Explanation

Statement B is false because LTCM actually had lock-up periods for their investors, which helped reduce funding risk rather than increase it. Investors were required to keep their money invested for extended periods, providing LTCM with stable capital.

Key facts about LTCM's troubles:

• A is true: LTCM had massive swap positions but believed their risk was minimized through offsetting positions
• C is true: LTCM obtained favorable financing terms through repurchase agreements
• D is true: LTCM's positions were so large that liquidation would have required selling at significant discounts
• B is false: The three-year lock-up period actually helped reduce funding risk by providing stable capital

LTCM's collapse was primarily due to:

• Extreme leverage (25:1 to 30:1)
• Concentrated positions in convergence trades
• Market illiquidity during the 1998 Russian financial crisis
• Inability to meet margin calls when their positions moved against them