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

2. Michael Milken works for which company?
(a) Drexel Burnham.
(b) Goldman Sachs.
(c) First Boston.
(d) Salomon Brothers.

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

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

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

Short Answer Questions

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

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

3. According to the author, what is a symbol of Britain's long economic decline?

4. According to the author, the whole idea of globalization at Salomon Brothers is _____.

5. The author considers Bill Voute a _____.

Short Essay Questions

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

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

3. As the author gains more experience working in London, what does he think interests European traders that differs from American traders?

4. Do bosses at Salomon Brothers think badly of employees who are not at their telephones all the time? Why or why not?

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

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

7. What are some of the bad habits mortgage traders have developed regarding the use of the Salomon Brothers expense account?

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

9. What happens to the average age and the average age at Salomon Brothers in London in 1987?

10. What is the particular need of thrifts in terms of investing in the mortgage bond market?

(see the answer keys)

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