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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 notable player was on vacation during the crisis in Russia?

2. What typically happens to stock prices when a merger is revealed?

3. How much equity did Long-Term have hold of in 1997?

4. When did Long-Term begin scrambling to raise money?

5. What was Long-Term's signature trade?

Short Essay Questions

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

2. What did Long-Term do when they expected stock prices to fall?

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

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

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

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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 2

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

Essay Topic 3

The investment requirements of Long-Term were quite stringent. Citing examples from the text, write an essay examining the investment requirements and opportunity for return for potential Long-Term investors.

(see the answer keys)

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