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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. In 1998, what were many hedge funds selling insurance against?

2. In 1998, what act led Long-Term to a fall?

3. What was the limitation on borrowing for equity trading?

4. What did the incident on August 21 cost Long-Term?

5. On what date did Russia declare a debt moratorium?

Short Essay Questions

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

2. What was the goal of the Federal Reserve when it was created?

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

4. What move did Salomon make that surprised Long-Term?

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

6. Since Long-Term expected stock prices would fall, what did they sell insurance against?

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

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

10. What was the Fed's response to Long-Term's exposure?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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.

Essay Topic 2

When Long-Term achieved major profits in its first year, Meriwether wrote a letter to investors warning against such a strong future performance.

1) Why did Meriwether feel it was important to communicate with his investors?

2) What warnings did Meriwether share with his investors?

3) Why did Meriwether feel it necessary to communicate at this level?

Essay Topic 3

Meriwether enjoyed building strong teams to work with. Write a brief essay examining the qualities he sought out in his team members.

(see the answer keys)

This section contains 482 words (approx. 2 pages at 300 words per page) View a FREE sample