Goldman Sachs INTERMEDIATE 4

Penguin Readers Answer Key l e v e l

The use of computers to store and Chapter 2 Answers to Book activities transfer financial information 1 Marcus Goldman arrived in the US from The growth of ‘insider trading’ 1 Open answers Germany. (h) c It brought them a foreign exchange 2 Open answers 2 Marcus Goldman and his family moved to department and made 30% of Goldman 3 Open answers New York City and started his own business Sachs’profits. 4 a John Weinberg was against the plan, as a broker. (g) d He believed that Maxwell was honest. although he stood to earn a fortune, 3 The daughter of Marcus Goldman married He bought a lot of shares for Maxwell because he believed that the firm would Sam Sachs. (m) and then sold them, on Maxwell’s advice suffer under the control of outside 4 Marcus Goldman invited Sam Sachs to join to people who could not pay for them. investors and lose its ability to attract the the broker business. (j) 13 Open answers best graduates. 5 The firm of Goldman Sachs joined the New 14 Open answers b Rubin felt that the company needed more York Stock Exchange. (n) 15 Open answers capital to compete with its rivals and to 6 Sam Sachs started a foreign department of 16 a It gave the traders at Goldman Sachs an spread the risks of the business. Goldman Sachs in London. (l) opportunity to sell pounds and make a c Friedman shared Rubin’s views. 7 Marcus Goldman died and his son, Henry, lot of money. d The new partners were opposed to the took over control of the firm with Sam b They made $50 million for the company. move as they would make much less Sachs. (I) c The Bank of England raised interest money than the existing partners 8 Goldman Sachs joined with Lehman rates which cost the firm tens of millions e Jimmy Weinberg was completely against Brothers to start the first mail order retail of dollars. the move because it broke with tradition business. (b) 17–24 Open answers and jeopardised relations with future 9 Henry Goldman left the firm and returned to employees. Germany.(f) 5 Open answers 10 Waddill Catchings joined the firm and built 6 Open answers Answers to Factsheet activities up a huge investment trust business. (p) 7 a Goldman and Lehmman were originally 11 The New York Stock Market crashed and joined together in 1906 and worked ■ Communicative activities shares in Catching’s investment trust fell together underwriting businesses until Open answers from $326 to $1.75. (o) 1936, when trust was lost and the 12 Catchings was asked to leave but the firm’s relationship was ended. ■ Student’s activities name was so badly damaged that it did not b During the First World War, Sam Sachs Activities before reading the book lead an underwriting for five years. (a) supported France and Britain but Henry 13 Sam Sachs died and Sidney Weinberg took Goldman supported Germany. Goldman 1 Open answers over with Walter Sachs as managing returned to Germany but went back to 2 Possible points partner. (k) the USAwhen Hitler came to power. No ... partnership 14 Gus Levy joined the firm and started an other Goldmans worked for the firm after ... relationship with clients arbitrage department. (e) him. ... the quiet (not flamboyant) nature of the 15 Goldman Sachs worked with Henry Ford II c Catchings was the biggest partner in people who work for the company on the largest ever public offering. (c) Goldman Sachs and started the Goldman 3 Possible points 16 Gus Levy became the senior partner with a Sachs Trading Corporation, an She was a trader in the company so she six-member management committee. (d) investment trust. He bought more and understands the company and the financial Chapters 3–4 more shares without the agreement of world. the partners, and in the Stock Market 1 (a) banking Activities while reading the book Crash of 1929 suffered disastrous losses. (b) space He was made to leave the company in Chapter 1 (c) invested 1930 (a) 63 (100 minus 37) (d) excesses d Sidney Weinberg led the company for (b)65 (e) losses nearly forty years from 1930 to 1969. (c) No – it says they invited an African- (f) leveraged Paul Sachs helped him when he first American and a woman ... (g) wasted joined the company and they were (d) 1869 (117 years before 1986) (h) shaped always good friends. (e) Yes - the management committee had spent (i) expansion e Henry Ford asked Sidney Weinberg for 5 days trying to get their support. (j) rewards help in developing his business. (f) Probably Saturday – it says partnership (k) responsibility Weinberg did this and became the most meetings were held on weekends. (In fact, (l) arbitrage prominent businessman in America. they started on Friday evenings!) (m) mergers 8 Open answers (g) A day and half – it was in the next 36 (n) defending 9 Open answers hours... (o) trading 10 Open answers (h) Yes – it says it had just finished a very (p) disagreement 11 Open answers profitable year. (q) fired 12 a The two men decided to run the firm (i) 1976 – he had led it for ten years in 1986. (r) insider together. They decided to stop having an (j) No, but others felt he was. (s) saved expensive car to take partners to the (k) Yes, problems with long-term planning, 2 Possible answers station. They decided that the partners problems perhaps in attracting graduates, (a) the date that Friedman and Rubin were should not stop work at 4.30, which they damage to client care and teamwork. named senior partners. thought was still the middle of the (l) No – no vote was taken. (b) the number of Goldman Sachs working day. They made management (m)No, it was amongst the top investment employees in 1990. meetings longer with more information banks. (c) the amount of money that Goldman sharing. They made Goldman Sachs an (n) $800 million - from $200 million to $1 billion. Sachs invested in Ralph Lauren. international business. (o) No - there was no expensive building, no (d) the amount that Goldman Sachs b Possible answers public show of riches from the partners. On received from the initial public offering of The growth of mergers between the negative side, it was predictable and Ralph Lauren. companies lacking in imagination. (e) the amount of money that both Rubin The deregulation of financial markets (p) 50% - from $1 billion to $1Wbillion and Friedman earned each year in 1992/the amount of money Goldman Sachs lent Maxwell on March 27, 1991.

