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. Once in business, what did Long-Term have an easy time getting from banks?
(a) Workers.
(b) Endorsements.
(c) Personal information.
(d) Money.

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

3. Who developed the Black-Scholes model?
(a) Jack Salomon.
(b) David Black.
(c) John Meriwether.
(d) Myron Scholes.

4. When Meriwether increased his position in Treasury futures, what did he expect the market to do?
(a) Collapse.
(b) Drop substantially.
(c) Rise sharply overnight.
(d) Perform typically.

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

6. How much money did Long-Term earn in 1996?
(a) $1 billion.
(b) $100 million.
(c) $500 million.
(d) $2.1 billion.

7. Where was the London office for Long-Term located?
(a) Buckingham Palace.
(b) Winchester.
(c) Picadilly Square.
(d) Mayfair.

8. In 1996, Long-Term was two and a half times larger than what company?
(a) Bank of America.
(b) Chase.
(c) Lehman Brothers.
(d) Fidelity Magellan.

9. Michael Steindardt believed what was the "culprit in 1994"?
(a) Poverty.
(b) Leverage.
(c) Wealth.
(d) Foolish investments.

10. What did Long-Term do when IOs started to fall?
(a) Explain the situation to investors.
(b) Buy them up.
(c) Sell their shares.
(d) Lie to investors.

11. In 1994, what market did Long-Term begin to express an interest in?
(a) Local.
(b) Chicago.
(c) International.
(d) Chinese.

12. What notable company went bankrupt in the 1970's?
(a) Penn Central Railroad.
(b) Penn Weapons Industry.
(c) Penn North Distillery.
(d) Penn Coal.

13. What was the end result of Meriwether's Treasury bill deal?
(a) It lost a lot of money.
(b) It was not a notable deal.
(c) It frightened his colleagues.
(d) It made a lot of money.

14. By the end of 1996, what was the status of the credit financing Long-Term wanted?
(a) No one would finance them.
(b) All of these.
(c) They still did not have it.
(d) They had financing.

15. How much did the accounts for investors increase in 1994?
(a) 20%.
(b) 50%.
(c) 10%.
(d) 5%.

Short Answer Questions

1. What did Meriwether do with his staff?

2. What type of funds gained popularity in the 1990's?

3. How much money did Meriwether need to start Long-Term?

4. What did Black and Scholes use to calculate market change?

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

(see the answer keys)

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