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

Multiple Choice Questions

1. How long did Long-Term expect their investors to commit?
(a) 1 year.
(b) 6 months.
(c) 3 months.
(d) 3 years.

2. Who ran the London office for Long-Term?
(a) Haghani.
(b) Mullins.
(c) Buffet.
(d) Meriwether.

3. How much did Long-Term plan to take from its profits?
(a) 10%.
(b) 30%.
(c) 25%.
(d) 15%.

4. In 1994, why did the price of bonds drop?
(a) The Fed lowered interest rates.
(b) The Fed raised interest rates.
(c) Property value went down.
(d) There was too much wealth in America.

5. What is the method of paying a percentage of a bond called?
(a) A bond fee.
(b) A haircut.
(c) A percentage price.
(d) A trim.

6. What affected bond trading in the 1970's?
(a) The democratic elections.
(b) The price of commodities.
(c) The Vietnam War.
(d) The international monetary crisis.

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

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

9. In 1996, what was the second bank Long-Term approached about financing their credit?
(a) International Banking System.
(b) National Bank of Russia.
(c) The Italian Republic of Banks.
(d) Union Bank of Switzerland.

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

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

12. In 1994, why did the yield raise on the thirty year Treasury bond?
(a) It rose 5%.
(b) It rose 16%.
(c) It dropped 10%.
(d) It dropped 16%.

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

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

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

Short Answer Questions

1. What did Meriwether do with his staff?

2. What type of funds gained popularity in the 1990's?

3. What did Long-Term want to do for investors?

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

5. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?

(see the answer keys)

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