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 year did Meriwether hire Myron Scholes?
(a) 1996.
(b) 1995.
(c) 1993.
(d) 1994.

2. What was the end result of Meriwether's Treasury bill deal?
(a) It made a lot of money.
(b) It frightened his colleagues.
(c) It lost a lot of money.
(d) It was not a notable deal.

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

4. When Meriwether increased his position in Treasury futures, what did he expect the market to do?
(a) Rise sharply overnight.
(b) Collapse.
(c) Perform typically.
(d) Drop substantially.

5. What level of risk did Long-Term offer?
(a) Low.
(b) High.
(c) None.
(d) Medium.

Short Answer Questions

1. What notable invention changed the face of trading in the 1970's?

2. What is the method of paying a percentage of a bond called?

3. What was practically impossible to determine about Long-Term?

4. Why did Rosenfeld choose not to co-found Kapor's project?

5. What was the typical scenario for bond investors in 1994?

Short Essay Questions

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

2. What did the partners do in the year following the bailout at Long-Term?

3. During the financial crisis in 1998, where were the partners finding money?

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

5. What strategy led to Long-Term's downfall during the Russian financial crisis?

6. Why did Meriwether increase his position on Treasury Bill futures in spite of the market fluctuation?

7. What contributes to the estimation of market volatility?

8. What was the risk to the market if Long-Term unraveled?

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

10. What did Standard & Poor downgrade that would affect Long-Term significantly?

(see the answer keys)

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