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

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

3. What was the limitation on borrowing for equity trading?
(a) 50%.
(b) 10%.
(c) 25%.
(d) 40%.

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

5. What regulation did Long-Term bypass when trading equities?
(a) Regulation-T.
(b) Regulation-B.
(c) Regulation-C.
(d) Regulation-E.

6. What year was the Federal Reserve System created?
(a) 1901.
(b) 1950.
(c) 1913.
(d) 1995.

7. What was the first horrible month Long-Term had?
(a) June, 1998.
(b) July, 1998.
(c) August, 1998.
(d) It never had a horrible month.

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

9. In 1998, what were many hedge funds selling insurance against?
(a) The U.S. Treasury.
(b) Falling prices.
(c) Rising prices.
(d) The Latin market.

10. What companies were selling bonds for Russia?
(a) Black market traders.
(b) All of these.
(c) Mom and pop establishments.
(d) Investment banking firms.

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

12. What did the Fed Chairman want to remove in an effort to create liquidity in the market?
(a) Trading rules.
(b) Margin rules.
(c) Short rules.
(d) Stock rules.

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

14. What was the leverage of Long-Term, following its meeting with the Fed?
(a) 100-1.
(b) 25-1.
(c) 10-1.
(d) 50-1.

15. What resource close to Long-Term began to experience financial difficulties following the financial problems in Russia?
(a) Long-Term's management company.
(b) Italy.
(c) Long-Term's audit company.
(d) Latin America.

Short Answer Questions

1. Where did the private contracts Long-Term made in 1998 trade?

2. By the end of August 1998, what market had practically stopped trading altogether?

3. When Long-Term met with the Fed, it was obvious they did not have enough money to make it through what?

4. What was the internal climate at Long-Term in 1998?

5. What are some of the new markets Long-Term looked into in 1997?

(see the answer keys)

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