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

2. In 1996, the first bank Long-Term approached regarding credit deemed Long-Term as what?
(a) Greedy.
(b) A great investment.
(c) Too risky.
(d) Brilliant.

3. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?
(a) Eager.
(b) Interested but wary.
(c) Interested.
(d) Competitive.

4. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?
(a) A better financial model.
(b) Empathy.
(c) Help.
(d) Real estate tips.

5. How was Meriwether's career affected following the Treasury bill deal?
(a) He was made partner.
(b) He became a public speaker.
(c) He lost his job.
(d) He became a regulation advocate.

6. Meriwether was threatened with what, if his Treasury bill deal did not pan out?
(a) A promotion.
(b) Death.
(c) Termination.
(d) A lawsuit.

7. What did the banks and investors use to estimate Long-Term's assets?
(a) Their exposure.
(b) History of investments.
(c) Net worth of investors.
(d) All of these.

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

9. In 1996, how much did Long-Term have in assets?
(a) $140 billion.
(b) $500 million.
(c) $1 billion.
(d) $120 million.

10. Why did Long-Term trade in Italy?
(a) Meriwether was Italian.
(b) The tax write-off opportunity.
(c) The opportunity for big returns.
(d) It was a safe market.

11. What did the Black-Scholes model believe was constant?
(a) Growth.
(b) Income.
(c) Meriwether's enthusiasm.
(d) Volatility.

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

13. What hedge fund caused a pound devaluation in Europe but made over a billion dollars?
(a) Treasury Fund.
(b) Millenium Fund.
(c) Quantum Fund.
(d) Endowment Fund.

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

15. How long did Long-Term expect their investors to commit?
(a) 1 year.
(b) 3 years.
(c) 3 months.
(d) 6 months.

Short Answer Questions

1. How much did banks and investors make in conjunction with Long-Term?

2. What notable invention changed the face of trading in the 1970's?

3. Who developed the Black-Scholes model?

4. What happened to Meriwether's Treasury bill deal before it was resolved?

5. How much of the face value of a bond do buyers typically pay?

(see the answer keys)

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