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

2. After the Russian financial crisis, what caused further fluctuations in the market?
(a) Interest from the IRS.
(b) Panicked investors.
(c) Interest from big oil.
(d) Small time investors.

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

4. When did the Russian market begin to fail?
(a) September 1998.
(b) August 1998.
(c) May 1998.
(d) April 1998.

5. When Russia began to default on its loans, what did people start doing with their high risk bonds?
(a) Selling.
(b) Holding.
(c) Trading.
(d) Buying.

Short Answer Questions

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

2. To create a paired-share, what is common stock partnered with?

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

4. The purpose of the Federal Reserve System was to promote what?

5. How many banks stepped forward to help bail out Long-Term?

Short Essay Questions

1. What strategy led to Long-Term's downfall during the Russian financial crisis?

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

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

4. Why were regulators concerned about the volume of banks and investment banks involved in the derivatives market?

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

6. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

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

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

9. What contributes to the estimation of market volatility?

10. During the financial crisis in 1998, where were the partners finding money?

(see the answer keys)

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