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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 August 1998, how far down was Long-Term for the year-to-date?

2. When the financial market in Russia collapsed, what were many in the market attempting to do?

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

4. Who suspended arbitrage operations in April 1998?

5. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?

Short Essay Questions

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

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

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

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

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

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

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

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

9. In spite of the economic crisis in Russia, what did Meriwether believe about Long-Term's trades?

10. What was the risk to the market if Long-Term unraveled?

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

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 3

Examine one of the following forms of investment vehicles:

- Hedge funds.

- Value funds.

- Bonds.

Answering the follow questions:

- What are the principals of this form of investment?

- What was Meriwether's experience with this form of investment?

- To what extent did the general public participate in this form of investment?

(see the answer keys)

This section contains 522 words (approx. 2 pages at 300 words per page) View a FREE sample