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 type of contracts did Long-Term make with private entities?
(a) Long-term.
(b) Short-term.
(c) Liquid.
(d) Illegal.

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

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

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

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

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

7. In 1998, Long-Term expected prices to do what?
(a) Stay the same.
(b) Fluctuate.
(c) Rise.
(d) Fall.

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

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

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

11. Who was withdrawing from the hedge fund markets?
(a) Small investment firms.
(b) Large investment firms.
(c) Long-Term.
(d) Foreign countries.

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

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

14. On what date did Russia declare a debt moratorium?
(a) August 17.
(b) September 30.
(c) August 31.
(d) July 4.

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

Short Answer Questions

1. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?

2. How much money did Chase loan Long-Term so that they could continue to clear trades?

3. What was the dollar amount of the premium Long-Term paid for its loan?

4. When the financial market in Russia collapsed, what were many in the market attempting to do?

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

(see the answer keys)

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