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 is the method of paying a percentage of a bond called?

2. How much money did Rosenfeld's business bring in?

3. Michael Steindardt believed what was the "culprit in 1994"?

4. Who charged Long-Term much lower fees than other clients?

5. What notable company went bankrupt in the 1970's?

Short Essay Questions

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

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

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

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

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

6. Why did bonds lose their value in the 1970's?

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

8. Why was Meriwether made a partner at Salomon?

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Occasionally, Long-Term encountered a trading regulation that was designed to prevent them from over-leveraging. In many of these situations, they would find a way to sidestep the regulation. Write an essay that takes a stand on this type of behavior and identify at least three examples from the text in your work.

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

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?

(see the answer keys)

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