View a FREE sample

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

Multiple Choice Questions

1. In its first bad year, what did Long-Term maintain?
(a) A good reputation.
(b) All of these.
(c) A strong energy.
(d) A great workforce.

2. How many banks stepped forward to help bail out Long-Term?
(a) 30.
(b) 2.
(c) 20.
(d) 16.

3. In 1998, what market did Long-Term bet would decline?
(a) The Russian market.
(b) The Latin market.
(c) The U.S. market.
(d) The Asian market.

4. Who suspended arbitrage operations in April 1998?
(a) Goldman Sachs.
(b) Fidelity Bank and Trust.
(c) Salomon.
(d) Chase.

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

Short Answer Questions

1. The purpose of the Federal Reserve System was to promote what?

2. After the Russian financial crisis, what caused further fluctuations in the market?

3. After the meeting with the Fed, a market movement of what percentage could have ended Long-Term?

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

5. What was the result for some banks due to their involvement in the derivatives market?

Short Essay Questions

1. Following the financial crisis in Russia, what did the partners do to begin raising money?

2. What did Standard & Poor downgrade that would affect Long-Term significantly?

3. What strategy led to Long-Term's downfall during the Russian financial crisis?

4. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

5. What did the Fed determine would happen if Long-Term failed?

6. What was the financial climate when Merton and Scholes were awarded the Nobel Prize?

7. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

8. When did huge losses begin for Long-Term and why?

9. In 1997, what was Meriwether encouraging his employees to do?

10. Why were regulators concerned about the volume of banks and investment banks involved in the derivatives market?

(see the answer keys)

This section contains 511 words (approx. 2 pages at 300 words per page) View a FREE sample