When Genius Failed Assignment

Include information on the following:Describe in detail what LTCM’s initial investment strategy was and how they expected to profit from it. Be specific.Describe financial leverage and give a concrete example of how leverage was used to magnify profits at LTCM. You do not need to use derivative examples, but may make up your own numbers using simple example(s). Be specific. Show calculation of return rates, etc. Explain why LTCM was so heavily leveraged.Was the initial investment strategy followed toward the end? If not, why did LTCM change?Why did LTCM fail? The trades that lost money were only the immediate cause. There were a number of possible structural reasons. List as many as you can think of, describe each one in detail and explain how that factor could have contributed to LTCM’s downfall in layman’s terms.Compare and contrast the risk profile of LTCM and the recent mortgage securities crisis. How are they similar and/or different?Why did the Federal Reserve encourage the bailout of LTCM? Does his activity by the Federal Reserve fall under their six monetary policy basic goals? If so, which one(s)?In general, do you think the government should “bail out” private industry? (LTCM was a private fund). Include in your discussion the concept of “moral hazard”. Discuss whether or not LTCM, specifically, should have been bailed out.Should the LTCM partners have been sanctioned from any governmental body (lose their professional licenses, prohibitions on working in the investment industry, etc.)? Why or why not.Discuss, in light of LTCM, whether you think more regulation is needed for hedge funds. What are the points for and against increased regulation and then discuss your opinion.What changes did Meriwether propose for his new fund JWM Partners? What ultimately happened to JWM partners?