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. Who was the Fed Chairman in 1997?
(a) Warren Buffet.
(b) Alan Greenspan.
(c) Hillary Clinton.
(d) Madeleine Albright.

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

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

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

5. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?
(a) The market was over-saturated.
(b) The market did not have enough players.
(c) Long-Term did not have investment capital.
(d) It was illegal to perform these trades.

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

7. In August 1998, how far down was Long-Term for the month?
(a) 25%.
(b) 44%.
(c) 10%.
(d) 60%.

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

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

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

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

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

13. Once crisis hit, how many weeks did it take for the partners to lose $3.6 billion?
(a) 1.
(b) 52.
(c) 5.
(d) 20.

14. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?
(a) Their office.
(b) The right to trade.
(c) Their workers.
(d) Their relationships with bankers.

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

Short Answer Questions

1. What determines the swap rate in a country?

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

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

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

5. If the Long-Term fund failed, what would counter parties have to do?

(see the answer keys)

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