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. How much money did Chase loan Long-Term so that they could continue to clear trades?
(a) $10 million.
(b) $5 million.
(c) $475 million.
(d) $752 million.

2. 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.

3. In a letter to clients, to what did Long-Term attribute the decrease in profits?
(a) Irresponsibility in foreign nations.
(b) Poor margins.
(c) Widening spreads.
(d) Foolish investments.

4. When Russia began to default on its loans, what did people start doing with their high risk bonds?
(a) Selling.
(b) Buying.
(c) Trading.
(d) Holding.

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

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

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

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

9. What did the incident on August 21 cost Long-Term?
(a) $150 million.
(b) $1 billion.
(c) $200 million.
(d) $2 billion.

10. 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.
(c) It was not serious but would not recover.
(d) It was serious and would not recover.

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

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

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

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

15. How many banks stepped forward to help bail out Long-Term?
(a) 30.
(b) 2.
(c) 20.
(d) 16.

Short Answer Questions

1. Who did Long-Term threaten to sue, following a threat not to clear trades?

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

3. In 1996, what was Meriwether encouraging Long-Term to do?

4. What did Long-Term avoid by working with derivatives instead of stocks?

5. After the financial crisis in Russia, what did Long-Term regret?

(see the answer keys)

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