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

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

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

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

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

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

7. After the Russian financial crisis, what caused further fluctuations in the market?
(a) Interest from the IRS.
(b) Interest from big oil.
(c) Panicked investors.
(d) Small time investors.

8. When Long-Term met with the Fed, it was obvious they did not have enough money to make it through what?
(a) The following week.
(b) Another big hit.
(c) A debt call from Russia.
(d) The fall of China.

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

10. When the financial market in Russia collapsed, what were many in the market attempting to do?
(a) Acquire losing positions.
(b) Leave the country.
(c) Invest in Italy.
(d) Release losing positions.

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

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

13. What did Long-Term avoid by working with derivatives instead of stocks?
(a) Disclosure.
(b) Outside interest.
(c) Fees.
(d) Profit.

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

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

Short Answer Questions

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

2. What was the first horrible month Long-Term had?

3. In August 1998, how far down was Long-Term for the month?

4. During the financial crisis in 1998, what did the partners keep from the workers?

5. When Russia began to default on its loans, what did people start doing with their high risk bonds?

(see the answer keys)

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