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. Who suspended arbitrage operations in April 1998?
(a) Goldman Sachs.
(b) Chase.
(c) Fidelity Bank and Trust.
(d) Salomon.

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

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

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

5. What was the credit limit on hedge funds?
(a) There wasn't one.
(b) $50 million.
(c) $100 million.
(d) $1 billion.

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

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

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

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

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

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

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

13. What typically happens to stock prices when a merger is revealed?
(a) They go up.
(b) They go down.
(c) They crash.
(d) They stay the same.

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

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

Short Answer Questions

1. Who was the Fed Chairman in 1997?

2. Where did the private contracts Long-Term made in 1998 trade?

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

4. When did Long-Term start losing money?

5. In 1998, what type of contracts did Long-Term make with private entities?

(see the answer keys)

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