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

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

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

4. What type of government paper was bought in Italy?
(a) Italian money.
(b) Deeds to monuments.
(c) Fluctuating rate.
(d) Floating rate.

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

6. What type of strategy did Long-Term employ?
(a) Low risk.
(b) High risk.
(c) Moderate risk.
(d) Whatever was dictated by the market.

7. What is the method of paying a percentage of a bond called?
(a) A trim.
(b) A bond fee.
(c) A haircut.
(d) A percentage price.

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

9. What year did Meriwether hire Myron Scholes?
(a) 1996.
(b) 1995.
(c) 1993.
(d) 1994.

10. What did Black and Scholes use to calculate market change?
(a) Calculus and computer models.
(b) Meriwether's advice.
(c) History.
(d) In depth financial patterns.

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

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

13. What did Meriwether do with his staff?
(a) Dine.
(b) All of these.
(c) Play golf.
(d) Travel.

14. What group did Meriwether found in 1977?
(a) Smith & Meriwether Co.
(b) The Commanders.
(c) The Arbitrage Group.
(d) The Meegen Group.

15. How much did Long-Term earn in its first year of operation?
(a) 10%.
(b) 28%.
(c) 75%.
(d) 5%.

Short Answer Questions

1. What is the CFTC short for?

2. In 1994, what market did Long-Term begin to express an interest in?

3. In 1996, the first bank Long-Term approached regarding credit deemed Long-Term as what?

4. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?

5. Why did Rosenfeld choose not to co-found Kapor's project?

(see the answer keys)

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