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 typically happens to stock prices when a merger is revealed?
(a) They go down.
(b) They go up.
(c) They stay the same.
(d) They crash.

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

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

4. In 1998, what type of contracts did Long-Term make with private entities?
(a) Illegal.
(b) Short-term.
(c) Long-term.
(d) Liquid.

5. What was the result for some banks due to their involvement in the derivatives market?
(a) They made billions.
(b) They went bankrupt.
(c) They were nationally recognized.
(d) They were prosecuted.

Short Answer Questions

1. What did Scholes and Merton think of some of the private trades Long-Term made in 1998?

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

3. Where did the private contracts Long-Term made in 1998 trade?

4. When Russia first experienced turmoil, Long-Term was confident that what would happen?

5. What did Long-Term think about the financial crisis that hit in August of 1998?

Short Essay Questions

1. Who was Jon Corzine?

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

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

4. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

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

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

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

8. What contributes to the estimation of market volatility?

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

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

(see the answer keys)

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