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. Why did Rosenfeld choose not to co-found Kapor's project?
(a) He was too interested in travel.
(b) He did not like Kapor.
(c) He was too interested in finance.
(d) He was competitive with Kapor.

2. How many employees were with Long-Term in 1996?
(a) Five hundred.
(b) Five.
(c) Less than a dozen.
(d) A couple dozen.

3. In 1996, Long-Term was four times as large as what?
(a) The largest hedge fund.
(b) A small European country.
(c) The Mexican Treasury.
(d) The U.S. Treasury.

4. In 1994, why did the price of bonds drop?
(a) The Fed raised interest rates.
(b) There was too much wealth in America.
(c) Property value went down.
(d) The Fed lowered interest rates.

5. Where were Italian bonds sold by Long-Term?
(a) Swaps.
(b) Under the table.
(c) Directly to investors.
(d) Cayman Islands.

Short Answer Questions

1. In 1996, Long-Term had achieved thirty times its what?

2. In 1996, how much did Long-Term have in assets?

3. Why did Long-Term trade in Italy?

4. Who ran the London office for Long-Term?

5. What year did Meriwether hire Myron Scholes?

Short Essay Questions

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

2. Why did hedge funds make money for managers?

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

4. When additional investors returned to the Italian market, what did Long-Term do?

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

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

7. On what did Long-Term base the claim that it was difficult to lose money with them?

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

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

10. Why were convergence trades the safest trades made by Long-Term?

(see the answer keys)

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