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. Who suspended arbitrage operations in April 1998?
(a) Salomon.
(b) Goldman Sachs.
(c) Fidelity Bank and Trust.
(d) Chase.

2. What are some of the new markets Long-Term looked into in 1997?
(a) Paired-shares.
(b) All of these.
(c) Stocks.
(d) Equities.

3. In 1998, what market did Long-Term bet would decline?
(a) The Asian market.
(b) The U.S. market.
(c) The Latin market.
(d) The Russian market.

4. What did Long-Term avoid by working with derivatives instead of stocks?
(a) Disclosure.
(b) Fees.
(c) Profit.
(d) Outside interest.

5. In 1998, Long-Term expected prices to do what?
(a) Stay the same.
(b) Rise.
(c) Fluctuate.
(d) Fall.

Short Answer Questions

1. What was Long-Term's signature trade based on?

2. What trading date dropped Long-Term below $1 billion in equity?

3. What did the Fed Chairman want to remove in an effort to create liquidity in the market?

4. On what date did Russia declare a debt moratorium?

5. When the financial market in Russia collapsed, what were many in the market attempting to do?

Short Essay Questions

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

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

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

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

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

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

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

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

9. Who was Jon Corzine?

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

(see the answer keys)

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