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

Question

Quizplus · Accepted Answer

The collapse of the Long Term Capital Management hedge fund in 1998 was a case of a tail event, which refers to extremely rare events that fall outside of the normal distribution of statistical probabilities. It was a confluence of unpredictable factors that led to the collapse, such as the Russian debt crisis and the sudden decline in liquidity in the markets. This event highlighted the potential risks of complex financial instruments and the interconnectedness of the global financial system.

The Collapse of the Long Term Capital Management Hedge Fund