When Genius Failed Test | Mid-Book Test - Hard

Roger Lowenstein
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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 did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?

2. How many employees were with Long-Term in 1996?

3. What were the models Long-Term used unable to predict?

4. What was the typical scenario for bond investors in 1994?

5. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?

Short Essay Questions

1. Why was it difficult to know the exact amount of assets Long-Term held?

2. Why were convergence trades the safest trades made by Long-Term?

3. Why was Meriwether made a partner at Salomon?

4. On what did Long-Term base the claim that it was difficult to lose money with them?

5. Why are hedge funds considered low risk?

6. What was Long-Term's objective in seeking out a bank to finance their credit?

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

8. What are relative value trades?

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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?

Essay Topic 2

Meriwether enjoyed building strong teams to work with. Write a brief essay examining the qualities he sought out in his team members.

Essay Topic 3

Write a brief essay supporting or refuting the following statement, citing examples from the text: Long-Term took part in risky investments as the market became over-saturated.

(see the answer keys)

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