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

Multiple Choice Questions

1. Investment banking in America is a long-standing _____.
(a) Dictatorship.
(b) Partnership.
(c) Oligopoly.
(d) Monarchy.

2. What is the name given to the junk bond seminar that Michael Milken speaks at every year in Beverly Hills?
(a) TheMoney Masquerade.
(b) The Junker's Ball.
(c) The Predator's Ball.
(d) The Golden Parachute.

3. Gutfreund is treated like a _____ in London.
(a) Crazy uncle.
(b) Brother.
(c) King.
(d) Gauche American tourist.

4. What author does the author recommend to his Prussian colleagues?
(a) John Suskind.
(b) Dale Carnegie.
(c) Sun-Tzu.
(d) Anthony Robbins.

5. Howie Rubin is picked up by which company when he is fired from Merrill Lynch?
(a) Shearson Lehman.
(b) Bear Stearns.
(c) Salomon Brothers.
(d) Drexel Burnham.

6. CMO's are divided into slices, or _____.
(a) Tranches.
(b) Compartments.
(c) Branches.
(d) Departments.

7. According to one mortgage trader, it is an accepted fact that mortgage traders have _____.
(a) Iron balls.
(b) Fishy eyes.
(c) Death wishes.
(d) No consciences.

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

9. What is Latin for "buyer beware"?
(a) Caveat emptor.
(b) Quid pro quo.
(c) Semper fedelis.
(d) Meum dictum pactum.

10. A sticking point in making mortgage securities work is the homeowner's right to _____ his mortgage.
(a) Prepay.
(b) Default on.
(c) Sell.
(d) Appropriate.

11. What is the name of the Salomon Brothers when it becomes a corporation?
(a) Salomon Shearson Incorporated.
(b) Salomon Brothers Incorporated.
(c) Phibro Salomon Incorporated.
(d) First Salomon Incorporated.

12. To create a CMO, hundreds of millions of dollars in ordinary mortgage bonds are placed in a _____.
(a) Pension fund.
(b) Retirement account.
(c) Certificate of Deposit.
(d) Trust.

13. Ranieri says Bill Voute always has a _____.
(a) Need to pick at people.
(b) Biting wit.
(c) Political agenda.
(d) Sportscar image.

14. What is jargon for a gamble that is sure to succeed?
(a) A field goal.
(b) A lay-up.
(c) A home run.
(d) A touchdown.

15. The author observes that Strauss doesn't seem to like Ranieri's lack of _____.
(a) Aplomb.
(b) Couth.
(c) Drive.
(d) Conviction.

Short Answer Questions

1. What is the chief occupational hazard of the trading floor?

2. Ranieri is the guru of the _____ industry.

3. Tokyo is seemingly the obvious site for Salomon Brothers' global expansion because of Japan's _____.

4. The ____ outlook of traders enables traders to exploit the weakness of their customers with virtual impunity.

5. What is another name for a call option?

(see the answer keys)

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