(f ) the year that Robert Maxwell was born in. were saying that Galdman Sachs could (g) the day that Robert Maxwell died. sell itself for 3.5 to 4 times the book (h) the amount of money that Maxwell owed value. his bankers when he died. (m) At the start of the 1990s GSAM hoped (i) the number of companies that Maxwell to have $100 billion under management. was at the center of in 1990. (n) At the end of 1997, Corzine and (j) the amount of money that Maxwell spent Paulson believed that the opportunities buying shares in his own company were endless. (k) the cost of shares that Goldman Sachs (o) From the beginning of 1993 to the bought in MCC. middle of 1998, the firm was #1 in the (l) the month in which Goldman Sachs world for mergers and initial public pressed Maxwell for repayment of loans. offerings. (m) the number of Maxwell ex-employees 2 (a) Because the Kuwaiti government did not who lost everything as a result of want to upset the stock market or BP Maxwell’s actions management. (b) Because they had invented the block Chapter 5 trade. Possible answers (c) Because they had discussed this day 1 Goldman Sachs handled the sale for $560 every afternoon for months. million to Thorn EMI. (d) Because they would be holding 170 2 Goldman Sachs made a lot of money from million shares which could go down in the attempts of the British Government to value before they could sell. keep the UK in the ERM. (e) Because it would give a chance for 3 Rubin left Goldman Sachs to take up a job buyers to sell on the New York Stock in Clinton’s government. Exchange. 4 The Guardian newspaper pointed out that (f) Because they wanted to give European Goldman Sachs earned more in one year clients a chance to take part. than Tanzania and distributed it amongst (g) Probably because they had been only 161 people. successful in the BP block trade. 5 His enormous profits and losses on trading (h) Because there were lower profits from led to changes in the controls on trader block trades. activities. (i) To make plans for the future of the firm. 6 The Bank of English increase the cost of (j) Because they did not want to become a borrowing in 1994 – and Goldman Sachs ‘supermarket of financial services’but to lost millions of dollars. remain as an investment bank. 7 Goldman Sachs handled the privatisation of (k) Because they thought it would change Deutsche Telekom – its biggest single the culture of the company - it would business since the Ford Motor Company take away the opportunity for employees deal forty years earlier. to become partners. 8 He became the senior partner of Goldman (l) To learn more of the facts that they need Sachs on 12 September 1994. to make a decision Chapters 6–7 (m)Because he thought it was the best way to serve clients and to strengthen the 1 The amendments or additions are shown in firm. italics. (n) Because the value of the firm had fallen (a) When some partners could not decide greatly and the world-wide economic whether to stay or leave the firm, they situation was very bad. were told to’get into the boat or get out’. (b) In 1994, just over 10% of the firm was Activities after reading the book asked to leave. Open answers (c) The firm improved the management committee by reducing the number of members by half. (d) In 1995, five of the old partners asked to return to the firm. (e) The firms profits for 1995 were $1.37 billion. (f) Corzine and Paulson suggested a public offering and most of the committee members agreed. (g) The idea was presented to the whole partnership at a meeting at a meeting center north of New York City – 85 Broad Street was too small. (h) At the time of the meeting, 53 per cent of the partners had worked less than three years with the firm. (i) Partners and hundreds of non partner employees were given a new title of Managing Director. (k) After 1996, partners risked only the assets they had invested with the firm. (l) By early 1998, financial newspapers