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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Why did Rosenfeld choose not to co-found Kapor's project?
(a) He was too interested in travel.
(b) He did not like Kapor.
(c) He was competitive with Kapor.
(d) He was too interested in finance.

2. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?
(a) Help.
(b) Real estate tips.
(c) A better financial model.
(d) Empathy.

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

4. Who charged Long-Term much lower fees than other clients?
(a) The Federal Reserve.
(b) NYSE.
(c) The hospitality industry.
(d) Brokerage firms.

5. How much money did Meriwether need to start Long-Term?
(a) $1 billion.
(b) $100,000.
(c) $50 million.
(d) $2.5 billion.

Short Answer Questions

1. How many employees were with Long-Term in 1996?

2. In 1996, Long-Term had achieved thirty times its what?

3. In 1996, what was Long-Term seeking from the bank that would handle their credit?

4. Meriwether believed that risk and volatility were what?

5. Who became the temporary CEO of Meriwether's group when scandal hit?

Short Essay Questions

1. When did Meriwether begin making sales calls for Long-Term?

2. What did the Black-Scholes model help Long-Term to predict?

3. What were the legal limits on hedge fund investors?

4. In 1996, which significant companies did Long-Term surpass in terms of assets?

5. Why did Black and Scholes believe that price changes were random?

6. When additional investors returned to the Italian market, what did Long-Term do?

7. Why was it difficult to know the exact amount of assets Long-Term held?

8. What dictates whether or interest only securities rise or fall?

9. Why was the investment in Italy a risky one for Long-Term to make?

10. What was Meriwether's group at Salomon given the authority to do?

(see the answer keys)

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