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

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

3. What was Meriwether's team allowed to do, following the Treasury bill deal?
(a) Vacation in Italy.
(b) Coach the office.
(c) Set Treasury standards.
(d) Spread trades.

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

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

6. What financial crisis did Long-Term make it through that most of the market didn't?
(a) The U.S. crisis.
(b) The Switzerland crisis.
(c) The Germany crisis.
(d) The Mexican crisis.

7. What was practically impossible to determine about Long-Term?
(a) Why it was doing so well.
(b) Where it was located.
(c) Actual fund assets.
(d) Who was in charge.

8. Where was the Long-Term Capital Portfolio stored?
(a) Germany.
(b) Switzerland.
(c) Bermuda.
(d) Cayman Islands.

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

10. In 1996, what was Long-Term seeking from the bank that would handle their credit?
(a) Cash flow.
(b) Asset storage.
(c) Legitimacy.
(d) Tax shelter.

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

12. Who typically invested in hedge funds?
(a) The general population.
(b) The Federal Reserve.
(c) Foreign banks.
(d) A club of exclusive investors.

13. How much of the face value of a bond do buyers typically pay?
(a) 10%.
(b) 15%.
(c) 25%.
(d) 1%.

14. Where did Meriwether work in 1979?
(a) Merrill Lynch.
(b) Long-Term.
(c) Salomon Brothers.
(d) Lehman.

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

Short Answer Questions

1. In 1996, who did Long-Term first approach to handle their credit?

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

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

4. Who helped Meriwether raise money for Long-Term?

5. Why did Long-Term trade in Italy?

(see the answer keys)

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