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

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

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

4. In 1998, what type of contracts did Long-Term make with private entities?
(a) Illegal.
(b) Long-term.
(c) Liquid.
(d) Short-term.

5. What did Scholes and Merton think of some of the private trades Long-Term made in 1998?
(a) They supported them.
(b) They were impressed.
(c) They did not support them.
(d) They were excited.

6. What determines the swap rate in a country?
(a) The price of corn.
(b) Interest rates on the real estate market.
(c) The price of oil.
(d) Interest rates on government debt.

7. In 1997, who awarded Long-Term the loan warrant it had requested?
(a) The Cayman Islands Commons.
(b) Chase.
(c) Bank of America.
(d) Union Bank of Switzerland.

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

9. What was Long-Term's signature trade based on?
(a) Consistency of investments.
(b) Consistency of volatility.
(c) Consistency of failure.
(d) None of these.

10. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?
(a) Their office.
(b) Their relationships with bankers.
(c) The right to trade.
(d) Their workers.

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

12. By the end of August 1998, what market had practically stopped trading altogether?
(a) Gold markets.
(b) International markets.
(c) Stock markets.
(d) Bond markets.

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

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

15. What award did Merton and Scholes win for economics?
(a) The Nobel Prize.
(b) The Academy Award.
(c) None of these.
(d) The Wall Street Trust.

Short Answer Questions

1. What word did people often use to describe Long-Term?

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

3. When Russia began to default on its loans, what did people start doing with their high risk bonds?

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

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

(see the answer keys)

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