When Genius Failed Test | Mid-Book Test - Medium

Roger Lowenstein
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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. What notable invention changed the face of trading in the 1970's?
(a) The scientific calculator.
(b) The cell phone.
(c) The computer.
(d) The video camera.

2. In 1996, how much did Long-Term have in assets?
(a) $1 billion.
(b) $140 billion.
(c) $500 million.
(d) $120 million.

3. What type of government paper was bought in Italy?
(a) Italian money.
(b) Floating rate.
(c) Deeds to monuments.
(d) Fluctuating rate.

4. In 1994, what market did Long-Term begin to express an interest in?
(a) Local.
(b) Chicago.
(c) Chinese.
(d) International.

5. In 1996, Long-Term had achieved thirty times its what?
(a) Original goal.
(b) Debt capacity.
(c) Proposed value.
(d) Starting capital.

Short Answer Questions

1. What did Rosenfeld and his friend develop?

2. Who did most funds have to be registered with?

3. What did the banks and investors use to estimate Long-Term's assets?

4. Where was David W. Mullins working when Meriwether hired him?

5. What type of funds gained popularity in the 1990's?

Short Essay Questions

1. What was Meriwether's business model for Long-Term?

2. Why did Meriwether begin recruiting employees he had worked with at the Arbitrage Group?

3. Why did Black and Scholes believe that price changes were random?

4. Although Long-Term was performing so well by 1996, how many Americans knew of the fund's existence?

5. What did the Black-Scholes model help Long-Term to predict?

6. Why was the investment in Italy a risky one for Long-Term to make?

7. When Meriwether was building his team at the Arbitrage Group, what qualities did he look for?

8. Why was it difficult to know the exact amount of assets Long-Term held?

9. What surprise happened when Meriwether was trading Treasury Bill futures?

10. In 1996, which significant companies did Long-Term surpass in terms of assets?

(see the answer keys)

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