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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. By the end of August 1998, what market had practically stopped trading altogether?

2. In August 1998, how far down was Long-Term for the month?

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

4. Once crisis hit, how many weeks did it take for the partners to lose $3.6 billion?

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

Short Essay Questions

1. What contributes to the estimation of market volatility?

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

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

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

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

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

There were many warning signs that the profits delivered by Long-Term couldn't last. Yet, many companies did everything possible to keep some investments going at higher and higher levels when they should have slowed. Using greed as a theme, analyze this situation.

Essay Topic 2

As Long-Term became more and more successful, many banks and investment firms were eager to work with the company. Examine the various ways banks and investment firms offered advantages to Long-Term and why.

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