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 helped Meriwether raise money for Long-Term?

3. By the end of 1996, what was the status of the credit financing Long-Term wanted?

4. What was J.F. Eckstein & Co. primarily working on in 1979?

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

Short Essay Questions

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

2. What are relative value trades?

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

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

5. What surprise happened when Meriwether was trading Treasury Bill futures?

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

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

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

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

10. Why was Meriwether made a partner at Salomon?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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 2

The Fed has a major voice in the financial decisions in the United States. Examine the function of the Fed and the actions that it took that inadvertently played a part in Long-Term's success.

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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