Answer: III and IV only

**Explanation:** In the Long-Term Capital Management (LTCM) case, the model risks were primarily related to: - **III. Ignoring autocorrelation of economic shocks**: LTCM's models assumed normal market conditions and failed to account for the persistence of economic shocks - **IV. Underestimating correlations among asset classes during economic crises**: During the 1998 Russian debt crisis, correlations between supposedly uncorrelated assets converged toward 1, which LTCM's models didn't anticipate **Why other options are incorrect:** - **I. Poor management oversight**: This is an operational risk issue, not specifically a model risk - **II. Financial reporting standards**: This relates to accounting/regulatory issues, not model risk LTCM's sophisticated models failed because they didn't adequately account for extreme market conditions and correlation breakdowns during crises.

Author: LeetQuiz Editorial Team