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. Where did Meriwether work in 1979?
(a) Lehman.
(b) Long-Term.
(c) Merrill Lynch.
(d) Salomon Brothers.

2. Where was the Long-Term Capital Portfolio stored?
(a) Bermuda.
(b) Germany.
(c) Switzerland.
(d) Cayman Islands.

3. Where was Robert C. Merton working when Meriwether hired him?
(a) NASA.
(b) Wall Street.
(c) Harvard.
(d) The Federal Exchange Commission.

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

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

Short Answer Questions

1. Meriwether was threatened with what, if his Treasury bill deal did not pan out?

2. In the 1970's, what type of trading was considered dull?

3. What did the letter Meriwether sent to his clients claim it was difficult to do with Long-Term?

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

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

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

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

4. Why are hedge funds considered low risk?

5. How did Long-Term respond to firms that would not waive the fee for the haircut?

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

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

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

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

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

(see the answer keys)

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