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

2. Who helped Meriwether raise money for Long-Term?

3. What were popular pools in 1993?

4. Once in business, what did Long-Term have an easy time getting from banks?

5. What was practically impossible to determine about Long-Term?

Short Essay Questions

1. Why was Meriwether made a partner at Salomon?

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

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

4. What did Long-Term do to limit risk in bond trading?

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

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

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

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

9. Why are hedge funds considered low risk?

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

Essay Topics

Write an essay for ONE of the following 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

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 3

When Long-Term was faced with financial turmoil, it took only five weeks for it to lose staggering amounts of money. Examine the following points:

1) What was the financial profile of Long-Term prior to Russia's debt default?

2) What did the financial profile change so drastically?

3) What moves did Long-Term make to correct the situation and why were they ineffective?

(see the answer keys)

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