The Big Short: Inside the Doomsday Machine Test | Mid-Book Test - Easy

Michael Lewis (author)
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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What is often referred to as a form of insurance that protects a lender if a borrower of capital defaults on a loan?
(a) FICO Scores.
(b) Collateral debt obligation.
(c) Tranches.
(d) Credit default swap.

2. For what company did Ben Hockett work when he met Jamie Mai?
(a) Standard & Poor's.
(b) Oppenheimer and Co.
(c) AIG FP.
(d) Deutsche Bank.

3. Steve Eisman got his job with Oppenheimer and Co. through whom?
(a) His neighbor.
(b) His uncle..
(c) His parents.
(d) A friend from college.

4. In Chapter 3, soon all the CDSs AIG FP sold consisted primarily of what?
(a) Pork futures.
(b) Auto loans.
(c) Gold and silver.
(d) Subprime mortgages.

5. How much money did Charlie Ledley and Jamie Mai make from their first major investment in a company with legal trouble in Chapter 5?
(a) Over $500,000.
(b) Over $5 million.
(c) Over $3 million.
(d) Over $1 million.

6. What refers to a cumulative number that suggests a consumer's credit risk?
(a) FICO Score.
(b) Tranches.
(c) Collateral debt obligation.
(d) Credit default swap.

7. In Chapter 5, Charlie Ledley and Jamie Mai continued to make risky investments until they had grown their investment company to how much?
(a) $30 million.
(b) $75 million.
(c) $10 million.
(d) $200 million.

8. Who was Gene Park's boss in Chapter 4?
(a) Joe Cassano.
(b) Amos Robinson.
(c) John Weatherfield.
(d) Theodore Williams.

9. During their research, Ledley and Mai discovered that many CDOs were comprised of triple-B rated mortgages being sold as what?
(a) Triple-C.
(b) Double-C.
(c) Triple-A.
(d) Double-B.

10. In whose garage did Charlie Ledley begin operating a hedge fund in Chapter 5?
(a) Jamie Mai's.
(b) Greg Lippmann's.
(c) Mike Burry's.
(d) Steve Eisman's.

11. By what year had Steve Eisman gathered a group of investors around himself filled with people who believed as he did that no one on Wall Street knew what they were doing, as described in Chapter 1?
(a) 1999.
(b) 2007.
(c) 2005.
(d) 2001.

12. What is a legal document that institutions and businesses use to describe the securities they are offering for participants and buyers?
(a) Contract.
(b) Prospectus.
(c) Syllabus.
(d) Terms of Service.

13. With Ben Hockett's help, Cornwall received what contract?
(a) JRCA.
(b) BYR.
(c) CDO.
(d) ISDA.

14. What refers to loans made to customers with less than perfect credit?
(a) High interest.
(b) Subprime.
(c) Gambles.
(d) CDS's.

15. In a short time, Michael Burry had credit default swaps worth what in subprime mortgage bonds in Chapter 2?
(a) $550 million.
(b) $750 million.
(c) $1 billion.
(d) $200 million.

Short Answer Questions

1. The alterations to bond ratings made by mortgage lenders in Chapter 4 led to such things as lending how much money to a migrant worker who made only $14,000 a year?

2. Meredith Whitney was an analyst of financial firms for what company in 2007?

3. When was Michael Lewis' first book published?

4. What are bonds that are made up of mortgages sold to consumers by banks?

5. What does CDO stand for?

(see the answer keys)

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