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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What is it called when occupants of an upmarket property buy out the owner-developer who repays his government loan?
(a) A reversal.
(b) A no-fault loan.
(c) A counter weight.
(d) A conversion.

2. Ranieri owns exactly four suits, all of them _____.
(a) Wool.
(b) Rayon.
(c) Silk.
(d) Polyester.

3. The Salomon Brothers expense account is used as a _____ compensation system.
(a) Soft-dollar.
(b) Second rate.
(c) First-rate.
(d) Hard-dollar.

4. A guiding principle of Salomon Brothers that Tom Strauss iterates to the author is that customers have _____.
(a) Small brains.
(b) Big wallets.
(c) Long options.
(d) Short memories.

5. What do rating services rely exclusively on to assess a company's creditworthy status?
(a) The past.
(b) Its earnings.
(c) The future.
(d) The present.

6. Drexel Burnham runs an ad in the Wall Street journal showing two men _____.
(a) Eating fast food.
(b) At a boxing match.
(c) On a tandem bicycle.
(d) Running up a hill.

7. What is the expression that describes a customer who has gone under as a result of a trade?
(a) Wiped out.
(b) Blown up.
(c) Excised.
(d) Disintegrated.

8. Mike Milkin of Drexel Burnham is the guru of _____.
(a) Mortgage bonds.
(b) Junk bonds.
(c) Government bonds.
(d) Municipal bonds.

9. What is the chief occupational hazard of the trading floor?
(a) Loss of concentration.
(b) Carpal tunnel.
(c) Hearing loss.
(d) Burn-out.

10. Ranieri is characterized by the author as perhaps the first _____ in the history of Wall Street.
(a) Democrat.
(b) Communist.
(c) Populist.
(d) Confedrate.

11. What fund goes from zero investment in the mortgage market in 1983 to thirty billion dollars worth of CMOs in 1986?
(a) The Freddie Mac fund.
(b) The Fannie Mae fund.
(c) The American pension fund.
(d) The U.S. treasury bill fund.

12. Ranieri tells Gutfreund that he is selling the [mortgage bond] technology for a _____.
(a) Hill of magic beans.
(b) Stable of horses.
(c) Good price.
(d) Pound of flesh.

13. The quote in "The Art of War" that captures the essence of the chapter is "God gave you eyes, _____."
(a) Plot their demise.
(b) Plagiarize.
(c) Watch your back.
(d) Look ahead.

14. Ranieri is the guru of the _____ industry.
(a) Dream.
(b) Junk bond.
(c) Restaurant.
(d) Thrift.

15. What type of help does Congress give thrifts in 1981?
(a) Ten-year interest-free loans.
(b) The government bought thrifts.
(c) Debt consolidation.
(d) Tax breaks.

Short Answer Questions

1. What type of ideas does Herman want for his investment?

2. According to the author, the whole idea of globalization at Salomon Brothers is _____.

3. What is more relevant than a bad joke because it moves markets?

4. Lewis characterizes the sprinting rabbit statue at the new London office as a _____.

5. The pet name that bond traders give to the corporate finance department is _____.

(see the answer keys)

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