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

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

3. 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.

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

5. The purpose of the Federal Reserve System was to promote what?
(a) Local investments.
(b) Morality.
(c) Honest investments.
(d) Stability.

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

7. What was the internal climate at Long-Term in 1998?
(a) Deteriorating.
(b) Positive.
(c) Negative.
(d) The same as always.

8. What was the common belief regarding nuclear powers?
(a) They do not have capital.
(b) They never default.
(c) They always default.
(d) They are not stable.

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

10. What was the leverage of Long-Term, following its meeting with the Fed?
(a) 10-1.
(b) 25-1.
(c) 100-1.
(d) 50-1.

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

12. Once the financial market in Russia collapsed, what did people stop trading?
(a) Bonds.
(b) Commodities.
(c) Stocks.
(d) Corn.

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

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

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

Short Answer Questions

1. What was Long-Term's signature trade based on?

2. In 1998, Long-Term expected prices to do what?

3. When Long-Term met with the Fed, it was obvious they did not have enough money to make it through what?

4. What was the result for some banks due to their involvement in the derivatives market?

5. What was Long-Term's signature trade?

(see the answer keys)

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