Long-Term Capital Management

Long-Term Capital Management (LTCM) was a hedge fund management firm based in Greenwich, Connecticut, and founded in 1994 by John W. Meriwether. Meriwether was a well-known bond trader and the former vice-chairman at Salomon Brothers. After leaving Salomon Brothers in 1991 following its U.S. Treasury bond scandal, he assembled a group of LTCM principals who were both academics and noted traders. Two such academicians, Myron S. Scholes and Robert C. Merton, were top economic theorists. In 1997, Scholes and Merton received the Nobel Memorial Prize in Economic Sciences for their work in derivatives.

LTCM began trading after it had received minimum investments from 80 initial investors, yielding approximately $1.0 billion of investor capital. The fund experienced unprecedented growth, with returns as high as 43%, until its ...

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