When Genius Failed Test | Final 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. When Long-Term met with the Fed, it was obvious they did not have enough money to make it through what?
(a) Another big hit.
(b) The fall of China.
(c) A debt call from Russia.
(d) The following week.

2. What was the internal climate at Long-Term in 1998?
(a) Deteriorating.
(b) Positive.
(c) The same as always.
(d) Negative.

3. What are some of the new markets Long-Term looked into in 1997?
(a) Paired-shares.
(b) All of these.
(c) Equities.
(d) Stocks.

4. In 1998, what market did Long-Term bet would decline?
(a) The Russian market.
(b) The Latin market.
(c) The U.S. market.
(d) The Asian market.

5. In August 1998, how far down was Long-Term for the year-to-date?
(a) 35%.
(b) 2%.
(c) 10%.
(d) 52%.

Short Answer Questions

1. By the end of August 1998, what market had practically stopped trading altogether?

2. What resource close to Long-Term began to experience financial difficulties following the financial problems in Russia?

3. What factor was forcing those with hedge funds to sell?

4. After the meeting with the Fed, a market movement of what percentage could have ended Long-Term?

5. Who was withdrawing from the hedge fund markets?

Short Essay Questions

1. What was the risk to the market if Long-Term unraveled?

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

3. What was the goal of the Federal Reserve when it was created?

4. How much of Long-Term did the Union Bank of Switzerland buy on a hedge?

5. What did the Fed determine would happen if Long-Term failed?

6. When Meriwether reached out to his clients following the Russian crisis, how did he explain the effect of the situation in Russia?

7. What was the Fed's response to Long-Term's exposure?

8. When did huge losses begin for Long-Term and why?

9. What contributes to the estimation of market volatility?

10. Since Long-Term expected stock prices would fall, what did they sell insurance against?

(see the answer keys)

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