When Genius Failed Test | Mid-Book Test - Hard

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 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. What is the CFTC short for?

2. Who developed the Black-Scholes model?

3. Meriwether believed that risk and volatility were what?

4. What did Rosenfeld and his friend develop?

5. What did Black and Scholes think price changes were?

Short Essay Questions

1. What did Long-Term do to limit risk in bond trading?

2. Why was Meriwether made a partner at Salomon?

3. What did the Black-Scholes model help Long-Term to predict?

4. What was Meriwether's group at Salomon given the authority to do?

5. Why did Black and Scholes believe that price changes were random?

6. How would a loan from a major bank help the partners at Long-Term make money?

7. In 1996, which significant companies did Long-Term surpass in terms of assets?

8. What are relative value trades?

9. How did Long-Term respond to firms that would not waive the fee for the haircut?

10. Although Long-Term was performing so well by 1996, how many Americans knew of the fund's existence?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

The academic model Long-Term used for investing proved impressive on many occasions.

1) What were the principles behind the Value-at-Risk models?

2) What were the problems with these models?

3) How did these models impact the investments placed by Long-Term?

Essay Topic 2

In the late 1970's, the financial climate was changing due to technology. Examine the changes this brought about in the financial market and how these changes directly affected Meriwether.

Essay Topic 3

Meriwether began his career at Salomon Brothers before starting Long-Term. Write a detailed profile of his career path at Salomon Brothers, answering the following questions.

1) What risk did Meriwether take at Salomon Brothers?

2) What were the challenges and rewards?

3) Why did his career at Salomon Brothers come to an end?

(see the answer keys)

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