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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. How much debt does the savings and loan companies seem to want to sell in 1981?
(a) One billion dollars.
(b) Fifty billion dollars.
(c) Zero.
(d) One trillion dollars.

2. What spins out of control at Salomon Brothers in 1987?
(a) Manager's demans.
(b) New hirings.
(c) Costs.
(d) Trader's risks.

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

4. What is another name for a call option?
(a) A warrant.
(b) A shared equity.
(c) A glue bond.
(d) A stay/

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

Short Answer Questions

1. On Wall Street, there is no theoretical basis for pricing a homeowner's option to _____ his loan.

2. According to the author, investors don't fear losing money as much as they fear _____?

3. What type of communication do the author and Dash launch into at the beginning of the work day?

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

5. Ronald O. Perelman is a hostile trader who took over which cosmetics company?

Short Essay Questions

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

2. What characterizes Stu Willicker's leadership style?

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

4. Why do costs at Salomon Brothers seem to suddenly matter in 1985?

5. Why do thrifts come back for more, even though they don't understand what is happening to their loans in the mortgage bond market?

6. What is a tombstone and how does it apply to the German interest warrant created by the author and Alexander?

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

8. Despite the upheaval in the mortgage market, what is the initial objection that remains valid as the mortgage market evolves?

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

10. When is the best time to sell short?

(see the answer keys)

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