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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. In 1996, what was Long-Term seeking from the bank that would handle their credit?
(a) Tax shelter.
(b) Legitimacy.
(c) Cash flow.
(d) Asset storage.

2. What did Long-Term expect foreign banks to invest?
(a) $1 million.
(b) Only individuals could invest.
(c) $10 million.
(d) $100 million.

3. What happened to Meriwether's Treasury bill deal before it was resolved?
(a) Huge gains.
(b) It fell apart.
(c) Big losses.
(d) It remained steady.

4. What is the CFTC short for?
(a) Counting Futures Trading Commodities.
(b) Capitalism Fortune Trust Commonwealth.
(c) Commodities Finding True Commission.
(d) Commodities Futures Trading Commission.

5. What did Black and Scholes use to calculate market change?
(a) Calculus and computer models.
(b) In depth financial patterns.
(c) Meriwether's advice.
(d) History.

6. What type of funds gained popularity in the 1990's?
(a) Value.
(b) Mutual.
(c) Real estate.
(d) Treasury.

7. How much did Long-Term plan to take from its profits?
(a) 30%.
(b) 10%.
(c) 25%.
(d) 15%.

8. What notable company went bankrupt in the 1970's?
(a) Penn North Distillery.
(b) Penn Weapons Industry.
(c) Penn Central Railroad.
(d) Penn Coal.

9. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?
(a) Fluctuate drastically.
(b) Remain the same.
(c) Converge.
(d) None of these.

10. What is the method of paying a percentage of a bond called?
(a) A haircut.
(b) A percentage price.
(c) A bond fee.
(d) A trim.

11. By the end of 1996, what was the status of the credit financing Long-Term wanted?
(a) No one would finance them.
(b) They still did not have it.
(c) All of these.
(d) They had financing.

12. Who did most funds have to be registered with?
(a) CFTC.
(b) The Fed.
(c) Most funds did not have to be registered.
(d) SEC.

13. In the 1970's, what type of trading was considered dull?
(a) Gasoline.
(b) Corn.
(c) Securities.
(d) Bond.

14. In 1994, what market did Long-Term begin to express an interest in?
(a) Chinese.
(b) Chicago.
(c) International.
(d) Local.

15. In bond trading, what are loans backed by collateral called?
(a) Mini trades.
(b) Fair financing.
(c) Repo financing.
(d) Exclusive trades.

Short Answer Questions

1. What was the end result of Meriwether's Treasury bill deal?

2. What did Long-Term want to do for investors?

3. What was J.F. Eckstein & Co. primarily working on in 1979?

4. Michael Steindardt believed what was the "culprit in 1994"?

5. Where was Robert C. Merton working when Meriwether hired him?

(see the answer keys)

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