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

Multiple Choice Questions

1. Why did Rosenfeld choose not to co-found Kapor's project?
(a) He was too interested in travel.
(b) He was too interested in finance.
(c) He did not like Kapor.
(d) He was competitive with Kapor.

2. How was Meriwether's career affected following the Treasury bill deal?
(a) He was made partner.
(b) He became a public speaker.
(c) He lost his job.
(d) He became a regulation advocate.

3. What type of funds gained popularity in the 1990's?
(a) Real estate.
(b) Treasury.
(c) Value.
(d) Mutual.

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

5. How much of the face value of a bond do buyers typically pay?
(a) 15%.
(b) 10%.
(c) 25%.
(d) 1%.

6. What was Meriwether's team allowed to do, following the Treasury bill deal?
(a) Spread trades.
(b) Vacation in Italy.
(c) Coach the office.
(d) Set Treasury standards.

7. How much money did Meriwether need to start Long-Term?
(a) $2.5 billion.
(b) $100,000.
(c) $1 billion.
(d) $50 million.

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

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

10. What is the CFTC short for?
(a) Commodities Futures Trading Commission.
(b) Counting Futures Trading Commodities.
(c) Commodities Finding True Commission.
(d) Capitalism Fortune Trust Commonwealth.

11. Meriwether was threatened with what, if his Treasury bill deal did not pan out?
(a) Termination.
(b) Death.
(c) A lawsuit.
(d) A promotion.

12. What was J.F. Eckstein & Co. primarily working on in 1979?
(a) IO's.
(b) Bonds.
(c) Stocks.
(d) Treasury Bill futures.

13. What did the Black-Scholes model believe was constant?
(a) Meriwether's enthusiasm.
(b) Volatility.
(c) Income.
(d) Growth.

14. What did Long-Term want to do for investors?
(a) Make money.
(b) All of these.
(c) Build trust.
(d) Limit risk.

15. What unusual event happened when Meriwether began working with Treasury futures?
(a) The price rose.
(b) He lost millions.
(c) The price fell.
(d) The U.S. government collapsed.

Short Answer Questions

1. Why did Long-Term trade in Italy?

2. What was the end result of Meriwether's Treasury bill deal?

3. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?

4. What was the typical scenario for bond investors in 1994?

5. What did Black and Scholes think price changes were?

(see the answer keys)

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