When Genius Failed Test | Final 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 companies were selling bonds for Russia?

2. At what level was the swap rate of the United States in April 1998?

3. In 1998, what were many hedge funds selling insurance against?

4. Who was the Fed Chairman in 1997?

5. Who threatened to stop clearing the trades at Long-Term if their fund fell below a particular amunt?

Short Essay Questions

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

2. What did Long-Term do when they expected stock prices to fall?

3. During the financial crisis in 1998, where were the partners finding money?

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

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

6. When Meriwether reached out to his clients following the Russian crisis, how did he explain the effect of the situation in Russia?

7. Who warned Long-Term about making trades that counted on falling stock prices?

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Meriwether began his career at Salomon Brothers before starting Long-Term. Write a detailed profile of his career path at Salomon Brothers, answering the following questions.

1) What risk did Meriwether take at Salomon Brothers?

2) What were the challenges and rewards?

3) Why did his career at Salomon Brothers come to an end?

Essay Topic 2

Examine one of the following forms of investment vehicles:

- Hedge funds.

- Value funds.

- Bonds.

Answering the follow questions:

- What are the principals of this form of investment?

- What was Meriwether's experience with this form of investment?

- To what extent did the general public participate in this form of investment?

Essay Topic 3

Meriwether enjoyed building strong teams to work with. Write a brief essay examining the qualities he sought out in his team members.

(see the answer keys)

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