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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.
Multiple Choice Questions
1. How much equity did Long-Term have hold of in 1997?
(a) $5 billion.
(b) $100 million.
(c) $0.
(d) $1 billion.
2. What was the limitation on borrowing for equity trading?
(a) 50%.
(b) 25%.
(c) 10%.
(d) 40%.
3. What did the Fed Chairman want to remove in an effort to create liquidity in the market?
(a) Margin rules.
(b) Stock rules.
(c) Short rules.
(d) Trading rules.
4. Who was withdrawing from the hedge fund markets?
(a) Large investment firms.
(b) Small investment firms.
(c) Foreign countries.
(d) Long-Term.
5. What notable player was on vacation during the crisis in Russia?
(a) Warren Buffet.
(b) The president of the United States.
(c) Alan Greenspan.
(d) The president of Russia.
Short Answer Questions
1. In a letter to clients, to what did Long-Term attribute the decrease in profits?
2. Who suspended arbitrage operations in April 1998?
3. What was the dollar amount of the premium Long-Term paid for its loan?
4. When did Long-Term begin scrambling to raise money?
5. What put pressure on the currency in Brazil?
Short Essay Questions
1. Following the financial crisis in Russia, what did the partners do to begin raising money?
2. What strategy led to Long-Term's downfall during the Russian financial crisis?
3. Who warned Long-Term about making trades that counted on falling stock prices?
4. Since Long-Term expected stock prices would fall, what did they sell insurance against?
5. What did the Fed determine would happen if Long-Term failed?
6. When did huge losses begin for Long-Term and why?
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 was the goal of the Federal Reserve when it was created?
9. What was the financial climate when Merton and Scholes were awarded the Nobel Prize?
10. During the financial crisis in 1998, where were the partners finding money?
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This section contains 515 words (approx. 2 pages at 300 words per page) |
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