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

Multiple Choice Questions

1. On Wall Street, there is no theoretical basis for pricing a homeowner's option to _____ his loan.
(a) Inflate.
(b) Repay.
(c) Default on.
(d) Refinance.

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

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

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

5. Which country's interest rate is part of the deal for which "the opportunist" steals credit?
(a) Italy.
(b) Thailand.
(c) England.
(d) Germany.

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

7. According to the author, what is a symbol of Britain's long economic decline?
(a) Sagging thin black socks.
(b) Going beltless.
(c) The low price of liquor.
(d) Meatless Mondays.

8. What is another name for an individual home loan?
(a) A windfall advantage loan.
(b) A window loan.
(c) A hammer loan.
(d) A whole loan.

9. In New York, when a trader is starting out, the excitement of being part of the action comes at the price _____.
(a) One's soul.
(b) A few million dollars.
(c) Freedom.
(d) One's sanity.

10. What is the primary aspect of business that always matters most at Salomon Brothers?
(a) Profit.
(b) Market advantage.
(c) Revenue.
(d) Loyalty.

11. Where does Dash see a painting that he wants?
(a) Sotheby's
(b) Christie's.
(c) Bonham's.
(d) The Metropolitan Museum.

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

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

14. 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 conversion.
(c) A no-fault loan.
(d) A counter weight.

15. What is the biggest most expensive real estate project in Manhattan on which Salomon Brothers bails out at a $107 million loss?
(a) The Long Island Bridge.
(b) Columbus Circle.
(c) The Manhattan Project.
(d) Crystal Island.

Short Answer Questions

1. Ranieri tells Gutfreund that he is selling the [mortgage bond] technology for a _____.

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?

3. What do rating services rely exclusively on to assess a company's creditworthy status?

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

5. A guiding principle of Salomon Brothers that Tom Strauss iterates to the author is that customers have _____.

(see the answer keys)

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