When Genius Failed Quiz | Eight Week Quiz E

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This quiz consists of 5 multiple choice and 5 short answer questions through The Fall.

Multiple Choice Questions

1. When Russia first experienced turmoil, Long-Term was confident that what would happen?
(a) The country would recover.
(b) Investors would back out.
(c) Spreads would converge.
(d) Spreads would never meet.

2. In 1994, why did the yield raise on the thirty year Treasury bond?
(a) It dropped 10%.
(b) It rose 16%.
(c) It dropped 16%.
(d) It rose 5%.

3. Meriwether believed that risk and volatility were what?
(a) Quantifiable.
(b) Abstract ideas.
(c) A part of life.
(d) Unmanagable.

4. What did the Fed Chairman want to remove in an effort to create liquidity in the market?
(a) Short rules.
(b) Margin rules.
(c) Stock rules.
(d) Trading rules.

5. What did Black and Scholes think price changes were?
(a) Smart corrections.
(b) Random events.
(c) Dangerous.
(d) Common occurences.

Short Answer Questions

1. What did the traders accept about the financial models they used?

2. What percentage of Americans had no knowledge of Long-Term?

3. In 1996, the first bank Long-Term approached regarding credit deemed Long-Term as what?

4. What affected bond trading in the 1970's?

5. What notable invention changed the face of trading in the 1970's?

(see the answer key)

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