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) Merrill Lynch.
(b) Salomon Brothers.
(c) Long-Term.
(d) Lehman.

2. Who gains from working with hedge funds?
(a) Impoverished countries.
(b) Women.
(c) Managers.
(d) The government.

3. What did Long-Term do with off-the-run bonds?
(a) Avoid them.
(b) Unload them quickly.
(c) Hold them for profit.
(d) Loan them to other firms.

4. What did the letter Meriwether sent to his clients claim it was difficult to do with Long-Term?
(a) Make money.
(b) Lose money.
(c) Get a job.
(d) Take legal action.

5. What was the typical scenario for bond investors in 1994?
(a) Substantial gains.
(b) Minimal gains.
(c) Loss.
(d) Few invested in bonds.

Short Answer Questions

1. What models did Long-Term follow?

2. What did Rosenfeld and his friend develop?

3. What affected bond trading in the 1970's?

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

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

Short Essay Questions

1. In 1997, what was Meriwether encouraging his employees to do?

2. Who warned Long-Term about making trades that counted on falling stock prices?

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

4. Why did banks and investment banks get involved in the derivatives market?

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

6. Why did bonds lose their value in the 1970's?

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

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

9. Although Long-Term was performing so well by 1996, how many Americans knew of the fund's existence?

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

(see the answer keys)

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