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 word did people often use to describe Long-Term?
(a) Communist.
(b) Genius.
(c) Dangerous.
(d) Stupid.

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

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

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

5. Who threatened to stop clearing the trades at Long-Term if their fund fell below a particular amunt?
(a) Fidelity.
(b) Goldman Sachs.
(c) Bear Sterns.
(d) Chase.

6. At what level was the swap rate of the United States in April 1998?
(a) High.
(b) Medium.
(c) Low.
(d) Non-existant.

7. Who did Long-Term threaten to sue, following a threat not to clear trades?
(a) Waterhouse Cooper.
(b) Chase.
(c) Bear Sterns.
(d) ING trading.

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

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

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

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

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

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

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

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

Short Answer Questions

1. How much equity did Long-Term have hold of in 1997?

2. What was the common belief regarding nuclear powers?

3. What was the internal climate at Long-Term in 1998?

4. When did Long-Term begin scrambling to raise money?

5. What trading date dropped Long-Term below $1 billion in equity?

(see the answer keys)

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