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. How much of the face value of a bond do buyers typically pay?

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

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

4. Who did most funds have to be registered with?

5. What affected bond trading in the 1970's?

Short Essay Questions

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

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

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

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

5. Why was Meriwether made a partner at Salomon?

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

As Long-Term became more and more successful, many banks and investment firms were eager to work with the company. Examine the various ways banks and investment firms offered advantages to Long-Term and why.

Essay Topic 2

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.

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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