) Penn Central Railroad.
(b) Penn Coal.
(c) Penn North Distillery.
(d) Penn Weapons Industry.

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

13. Where was Robert C. Merton working when Meriwether hired him?
(a) Wall Street.
(b) The Federal Exchange Commission.
(c) Harvard.
(d) NASA.

14. What company was Kapor the founder of?
(a) Lotus Development Corporation.
(b) Circuit Finance, Inc.
(c) Lochfield Growing Corporation.
(d) Finance Development International.

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

Short Answer Questions

1. In 1996, Long-Term was four times as large as what?

2. How much of the face value of a bond do buyers typically pay?

3. What affected bond trading in the 1970's?

4. When Meriwether increased his position in Treasury futures, what did he expect the market to do?

5. What did Long-Term do when IOs started to fall?

(see the answer keys)

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