When Genius Failed Test | Final Test - Medium

Roger Lowenstein
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This test consists of 5 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What typically happens to stock prices when a merger is revealed?
(a) They crash.
(b) They go up.
(c) They stay the same.
(d) They go down.

2. What determines the swap rate in a country?
(a) Interest rates on government debt.
(b) The price of oil.
(c) Interest rates on the real estate market.
(d) The price of corn.

3. What was Long-Term's signature trade?
(a) The "shining cat".
(b) The "small build".
(c) The "equity vol".
(d) The "mort up".

4. What was Long-Term's signature trade based on?
(a) Consistency of failure.
(b) Consistency of volatility.
(c) None of these.
(d) Consistency of investments.

5. What was the result for some banks due to their involvement in the derivatives market?
(a) They were nationally recognized.
(b) They went bankrupt.
(c) They made billions.
(d) They were prosecuted.

Short Answer Questions

1. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?

2. When did Long-Term begin scrambling to raise money?

3. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?

4. During the financial crisis in 1998, what did the partners keep from the workers?

5. When the financial market in Russia collapsed, what were many in the market attempting to do?

(see the answer keys)

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