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 Long-Term do when IOs started to fall?

2. What did Meriwether warn his investors against in 1994?

3. What did Meriwether do with his staff?

4. What group did Meriwether found in 1977?

5. What hedge fund caused a pound devaluation in Europe but made over a billion dollars?

Short Essay Questions

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

2. Why did the issue in Russia cost Long-Term money on an initial basis?

3. Why were regulators concerned about the volume of banks and investment banks involved in the derivatives market?

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

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

6. In spite of the economic crisis in Russia, what did Meriwether believe about Long-Term's trades?

7. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

8. Following the financial crisis in Russia, what did the partners do to begin raising money?

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

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

Essay 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

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 3

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.

(see the answer keys)

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