When Genius Failed Test | Final Test - Medium

Roger Lowenstein
This set of Lesson Plans consists of approximately 99 pages of tests, essay questions, lessons, and other teaching materials.
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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. By the end of August 1998, what market had practically stopped trading altogether?
(a) Stock markets.
(b) International markets.
(c) Bond markets.
(d) Gold markets.

2. What was the first horrible month Long-Term had?
(a) It never had a horrible month.
(b) July, 1998.
(c) August, 1998.
(d) June, 1998.

3. When the Fed visited Long-Term, what did Hilibrand show them?
(a) His recent financial model.
(b) The risk aggregator.
(c) The door.
(d) The new buildings.

4. In a letter to clients, to what did Long-Term attribute the decrease in profits?
(a) Foolish investments.
(b) Widening spreads.
(c) Poor margins.
(d) Irresponsibility in foreign nations.

5. On what date did Russia declare a debt moratorium?
(a) August 17.
(b) July 4.
(c) August 31.
(d) September 30.

Short Answer Questions

1. What typically happens to stock prices when a merger is revealed?

2. Who was withdrawing from the hedge fund markets?

3. What was the credit limit on hedge funds?

4. What was the result for some banks due to their involvement in the derivatives market?

5. What did the incident on August 21 cost Long-Term?

Short Essay Questions

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

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

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

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

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

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

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

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

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

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

(see the answer keys)

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