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. What was the common belief regarding nuclear powers?
(a) They always default.
(b) They never default.
(c) They are not stable.
(d) They do not have capital.

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

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

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

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

6. When did the Russian market begin to fail?
(a) August 1998.
(b) September 1998.
(c) May 1998.
(d) April 1998.

7. What award did Merton and Scholes win for economics?
(a) The Academy Award.
(b) None of these.
(c) The Wall Street Trust.
(d) The Nobel Prize.

8. In its first bad year, what did Long-Term maintain?
(a) A great workforce.
(b) A strong energy.
(c) A good reputation.
(d) All of these.

9. What was Long-Term's signature trade?
(a) The "mort up".
(b) The "shining cat".
(c) The "small build".
(d) The "equity vol".

10. If the Long-Term fund failed, what would counter parties have to do?
(a) Nothing.
(b) Sell.
(c) Give it money to keep going.
(d) Buy more stocks.

11. The purpose of the Federal Reserve System was to promote what?
(a) Local investments.
(b) Stability.
(c) Morality.
(d) Honest investments.

12. How much equity did Long-Term have hold of in 1997?
(a) $5 billion.
(b) $0.
(c) $100 million.
(d) $1 billion.

13. What was the credit limit on hedge funds?
(a) $50 million.
(b) There wasn't one.
(c) $100 million.
(d) $1 billion.

14. Who did Long-Term threaten to sue, following a threat not to clear trades?
(a) Chase.
(b) Bear Sterns.
(c) ING trading.
(d) Waterhouse Cooper.

15. Who threatened to stop clearing the trades at Long-Term if their fund fell below a particular amunt?
(a) Chase.
(b) Bear Sterns.
(c) Fidelity.
(d) Goldman Sachs.

Short Answer Questions

1. What did the Fed Chairman want to remove in an effort to create liquidity in the market?

2. In 1996, what was Meriwether encouraging Long-Term to do?

3. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?

4. When did Long-Term start losing money?

5. How many banks stepped forward to help bail out Long-Term?

(see the answer keys)

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