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 was the internal climate at Long-Term in 1998?
(a) Negative.
(b) Positive.
(c) The same as always.
(d) Deteriorating.

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

3. Who was the Fed Chairman in 1997?
(a) Warren Buffet.
(b) Madeleine Albright.
(c) Alan Greenspan.
(d) Hillary Clinton.

4. When Russia first experienced turmoil, Long-Term was confident that what would happen?
(a) Spreads would never meet.
(b) Spreads would converge.
(c) Investors would back out.
(d) The country would recover.

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

Short Answer Questions

1. In August 1998, how far down was Long-Term for the month?

2. When did Long-Term start losing money?

3. In August 1998, how far down was Long-Term for the year-to-date?

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

5. What regulation did Long-Term bypass when trading equities?

Short Essay Questions

1. What contributes to the estimation of market volatility?

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

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

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

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

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

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

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

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

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

(see the answer keys)

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