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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. When the Fed visited Long-Term, what did Hilibrand show them?
(a) His recent financial model.
(b) The risk aggregator.
(c) The new buildings.
(d) The door.

2. What was the climate at Long-Term during the Russian financial crisis?
(a) Confident.
(b) Nervous.
(c) Excited.
(d) Standard.

3. When markets get jumpy, what begins to rise?
(a) All of these.
(b) Real estate.
(c) The price of gold.
(d) Option prices.

4. What companies were selling bonds for Russia?
(a) Investment banking firms.
(b) Mom and pop establishments.
(c) Black market traders.
(d) All of these.

5. What award did Merton and Scholes win for economics?
(a) The Academy Award.
(b) The Wall Street Trust.
(c) None of these.
(d) The Nobel Prize.

Short Answer Questions

1. In 1998, what were many hedge funds selling insurance against?

2. What was the dollar amount of the premium Long-Term paid for its loan?

3. During the financial crisis in 1998, what did the partners keep from the workers?

4. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?

5. In August 1998, how far down was Long-Term for the year-to-date?

Short Essay Questions

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

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

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

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

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

6. During the financial crisis in 1998, where were the partners finding money?

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

8. Who was Jon Corzine?

9. What was the Fed's response to Long-Term's exposure?

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

(see the answer keys)

This section contains 457 words (approx. 2 pages at 300 words per page) View a FREE sample