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 did Long-Term do when IOs started to fall?
(a) Buy them up.
(b) Lie to investors.
(c) Sell their shares.
(d) Explain the situation to investors.

2. What did Meriwether warn his investors against in 1994?
(a) Further growth.
(b) A repeat performance.
(c) Not investing enough with Long-Term.
(d) His early retirement.

3. What did Meriwether do with his staff?
(a) Dine.
(b) Play golf.
(c) All of these.
(d) Travel.

4. What group did Meriwether found in 1977?
(a) The Commanders.
(b) The Arbitrage Group.
(c) Smith & Meriwether Co.
(d) The Meegen Group.

5. What hedge fund caused a pound devaluation in Europe but made over a billion dollars?
(a) Quantum Fund.
(b) Endowment Fund.
(c) Treasury Fund.
(d) Millenium Fund.

Short Answer Questions

1. Who did most funds have to be registered with?

2. In 1994, why did the price of bonds drop?

3. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?

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

5. In 1996, what was the second bank Long-Term approached about financing their credit?

Short Essay Questions

1. When investing in Italy, what did Long-Term avoid telling their customers?

2. Why did the issue in Russia cost Long-Term money on an initial basis?

3. Why were regulators concerned about the volume of banks and investment banks involved in the derivatives market?

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

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

6. In spite of the economic crisis in Russia, what did Meriwether believe about Long-Term's trades?

7. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

8. Following the financial crisis in Russia, what did the partners do to begin raising money?

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

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

(see the answer keys)

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