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 Long-Term's signature trade based on?
(a) Consistency of failure.
(b) Consistency of volatility.
(c) None of these.
(d) Consistency of investments.

2. What are some of the new markets Long-Term looked into in 1997?
(a) All of these.
(b) Paired-shares.
(c) Equities.
(d) Stocks.

3. How did regulators respond to the involvement of banks in the derivatives market?
(a) There were not concerned.
(b) They were delighted.
(c) They were worried.
(d) They encouraged it.

4. In 1996, what was Meriwether encouraging Long-Term to do?
(a) Break the law.
(b) Hire new employees.
(c) Stick with the tried and true.
(d) Investigate new territory.

5. In 1998, what act led Long-Term to a fall?
(a) Shorting the U.S. market.
(b) Shorting the Russian market.
(c) Putting money into Italy.
(d) Investing in the Asian market.

6. When Russia first experienced turmoil, Long-Term was confident that what would happen?
(a) The country would recover.
(b) Investors would back out.
(c) Spreads would never meet.
(d) Spreads would converge.

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

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

9. To create a paired-share, what is common stock partnered with?
(a) Shorted stocks.
(b) Bond deals.
(c) Private stock.
(d) Preferred stock.

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

11. In 1998, what market did Long-Term bet would decline?
(a) The Asian market.
(b) The Russian market.
(c) The U.S. market.
(d) The Latin market.

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

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

14. 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) The fall of China.
(c) Another big hit.
(d) A debt call from Russia.

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

Short Answer Questions

1. When the Fed visited Long-Term, what did Hilibrand show them?

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

3. What was the limitation on borrowing for equity trading?

4. Once the financial market in Russia collapsed, what did people stop trading?

5. Who was the Fed Chairman in 1997?

(see the answer keys)

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