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 was the common belief regarding nuclear powers?
(a) They always default.
(b) They do not have capital.
(c) They are not stable.
(d) They never default.

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

3. In the mid-1990's, what was the ratio of leverage on Wall Street?
(a) 25-1.
(b) 100-1.
(c) 10-1.
(d) 45-1.

4. What did the Fed Chairman want to remove in an effort to create liquidity in the market?
(a) Stock rules.
(b) Trading rules.
(c) Short rules.
(d) Margin rules.

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

Short Answer Questions

1. What award did Merton and Scholes win for economics?

2. What was the first horrible month Long-Term had?

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

4. After the first bad year experienced by Long-Term, what did its overall record look like?

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

(see the answer keys)

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