The Collapse of the Long Term Capital Management Hedge Fund

question 58

Multiple Choice

The collapse of the Long Term Capital Management hedge fund in 1998 was a case of an extreme unlikely statistical event called ________.

• A) statistical arbitrage
• B) an unhedged play
• C) a tail event
• D) a liquidity trap

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Definitions:

Interest Rates

The cost of borrowing money or the return on investment for savings, typically expressed as a percentage, which influences economic activity and financial decisions.

Three Mile Island

This refers to a location in Pennsylvania, USA, where a significant nuclear accident occurred in 1979, marking the most serious accident in U.S. commercial nuclear power plant history.

Environmental Movement

A diverse scientific, social, and political movement for addressing environmental issues and promoting sustainability to protect the natural environment.

James Watt

A Scottish inventor and mechanical engineer whose improvements to the steam engine in the late 18th century facilitated the progress of the Industrial Revolution.