View a FREE sample

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

Multiple Choice Questions

1. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?
(a) Their workers.
(b) Their office.
(c) The right to trade.
(d) Their relationships with bankers.

2. In August 1998, how far down was Long-Term for the month?
(a) 25%.
(b) 10%.
(c) 60%.
(d) 44%.

3. What did Long-Term think about the financial crisis that hit in August of 1998?
(a) It was serious but would recover.
(b) It was not serious but would not recover.
(c) It was serious and would not recover.
(d) It was not serious.

4. At what level was the swap rate of the United States in April 1998?
(a) Low.
(b) Non-existant.
(c) Medium.
(d) High.

5. Once crisis hit, how many weeks did it take for the partners to lose $3.6 billion?
(a) 52.
(b) 1.
(c) 20.
(d) 5.

6. After the Russian financial crisis, what caused further fluctuations in the market?
(a) Panicked investors.
(b) Interest from the IRS.
(c) Small time investors.
(d) Interest from big oil.

7. After the meeting with the Fed, a market movement of what percentage could have ended Long-Term?
(a) 1%.
(b) 30%.
(c) 10%.
(d) 25%.

8. What was the first horrible month Long-Term had?
(a) June, 1998.
(b) August, 1998.
(c) It never had a horrible month.
(d) July, 1998.

9. In 1998, what act led Long-Term to a fall?
(a) Shorting the Russian market.
(b) Shorting the U.S. market.
(c) Putting money into Italy.
(d) Investing in the Asian market.

10. Where did the private contracts Long-Term made in 1998 trade?
(a) Privately.
(b) Overseas.
(c) On the exchange.
(d) In Russia.

11. What trading date dropped Long-Term below $1 billion in equity?
(a) October 10.
(b) September 5.
(c) September 21.
(d) April 15.

12. When did the Russian market begin to fail?
(a) April 1998.
(b) August 1998.
(c) September 1998.
(d) May 1998.

13. By the end of August 1998, what market had practically stopped trading altogether?
(a) Stock markets.
(b) Bond markets.
(c) International markets.
(d) Gold markets.

14. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?
(a) Long-Term did not have investment capital.
(b) The market did not have enough players.
(c) It was illegal to perform these trades.
(d) The market was over-saturated.

15. In 1998, what were many hedge funds selling insurance against?
(a) Falling prices.
(b) The Latin market.
(c) The U.S. Treasury.
(d) Rising prices.

Short Answer Questions

1. Who was withdrawing from the hedge fund markets?

2. When did Long-Term begin scrambling to raise money?

3. What notable player was on vacation during the crisis in Russia?

4. What was the dollar amount of the premium Long-Term paid for its loan?

5. In a letter to clients, to what did Long-Term attribute the decrease in profits?

(see the answer keys)

This section contains 407 words (approx. 2 pages at 300 words per page) View a FREE sample