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

Multiple Choice Questions

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

2. Who typically invested in hedge funds?
(a) The general population.
(b) The Federal Reserve.
(c) Foreign banks.
(d) A club of exclusive investors.

3. What group did Meriwether found in 1977?
(a) Smith & Meriwether Co.
(b) The Meegen Group.
(c) The Commanders.
(d) The Arbitrage Group.

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

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

6. What was practically impossible to determine about Long-Term?
(a) Where it was located.
(b) Actual fund assets.
(c) Who was in charge.
(d) Why it was doing so well.

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

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

9. In 1994, what market did Long-Term begin to express an interest in?
(a) Chicago.
(b) International.
(c) Chinese.
(d) Local.

10. Where was the London office for Long-Term located?
(a) Buckingham Palace.
(b) Winchester.
(c) Mayfair.
(d) Picadilly Square.

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

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

13. Where was David W. Mullins working when Meriwether hired him?
(a) Federal Reserve.
(b) Salomon Brothers.
(c) Yale School of Finance.
(d) The United Nations.

14. What financial crisis did Long-Term make it through that most of the market didn't?
(a) The Mexican crisis.
(b) The Switzerland crisis.
(c) The U.S. crisis.
(d) The Germany crisis.

15. What did Black and Scholes use to calculate market change?
(a) Meriwether's advice.
(b) History.
(c) In depth financial patterns.
(d) Calculus and computer models.

Short Answer Questions

1. How much did Long-Term earn in its first year of operation?

2. What did Meriwether warn his investors against in 1994?

3. How much did the accounts for investors increase in 1994?

4. How much did Long-Term plan to take from its profits?

5. Who did most funds have to be registered with?

(see the answer keys)

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