When Genius Failed Test | Final Test - Hard

Roger Lowenstein
This set of Lesson Plans consists of approximately 99 pages of tests, essay questions, lessons, and other teaching materials.
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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. Who suspended arbitrage operations in April 1998?

2. When Russia first experienced turmoil, Long-Term was confident that what would happen?

3. In 1998, Long-Term expected prices to do what?

4. In the mid-1990's, what was the ratio of leverage on Wall Street?

5. What was the first horrible month Long-Term had?

Short Essay Questions

1. What move did Salomon make that surprised Long-Term?

2. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

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

4. What was the Fed's response to Long-Term's exposure?

5. What strategy led to Long-Term's downfall during the Russian financial crisis?

6. Since Long-Term expected stock prices would fall, what did they sell insurance against?

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

8. By the end of August 1998, what did the movement in the bond market look like?

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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?

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 set out to be a low risk company and exemplified that mission for several years.

(see the answer keys)

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