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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 was the internal climate at Long-Term in 1998?

2. In 1997, who awarded Long-Term the loan warrant it had requested?

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

4. What was the common belief regarding nuclear powers?

5. What regulation did Long-Term bypass when trading equities?

Short Essay Questions

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

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

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

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

5. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

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

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

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

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

10. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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?

Essay Topic 2

Meriwether began his career at Salomon Brothers before starting Long-Term. Write a detailed profile of his career path at Salomon Brothers, answering the following questions.

1) What risk did Meriwether take at Salomon Brothers?

2) What were the challenges and rewards?

3) Why did his career at Salomon Brothers come to an end?

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 525 words (approx. 2 pages at 300 words per page) View a FREE sample