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

Multiple Choice Questions

1. Which company becomes Salomon Brothers' biggest competitor soon after mortgage trading becomes a viable investment entity?
(a) First Boston.
(b) Merril Lynch.
(c) Goldman Sachs.
(d) Drexel Burnham.

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

3. According to the author, investors don't fear losing money as much as they fear _____?
(a) Dogma.
(b) Math.
(c) Solitude.
(d) Ridicule.

4. The market settles on a fair value of CMOs by comparing them with corporate and _____ bonds.
(a) Municipal.
(b) Treasury.
(c) School.
(d) Junk.

5. Who are the biggest shoppers for mortgage products?
(a) Foreign investors.
(b) Homeowners.
(c) Thrifts.
(d) Government agencies.

6. Mark Smith enters the mortgage department in 1985 and is considered a _____ by the author.
(a) Dark horse.
(b) Genius.
(c) Spy.
(d) Mediator.

7. According to the author, the whole idea of globalization at Salomon Brothers is _____.
(a) A given.
(b) Somewhat realisitic.
(c) A relief.
(d) A canard.

8. According to the author, what is the rarest and most valuable asset a Wall Street firm can possess?
(a) A monopoly.
(b) A high cash flow.
(c) A Howie Ruben.
(d) A good manager.

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

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

11. What type of ideas does Herman want for his investment?
(a) Ancient.
(b) Current.
(c) Smart.
(d) Gut.

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

13. The pet name that bond traders give to the corporate finance department is _____.
(a) The Who.
(b) Twenty Mule Team.
(c) Team Xerox.
(d) The Cleveland Browns.

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

15. Salomon Brothers is a ______ from 1910 to 1981.
(a) Corporation.
(b) Partnership.
(c) Sole proprietorship.
(d) Monopoly.

Short Answer Questions

1. Investment banking in America is a long-standing _____.

2. CMO's are divided into slices, or _____.

3. The Salomon Brothers expense account is used as a _____ compensation system.

4. Howie Rubin is picked up by which company when he is fired from Merrill Lynch?

5. What is the name of the standard of one hundred cents on the dollar?

(see the answer keys)

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