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. In 1996, who did Long-Term first approach to handle their credit?
(a) Citibank.
(b) Bank of America.
(c) Chase.
(d) Washington Mutual.

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

3. What unusual event happened when Meriwether began working with Treasury futures?
(a) The U.S. government collapsed.
(b) He lost millions.
(c) The price fell.
(d) The price rose.

4. Who gains from working with hedge funds?
(a) Women.
(b) The government.
(c) Impoverished countries.
(d) Managers.

5. In 1996, Long-Term was four times as large as what?
(a) The U.S. Treasury.
(b) The largest hedge fund.
(c) The Mexican Treasury.
(d) A small European country.

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

7. What happened to Meriwether's Treasury bill deal before it was resolved?
(a) It fell apart.
(b) It remained steady.
(c) Huge gains.
(d) Big losses.

8. In 1994, why did the price of bonds drop?
(a) The Fed raised interest rates.
(b) There was too much wealth in America.
(c) The Fed lowered interest rates.
(d) Property value went down.

9. Who did most funds have to be registered with?
(a) Most funds did not have to be registered.
(b) CFTC.
(c) SEC.
(d) The Fed.

10. What did Long-Term expect foreign banks to invest?
(a) $100 million.
(b) $10 million.
(c) Only individuals could invest.
(d) $1 million.

11. What type of funds gained popularity in the 1990's?
(a) Value.
(b) Mutual.
(c) Real estate.
(d) Treasury.

12. Who became the temporary CEO of Meriwether's group when scandal hit?
(a) Paul Mozer.
(b) John Meriwether.
(c) J.F. Salomon.
(d) Warren Buffet.

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

14. What is the CFTC short for?
(a) Capitalism Fortune Trust Commonwealth.
(b) Commodities Futures Trading Commission.
(c) Commodities Finding True Commission.
(d) Counting Futures Trading Commodities.

15. How much money did Rosenfeld's business bring in?
(a) Hundreds of thousands.
(b) Two million.
(c) Five million.
(d) A couple thousand.

Short Answer Questions

1. What financial crisis did Long-Term make it through that most of the market didn't?

2. In the 1970's, what type of trading was considered dull?

3. What did banks and investors want from Long-Term?

4. What did Black and Scholes think price changes were?

5. What notable company went bankrupt in the 1970's?

(see the answer keys)

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