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

Multiple Choice Questions

1. What notable player was on vacation during the crisis in Russia?
(a) The president of Russia.
(b) Warren Buffet.
(c) The president of the United States.
(d) Alan Greenspan.

2. After the first bad year experienced by Long-Term, what did its overall record look like?
(a) Mediocre.
(b) Terrible.
(c) Fantastic.
(d) Typical.

3. Once the financial market in Russia collapsed, what did people stop trading?
(a) Commodities.
(b) Bonds.
(c) Stocks.
(d) Corn.

4. What did Scholes and Merton think of some of the private trades Long-Term made in 1998?
(a) They were excited.
(b) They supported them.
(c) They did not support them.
(d) They were impressed.

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

6. Who threatened to stop clearing the trades at Long-Term if their fund fell below a particular amunt?
(a) Chase.
(b) Fidelity.
(c) Goldman Sachs.
(d) Bear Sterns.

7. What award did Merton and Scholes win for economics?
(a) The Academy Award.
(b) None of these.
(c) The Wall Street Trust.
(d) The Nobel Prize.

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

9. After the financial crisis in Russia, what did Long-Term regret?
(a) All of these.
(b) Forcing investors to take back money.
(c) Creating private deals.
(d) Creating deals that were not liquid.

10. In 1998, Long-Term expected prices to do what?
(a) Rise.
(b) Stay the same.
(c) Fall.
(d) Fluctuate.

11. What word did people often use to describe Long-Term?
(a) Stupid.
(b) Genius.
(c) Communist.
(d) Dangerous.

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

13. In 1998, what type of contracts did Long-Term make with private entities?
(a) Illegal.
(b) Short-term.
(c) Long-term.
(d) Liquid.

14. Who was the Fed Chairman in 1997?
(a) Warren Buffet.
(b) Hillary Clinton.
(c) Alan Greenspan.
(d) Madeleine Albright.

15. When the Fed visited Long-Term, what did Hilibrand show them?
(a) His recent financial model.
(b) The risk aggregator.
(c) The door.
(d) The new buildings.

Short Answer Questions

1. What did the incident on August 21 cost Long-Term?

2. When the financial market in Russia collapsed, what were many in the market attempting to do?

3. In 1998, what market did Long-Term bet would decline?

4. To create a paired-share, what is common stock partnered with?

5. In 1998, what act led Long-Term to a fall?

(see the answer keys)

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