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. If the Long-Term fund failed, what would counter parties have to do?
(a) Buy more stocks.
(b) Give it money to keep going.
(c) Nothing.
(d) Sell.

2. What notable player was on vacation during the crisis in Russia?
(a) The president of Russia.
(b) Warren Buffet.
(c) Alan Greenspan.
(d) The president of the United States.

3. What award did Merton and Scholes win for economics?
(a) The Academy Award.
(b) The Wall Street Trust.
(c) None of these.
(d) The Nobel Prize.

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

5. What word did people often use to describe Long-Term?
(a) Communist.
(b) Dangerous.
(c) Genius.
(d) Stupid.

Short Answer Questions

1. How did regulators respond to the involvement of banks in the derivatives market?

2. What year was the Federal Reserve System created?

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

4. In 1998, Long-Term expected prices to do what?

5. What are some of the new markets Long-Term looked into in 1997?

Short Essay Questions

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

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

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

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

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

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

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

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

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

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

(see the answer keys)

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