When Genius Failed Test | Mid-Book Test - Medium

Roger Lowenstein
This set of Lesson Plans consists of approximately 99 pages of tests, essay questions, lessons, and other teaching materials.

When Genius Failed Test | Mid-Book Test - Medium

Roger Lowenstein
This set of Lesson Plans consists of approximately 99 pages of tests, essay questions, lessons, and other teaching materials.
Buy the When Genius Failed Lesson Plans
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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. What is the CFTC short for?
(a) Commodities Finding True Commission.
(b) Commodities Futures Trading Commission.
(c) Capitalism Fortune Trust Commonwealth.
(d) Counting Futures Trading Commodities.

2. What type of government paper was bought in Italy?
(a) Deeds to monuments.
(b) Floating rate.
(c) Italian money.
(d) Fluctuating rate.

3. When Meriwether increased his position in Treasury futures, what did he expect the market to do?
(a) Rise sharply overnight.
(b) Perform typically.
(c) Collapse.
(d) Drop substantially.

4. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?
(a) Eager.
(b) Interested.
(c) Competitive.
(d) Interested but wary.

5. In 1996, Long-Term was four times as large as what?
(a) The largest hedge fund.
(b) A small European country.
(c) The Mexican Treasury.
(d) The U.S. Treasury.

Short Answer Questions

1. What did the banks and investors use to estimate Long-Term's assets?

2. Where was Robert C. Merton working when Meriwether hired him?

3. How was Meriwether's career affected following the Treasury bill deal?

4. What unusual event happened when Meriwether began working with Treasury futures?

5. Where was the Long-Term Capital Portfolio stored?

Short Essay Questions

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

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

3. Why did bonds lose their value in the 1970's?

4. On what did Long-Term base the claim that it was difficult to lose money with them?

5. Why are hedge funds considered low risk?

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

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

8. Why was Meriwether made a partner at Salomon?

9. How would a loan from a major bank help the partners at Long-Term make money?

10. Why did Black and Scholes believe that price changes were random?

(see the answer keys)

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