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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 limitation on borrowing for equity trading?

2. How much money did Chase loan Long-Term so that they could continue to clear trades?

3. In a letter to clients, to what did Long-Term attribute the decrease in profits?

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

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

Short Essay Questions

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

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 contributes to the estimation of market volatility?

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

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Write a brief essay supporting or refuting the following statement, citing examples from the text: Meriwether fully expected to continue making substantial returns with Long-Term's investment model.

Essay Topic 2

In the late 1970's, the financial climate was changing due to technology. Examine the changes this brought about in the financial market and how these changes directly affected Meriwether.

Essay Topic 3

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.

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This section contains 517 words (approx. 2 pages at 300 words per page) View a FREE sample