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, Long-Term had achieved thirty times its what?
(a) Starting capital.
(b) Original goal.
(c) Debt capacity.
(d) Proposed value.

2. Who helped Meriwether raise money for Long-Term?
(a) Merrill Lynch.
(b) No one.
(c) Warren Buffet.
(d) Salomon Brothers.

3. What level of risk did Long-Term offer?
(a) High.
(b) Low.
(c) Medium.
(d) None.

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

5. What notable invention changed the face of trading in the 1970's?
(a) The video camera.
(b) The computer.
(c) The cell phone.
(d) The scientific calculator.

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

7. Who ran the London office for Long-Term?
(a) Haghani.
(b) Meriwether.
(c) Buffet.
(d) Mullins.

8. What did the letter Meriwether sent to his clients claim it was difficult to do with Long-Term?
(a) Lose money.
(b) Get a job.
(c) Take legal action.
(d) Make money.

9. In the 1970's, what type of trading was considered dull?
(a) Gasoline.
(b) Corn.
(c) Bond.
(d) Securities.

10. What was the typical scenario for bond investors in 1994?
(a) Few invested in bonds.
(b) Loss.
(c) Substantial gains.
(d) Minimal gains.

11. Where was the London office for Long-Term located?
(a) Mayfair.
(b) Picadilly Square.
(c) Winchester.
(d) Buckingham Palace.

12. In 1994, what market did Long-Term begin to express an interest in?
(a) Chicago.
(b) Chinese.
(c) Local.
(d) International.

13. What financial crisis did Long-Term make it through that most of the market didn't?
(a) The Germany crisis.
(b) The U.S. crisis.
(c) The Mexican crisis.
(d) The Switzerland crisis.

14. In 1996, Long-Term was four times as large as what?
(a) A small European country.
(b) The largest hedge fund.
(c) The U.S. Treasury.
(d) The Mexican Treasury.

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

Short Answer Questions

1. Who developed the Black-Scholes model?

2. What was J.F. Eckstein & Co. primarily working on in 1979?

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

4. What type of funds gained popularity in the 1990's?

5. What did Black and Scholes think price changes were?

(see the answer keys)

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