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

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

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

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

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

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

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

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

9. What typically happens to stock prices when a merger is revealed?
(a) They crash.
(b) They go down.
(c) They go up.
(d) They stay the same.

10. What was the internal climate at Long-Term in 1998?
(a) Positive.
(b) Deteriorating.
(c) Negative.
(d) The same as always.

11. What notable player was on vacation during the crisis in Russia?
(a) Warren Buffet.
(b) Alan Greenspan.
(c) The president of Russia.
(d) The president of the United States.

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

13. Where did the private contracts Long-Term made in 1998 trade?
(a) In Russia.
(b) Privately.
(c) Overseas.
(d) On the exchange.

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

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

Short Answer Questions

1. What did the incident on August 21 cost Long-Term?

2. What was the climate at Long-Term during the Russian financial crisis?

3. In 1998, Long-Term expected prices to do what?

4. When did Long-Term start losing money?

5. What companies were selling bonds for Russia?

(see the answer keys)

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