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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 did the Fed Chairman want to remove in an effort to create liquidity in the market?

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

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

4. What resource close to Long-Term began to experience financial difficulties following the financial problems in Russia?

5. After the first bad year experienced by Long-Term, what did its overall record look like?

Short Essay Questions

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

2. What contributes to the estimation of market volatility?

3. Why did banks and investment banks get involved in the derivatives market?

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

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

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

When Long-Term was faced with financial turmoil, it took only five weeks for it to lose staggering amounts of money. Examine the following points:

1) What was the financial profile of Long-Term prior to Russia's debt default?

2) What did the financial profile change so drastically?

3) What moves did Long-Term make to correct the situation and why were they ineffective?

Essay Topic 2

When Meriwether set up Long-Term, he had to take many steps to create the company. Write an essay examining the process Meriwether went through to create Long-Term.

Essay Topic 3

Those involved at the top levels of Long-Term were given respect, money and opportunity. Write a brief essay analyzing some of the advantages a career at Long-Term gave many of the partners, citing examples from the text.

(see the answer keys)

This section contains 519 words (approx. 2 pages at 300 words per page) View a FREE sample