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 Meriwether warn his investors against in 1994?

2. What year did Meriwether hire Myron Scholes?

3. Where was the London office for Long-Term located?

4. Who typically invested in hedge funds?

5. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?

Short Essay Questions

1. How much of Long-Term did the Union Bank of Switzerland buy on a hedge?

2. Who was Jon Corzine?

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

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

5. When did Meriwether begin making sales calls for Long-Term?

6. What did the Fed determine would happen if Long-Term failed?

7. What contributes to the estimation of market volatility?

8. What dictates whether or interest only securities rise or fall?

9. What methods did Black and Scholes use to predict the changes that would take place in the market?

10. When did huge losses begin for Long-Term and why?

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

Write a brief essay supporting or refuting the following statement, citing examples from the text: Meriwether fully expected to continue making substantial returns with Long-Term's investment model.

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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