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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. When Russia first experienced turmoil, Long-Term was confident that what would happen?
(a) Spreads would converge.
(b) Investors would back out.
(c) The country would recover.
(d) Spreads would never meet.

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

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

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

Short Answer Questions

1. How much equity did Long-Term have hold of in 1997?

2. What award did Merton and Scholes win for economics?

3. Who was the Fed Chairman in 1997?

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

5. How many banks stepped forward to help bail out Long-Term?

Short Essay Questions

1. Who warned Long-Term about making trades that counted on falling stock prices?

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

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

4. How much of Long-Term did the Union Bank of Switzerland buy on a hedge?

5. During the financial crisis in 1998, where were the partners finding money?

6. Why did the issue in Russia cost Long-Term money on an initial basis?

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

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

9. By the end of August 1998, what did the movement in the bond market look like?

10. When Meriwether reached out to his clients following the Russian crisis, how did he explain the effect of the situation in Russia?

(see the answer keys)

This section contains 498 words (approx. 2 pages at 300 words per page) View a FREE sample