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

Multiple Choice Questions

1. How much money did Chase loan Long-Term so that they could continue to clear trades?
(a) $752 million.
(b) $5 million.
(c) $475 million.
(d) $10 million.

2. During the financial crisis in 1998, what did the partners keep from the workers?
(a) Money.
(b) Profits.
(c) Information.
(d) Hope.

3. What was the dollar amount of the premium Long-Term paid for its loan?
(a) $100 million.
(b) $200 million.
(c) $289 million.
(d) $1 billion.

4. What was Long-Term's signature trade based on?
(a) Consistency of investments.
(b) None of these.
(c) Consistency of failure.
(d) Consistency of volatility.

5. What companies were selling bonds for Russia?
(a) Black market traders.
(b) Investment banking firms.
(c) Mom and pop establishments.
(d) All of these.

6. What was Long-Term's signature trade?
(a) The "equity vol".
(b) The "shining cat".
(c) The "mort up".
(d) The "small build".

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

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

9. In 1997, who awarded Long-Term the loan warrant it had requested?
(a) Bank of America.
(b) Chase.
(c) The Cayman Islands Commons.
(d) Union Bank of Switzerland.

10. How much equity did Long-Term have hold of in 1997?
(a) $1 billion.
(b) $5 billion.
(c) $0.
(d) $100 million.

11. What are some of the new markets Long-Term looked into in 1997?
(a) Paired-shares.
(b) Equities.
(c) Stocks.
(d) All of these.

12. When markets get jumpy, what begins to rise?
(a) All of these.
(b) Real estate.
(c) Option prices.
(d) The price of gold.

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

14. In August 1998, how far down was Long-Term for the year-to-date?
(a) 2%.
(b) 10%.
(c) 35%.
(d) 52%.

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

Short Answer Questions

1. Once crisis hit, how many weeks did it take for the partners to lose $3.6 billion?

2. What regulation did Long-Term bypass when trading equities?

3. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?

4. In 1998, what type of contracts did Long-Term make with private entities?

5. Who did Long-Term threaten to sue, following a threat not to clear trades?

(see the answer keys)

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