When Genius Failed Test | Final 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. How many banks stepped forward to help bail out Long-Term?
(a) 20.
(b) 16.
(c) 30.
(d) 2.

2. In August 1998, how far down was Long-Term for the year-to-date?
(a) 2%.
(b) 10%.
(c) 35%.
(d) 52%.

3. What was Long-Term's signature trade based on?
(a) Consistency of volatility.
(b) Consistency of failure.
(c) None of these.
(d) Consistency of investments.

4. In 1997, who awarded Long-Term the loan warrant it had requested?
(a) Chase.
(b) Union Bank of Switzerland.
(c) Bank of America.
(d) The Cayman Islands Commons.

5. When markets get jumpy, what begins to rise?
(a) All of these.
(b) Real estate.
(c) The price of gold.
(d) Option prices.

6. In 1998, Long-Term expected prices to do what?
(a) Fall.
(b) Rise.
(c) Fluctuate.
(d) Stay the same.

7. What are some of the new markets Long-Term looked into in 1997?
(a) All of these.
(b) Paired-shares.
(c) Stocks.
(d) Equities.

8. What did Long-Term think about the financial crisis that hit in August of 1998?
(a) It was not serious.
(b) It was serious but would recover.
(c) It was not serious but would not recover.
(d) It was serious and would not recover.

9. What was the dollar amount of the premium Long-Term paid for its loan?
(a) $100 million.
(b) $289 million.
(c) $1 billion.
(d) $200 million.

10. By the end of August 1998, what market had practically stopped trading altogether?
(a) Bond markets.
(b) International markets.
(c) Stock markets.
(d) Gold markets.

11. When the Fed visited Long-Term, what did Hilibrand show them?
(a) His recent financial model.
(b) The door.
(c) The risk aggregator.
(d) The new buildings.

12. What trading date dropped Long-Term below $1 billion in equity?
(a) April 15.
(b) October 10.
(c) September 21.
(d) September 5.

13. When did Long-Term begin scrambling to raise money?
(a) August 10.
(b) August 30.
(c) August 24.
(d) August 2.

14. In 1998, what type of contracts did Long-Term make with private entities?
(a) Short-term.
(b) Illegal.
(c) Liquid.
(d) Long-term.

15. Who suspended arbitrage operations in April 1998?
(a) Salomon.
(b) Chase.
(c) Goldman Sachs.
(d) Fidelity Bank and Trust.

Short Answer Questions

1. When Russia began to default on its loans, what did people start doing with their high risk bonds?

2. What notable player was on vacation during the crisis in Russia?

3. In 1998, who published Meriwether's letter to his clients?

4. What typically happens to stock prices when a merger is revealed?

5. The purpose of the Federal Reserve System was to promote what?

(see the answer keys)

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