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

Multiple Choice Questions

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

2. The author and Alexander orchestrate the a second security after "the opportunist" steals credit for the first involving the interest rate of which country?
(a) China.
(b) Japan.
(c) Singapore.
(d) Korea.

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

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

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

6. Lewis characterizes the sprinting rabbit statue at the new London office as a _____.
(a) Caveat emptor.
(b) Non sequitur.
(c) Reminder to work hard.
(d) Frivolous trinket.

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

8. What is the word that means trading riskily for profit?
(a) Arbitration.
(b) Swapping.
(c) Selling short.
(d) Arbitrage.

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

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

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

12. Tokyo is seemingly the obvious site for Salomon Brothers' global expansion because of Japan's _____.
(a) Financial regulations..
(b) Work ethic.
(c) Money-making machine.
(d) Trade surplus.

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

14. What are the European genus, English species, of slick financial people called?
(a) Rakes.
(b) Donkeys.
(c) Spivs.
(d) Snakes.

15. What are the bonds of one-time blue-chip companies called?
(a) Second-string bonds.
(b) Fallen angels.
(c) Loss leaders.
(d) Convertible bonds.

Short Answer Questions

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

2. Who writes the book, On War?

3. A sticking point in making mortgage securities work is the homeowner's right to _____ his mortgage.

4. What fund goes from zero investment in the mortgage market in 1983 to thirty billion dollars worth of CMOs in 1986?

5. What type of help does Congress give thrifts in 1981?

(see the answer keys)

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