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. During the time period in "Hedge Fund", how many people were millionaires due to the stock market?
(a) 1 million.
(b) 5 million.
(c) 6 million.
(d) 20 million.

2. Meriwether believed that risk and volatility were what?
(a) Quantifiable.
(b) Abstract ideas.
(c) A part of life.
(d) Unmanagable.

3. In bond trading, what are loans backed by collateral called?
(a) Fair financing.
(b) Mini trades.
(c) Repo financing.
(d) Exclusive trades.

4. Once in business, what did Long-Term have an easy time getting from banks?
(a) Endorsements.
(b) Money.
(c) Workers.
(d) Personal information.

5. Michael Steindardt believed what was the "culprit in 1994"?
(a) Wealth.
(b) Leverage.
(c) Poverty.
(d) Foolish investments.

Short Answer Questions

1. Where were Italian bonds sold by Long-Term?

2. What financial crisis did Long-Term make it through that most of the market didn't?

3. How was Meriwether's career affected following the Treasury bill deal?

4. What did Black and Scholes think price changes were?

5. How much money did Rosenfeld's business bring in?

Short Essay Questions

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

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

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

4. When did Meriwether begin making sales calls for Long-Term?

5. What are relative value trades?

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

7. Why did hedge funds make money for managers?

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

9. What was Long-Term's objective in seeking out a bank to finance their credit?

10. Why are hedge funds considered low risk?

(see the answer keys)

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