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 was the end result of Meriwether's Treasury bill deal?

2. Who developed the Black-Scholes model?

3. What company was Kapor the founder of?

4. What level of risk did Long-Term offer?

5. What did Black and Scholes use to calculate market change?

Short Essay Questions

1. Why was the investment in Italy a risky one for Long-Term to make?

2. When investing in Italy, what did Long-Term avoid telling their customers?

3. Why did Meriwether increase his position on Treasury Bill futures in spite of the market fluctuation?

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

5. When Meriwether was building his team at the Arbitrage Group, what qualities did he look for?

6. What was Meriwether's business model for Long-Term?

7. Why are hedge funds considered low risk?

8. When additional investors returned to the Italian market, what did Long-Term do?

9. By the time Long-Term had been in business for two years, how did it compare to other old Wall Street companies?

10. What were the legal limits on hedge fund investors?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Write a brief essay supporting or refuting the following statement, citing examples from the text: The irresponsible management of Long-Term by the partners led to its downfall.

Essay Topic 2

When Long-Term achieved major profits in its first year, Meriwether wrote a letter to investors warning against such a strong future performance.

1) Why did Meriwether feel it was important to communicate with his investors?

2) What warnings did Meriwether share with his investors?

3) Why did Meriwether feel it necessary to communicate at this level?

Essay Topic 3

Those involved at the top levels of Long-Term were given respect, money and opportunity. Write a brief essay analyzing some of the advantages a career at Long-Term gave many of the partners, citing examples from the text.

(see the answer keys)

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