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. Who did Long-Term threaten to sue, following a threat not to clear trades?
(a) Waterhouse Cooper.
(b) ING trading.
(c) Chase.
(d) Bear Sterns.

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

3. What factor was forcing those with hedge funds to sell?
(a) Toxic assets.
(b) The Fed's involvement.
(c) Ample credit.
(d) Lack of credit.

4. What companies were selling bonds for Russia?
(a) Investment banking firms.
(b) Mom and pop establishments.
(c) Black market traders.
(d) All of these.

5. After the financial crisis in Russia, what did Long-Term regret?
(a) Forcing investors to take back money.
(b) Creating deals that were not liquid.
(c) All of these.
(d) Creating private deals.

Short Answer Questions

1. When Russia first experienced turmoil, Long-Term was confident that what would happen?

2. What did Long-Term think about the financial crisis that hit in August of 1998?

3. How much equity did Long-Term have hold of in 1997?

4. When did the Russian market begin to fail?

5. What was the common belief regarding nuclear powers?

Short Essay Questions

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

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

3. What did Standard & Poor downgrade that would affect Long-Term significantly?

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

5. By the end of August 1998, what did the movement in the bond market look like?

6. What move did Salomon make that surprised Long-Term?

7. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

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

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

10. What did Long-Term do when they expected stock prices to fall?

(see the answer keys)

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