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

2. How much money did Long-Term earn in 1996?
(a) $500 million.
(b) $1 billion.
(c) $2.1 billion.
(d) $100 million.

3. What did the letter Meriwether sent to his clients claim it was difficult to do with Long-Term?
(a) Get a job.
(b) Lose money.
(c) Make money.
(d) Take legal action.

4. How much money did Meriwether need to start Long-Term?
(a) $1 billion.
(b) $100,000.
(c) $2.5 billion.
(d) $50 million.

5. What did banks and investors want from Long-Term?
(a) Regulation.
(b) Client referrals.
(c) To be involved.
(d) It to shut down.

Short Answer Questions

1. Who gains from working with hedge funds?

2. What hedge fund caused a pound devaluation in Europe but made over a billion dollars?

3. In 1994, what market did Long-Term begin to express an interest in?

4. What unusual event happened when Meriwether began working with Treasury futures?

5. Once in business, what did Long-Term have an easy time getting from banks?

Short Essay Questions

1. By the time Long-Term had been in business for two years, how did it compare to other old Wall Street companies?

2. Why was Meriwether made a partner at Salomon?

3. What did Long-Term do to limit risk in bond trading?

4. What dictates whether or interest only securities rise or fall?

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

6. What were the legal limits on hedge fund investors?

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

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

9. How would a loan from a major bank help the partners at Long-Term make money?

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

(see the answer keys)

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