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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. What were popular pools in 1993?

2. What was the typical scenario for bond investors in 1994?

3. In 1994, why did the price of bonds drop?

4. During the time period in "Hedge Fund", how many people were millionaires due to the stock market?

5. What did Black and Scholes use to calculate market change?

Short Essay Questions

1. Why are hedge funds considered low risk?

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

3. On what did Long-Term base the claim that it was difficult to lose money with them?

4. What methods did Black and Scholes use to predict the changes that would take place in the market?

5. Why was Meriwether made a partner at Salomon?

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

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

8. When Meriwether was building his team at the Arbitrage Group, what qualities did he look for?

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

10. Why did hedge funds make money for managers?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Occasionally, Long-Term encountered a trading regulation that was designed to prevent them from over-leveraging. In many of these situations, they would find a way to sidestep the regulation. Write an essay that takes a stand on this type of behavior and identify at least three examples from the text in your work.

Essay Topic 2

Write a brief essay supporting or refuting the following statement, citing examples from the text: Long-Term took part in risky investments as the market became over-saturated.

Essay Topic 3

The Fed has a major voice in the financial decisions in the United States. Examine the function of the Fed and the actions that it took that inadvertently played a part in Long-Term's success.

(see the answer keys)

This section contains 571 words (approx. 2 pages at 300 words per page) View a FREE sample