When Genius Failed Test | Mid-Book Test - Easy

Roger Lowenstein
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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Where were Italian bonds sold by Long-Term?
(a) Directly to investors.
(b) Cayman Islands.
(c) Under the table.
(d) Swaps.

2. What affected bond trading in the 1970's?
(a) The international monetary crisis.
(b) The Vietnam War.
(c) The democratic elections.
(d) The price of commodities.

3. What were popular pools in 1993?
(a) Electricity.
(b) Green energy.
(c) Mortgage.
(d) Oil.

4. What did the banks and investors use to estimate Long-Term's assets?
(a) History of investments.
(b) All of these.
(c) Their exposure.
(d) Net worth of investors.

5. Who helped Meriwether raise money for Long-Term?
(a) No one.
(b) Salomon Brothers.
(c) Warren Buffet.
(d) Merrill Lynch.

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

7. How long did Long-Term expect their investors to commit?
(a) 6 months.
(b) 3 years.
(c) 3 months.
(d) 1 year.

8. How much did Long-Term plan to take from its profits?
(a) 15%.
(b) 10%.
(c) 30%.
(d) 25%.

9. What level of risk did Long-Term offer?
(a) High.
(b) None.
(c) Low.
(d) Medium.

10. What did the traders accept about the financial models they used?
(a) They were expensive.
(b) They removed the element of surprise.
(c) They were smarter than humans.
(d) They were imperfect.

11. What percentage of Americans had no knowledge of Long-Term?
(a) 10%.
(b) 50%.
(c) 99%.
(d) 75%.

12. Meriwether was threatened with what, if his Treasury bill deal did not pan out?
(a) A lawsuit.
(b) Termination.
(c) Death.
(d) A promotion.

13. What notable invention changed the face of trading in the 1970's?
(a) The computer.
(b) The scientific calculator.
(c) The cell phone.
(d) The video camera.

14. What was the typical scenario for bond investors in 1994?
(a) Few invested in bonds.
(b) Loss.
(c) Minimal gains.
(d) Substantial gains.

15. In the 1970's, what type of trading was considered dull?
(a) Gasoline.
(b) Bond.
(c) Corn.
(d) Securities.

Short Answer Questions

1. How much did Long-Term earn in its first year of operation?

2. By the end of 1996, what was the status of the credit financing Long-Term wanted?

3. What did Long-Term want to do for investors?

4. In 1993, what was happening more than usual in America?

5. How many employees were with Long-Term in 1996?

(see the answer keys)

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