小试牛刀：FRM一级题目<50>

　　Which of the following best describes the relationship betweenleverage, margin calls, position size, and liquidity as presented in theLong-Term Capital Management case?

　　a. Leverage allows a firm to establishlarge positions than can generate large margin calls and force, liquidationsthat can exacerbate declining market prices.

　　b. Leverage can help offset the risk ofbeing unable to meet large margin calls generated from large positions, therebyincreasing a firm's liquidity.

　　c. Margin calls create leverage that canforce a firm to assume illiquid positions even in small trades.

　　d. Margin calls decrease the liquidity of aposition unless the firm uses leverage to decrease the size of a hedge.

　　答案解析：a

　　LTCM assumed an enormous degree o(levernge, in part.because financial insumtions with which they dealt waived margin requirements.]heir balance sheer, leverage was magnified by the economic Ievel of thepositions they assumed. As a result, their positions were extremely large.particularly in relation m the limited liquidity in some of the markers. Whenchanges in asses prices created significant marked-marker losses, LTCM did nothave the equity en sneer the margin calls due to their high degree of leverage.They were therefore forced so liquidate large illiquid positions, which moved markerprim in such a way as to create more margin calls and more forced liquidation. (SeeBook 1. Topic 6))