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 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 but would not recover.
(c) It was serious but would recover.
(d) It was not serious.

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

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

4. After the meeting with the Fed, a market movement of what percentage could have ended Long-Term?
(a) 30%.
(b) 1%.
(c) 25%.
(d) 10%.

5. At what level was the swap rate of the United States in April 1998?
(a) Medium.
(b) Low.
(c) Non-existant.
(d) High.

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

7. On what date did Russia declare a debt moratorium?
(a) August 31.
(b) July 4.
(c) September 30.
(d) August 17.

8. What did Scholes and Merton think of some of the private trades Long-Term made in 1998?
(a) They did not support them.
(b) They supported them.
(c) They were impressed.
(d) They were excited.

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

10. What was the climate at Long-Term during the Russian financial crisis?
(a) Confident.
(b) Nervous.
(c) Standard.
(d) Excited.

11. What put pressure on the currency in Brazil?
(a) Goldman's bought out China's debt.
(b) Moody's downgraded Brazilian debt.
(c) Warren Buffet paid off Brazilian debt.
(d) The United State balanced the budget.

12. During the financial crisis in 1998, what did the partners keep from the workers?
(a) Money.
(b) Profits.
(c) Information.
(d) Hope.

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

14. In 1998, who published Meriwether's letter to his clients?
(a) The New Yorker.
(b) The Financial Times.
(c) The New York Times.
(d) Bloomberg.

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

Short Answer Questions

1. What factor was forcing those with hedge funds to sell?

2. What was the credit limit on hedge funds?

3. How did regulators respond to the involvement of banks in the derivatives market?

4. What was the dollar amount of the premium Long-Term paid for its loan?

5. In 1998, what market did Long-Term bet would decline?

(see the answer keys)

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