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 dropped 16%.
(b) It rose 16%.
(c) It dropped 10%.
(d) It rose 5%.

2. Who became the temporary CEO of Meriwether's group when scandal hit?
(a) J.F. Salomon.
(b) Paul Mozer.
(c) John Meriwether.
(d) Warren Buffet.

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

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

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

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

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

8. 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.

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

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

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

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

13. What did Long-Term do when IOs started to fall?
(a) Lie to investors.
(b) Sell their shares.
(c) Buy them up.
(d) Explain the situation to investors.

14. What did Long-Term expect foreign banks to invest?
(a) Only individuals could invest.
(b) $10 million.
(c) $100 million.
(d) $1 million.

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

Short Answer Questions

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

2. Who developed the Black-Scholes model?

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

4. How much did Long-Term earn in its first year of operation?

5. What did banks and investors want from Long-Term?

(see the answer keys)

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