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, the first bank Long-Term approached regarding credit deemed Long-Term as what?
(a) Greedy.
(b) A great investment.
(c) Brilliant.
(d) Too risky.

2. Where was Robert C. Merton working when Meriwether hired him?
(a) Wall Street.
(b) Harvard.
(c) The Federal Exchange Commission.
(d) NASA.

3. In 1993, what was happening more than usual in America?
(a) Refinancing.
(b) Day trading.
(c) Bankruptcy.
(d) Starvation.

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

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

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

7. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?
(a) Fluctuate drastically.
(b) None of these.
(c) Remain the same.
(d) Converge.

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

9. Who charged Long-Term much lower fees than other clients?
(a) Brokerage firms.
(b) The Federal Reserve.
(c) NYSE.
(d) The hospitality industry.

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

11. How much money did Meriwether need to start Long-Term?
(a) $100,000.
(b) $50 million.
(c) $2.5 billion.
(d) $1 billion.

12. What were the models Long-Term used unable to predict?
(a) Market collapse.
(b) Investor's exact return.
(c) Long-Term's exact income.
(d) All of these.

13. Why did Rosenfeld choose not to co-found Kapor's project?
(a) He was too interested in finance.
(b) He did not like Kapor.
(c) He was too interested in travel.
(d) He was competitive with Kapor.

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

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

Short Answer Questions

1. In 1996, Long-Term had achieved thirty times its what?

2. Where was the Long-Term Capital Portfolio stored?

3. When Meriwether increased his position in Treasury futures, what did he expect the market to do?

4. What is the method of paying a percentage of a bond called?

5. How much did Long-Term plan to take from its profits?

(see the answer keys)

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