1. Which position would have partially hedged Nick Leesons primary option at Barings?

a)
b)
c)
d)

Long futures
Short strangle
Long straddle
Short repo

2. Robert Citrons bet on interest rates was?

a)
b)
c)
d)

Long-term interest rates will be low as compared to medium-term rates

Short-term interest rates will be low as compared to medium-term rates
Short-term interest rates will be low as compared to long-term rates
Medium-term interest rates will be low as compared to long-term rates

3. Which of the following statement about Metallgesellschaft is true?

a)
b)
c)
d)

Metallgesellschaft was always losing money when the market was in backwardation
Metallgesellschaft was always losing money when the market was in contango
Metallgesellschaft forecasted a market consistently in contango
Metallgesellschaft forecasted a market consistently in backwardation

4. Metallgesellschaft position was?

a)
b)
c)
d)

Long forwards hedged by short futures

Long futures hedged by short forwards
Short futures hedged by long forwards
Short forwards hedged by long futures

5.
a)
b)
c)

Which of the following statement about Orange County case is true?

It was unable to meet margin calls after selling straddle
It was unable to meet margin calls after selling strangle
Robert Citron concealed the loss by entering false transactions in the computer
system
d) Robert Citron was unable to roll over repo transactions after suffering losses due to
interest rate increase

6.
a)
b)
c)
d)

Which of the following statement about LTCM case is true?

Its losses were within VAR limit
Its model was based on historical data
Apart from the liquidity issue, LTCM strategy was not sound
The Fed lent money to some banks for LTCMs rescue

7.
a)
b)
c)
d)

Which of the following was not a risk incurred by Barings?

Market Risk
Operational Risk
Credit Risk
Reputation Risk