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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

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

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

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

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

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

Short Answer Questions

1. Michael Milken invents the _____.

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

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

4. What ritual of the London office is fairly renowned in New York?

5. According to the author, even knowledgeable thrift presidents feel they face a choice between rape and _____ when dealing with mortgage traders.

Short Essay Questions

1. From the moment the Federal Reserve lifted interest rates in October 1979, what happens to the thrifts?

2. What is the relationship of IOs and POs to the market?

3. Does Michael Milken consider himself a part of Drexel Burnham?

4. What are the two kinds of friction at Salomon Brothers?

5. Why does one trader think that Mark Smith is not a Trojan Horse like some of the other traders believe?

6. When is the best time to sell short?

7. What is drifting away from Salomon Brothers and toward Drexel Burnham in 1987? Why?

8. How is Howie Rubin thought of at Salomon Brothers? Why?

9. How does Lewie Ranieri feel about Michael Milken? How does this differ from John Gutfreund's opinion of him?

10. What is the "gospel according to Ranieri"?

(see the answer keys)

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