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

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

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

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

5. How much did banks and investors make in conjunction with Long-Term?
(a) 50 million.
(b) Several hundred thousand.
(c) 1-200 million.
(d) 1 million.

6. Where was David W. Mullins working when Meriwether hired him?
(a) The United Nations.
(b) Federal Reserve.
(c) Salomon Brothers.
(d) Yale School of Finance.

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

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

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

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

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

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

13. What did Long-Term do with off-the-run bonds?
(a) Loan them to other firms.
(b) Hold them for profit.
(c) Unload them quickly.
(d) Avoid them.

14. In bond trading, what are loans backed by collateral called?
(a) Repo financing.
(b) Fair financing.
(c) Mini trades.
(d) Exclusive trades.

15. What company was Kapor the founder of?
(a) Circuit Finance, Inc.
(b) Lotus Development Corporation.
(c) Lochfield Growing Corporation.
(d) Finance Development International.

Short Answer Questions

1. What type of strategy did Long-Term employ?

2. In 1996, what was the second bank Long-Term approached about financing their credit?

3. What did Long-Term expect foreign banks to invest?

4. What was the typical scenario for bond investors in 1994?

5. What did Meriwether do with his staff?

(see the answer keys)

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