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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. What are the bonds of one-time blue-chip companies called?

2. What is the primary aspect of business that always matters most at Salomon Brothers?

3. This person is charged with coordinating all deals on the trading floor.

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

5. To create a CMO, hundreds of millions of dollars in ordinary mortgage bonds are placed in a _____.

Short Essay Questions

1. What is selling short?

2. How does Bear Stearns take the $250 million loss that Howie Rubin incurs at Merrill Lynch?

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

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

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

6. When is the best time to sell short?

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

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

9. What characterizes Stu Willicker's leadership style?

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

According to Andy Stone, what effect does Wall Street's tendency to make its best producers into managers have on firms? What happens to managers once they achieve the position? Is it a good system overall?

Essay Topic 2

Describe the change that took place in the bond market in the 1980s. What event took place in 1979 to affect this change? Who was involved? How did the change affect people's perception of bonds? How did Salomon Brothers make money at bonds?

Essay Topic 3

What is the quickest way to be fired from Salomon Brothers? Why? How does Gutfreund act contrary to this unwritten rule? How does he get away with it?

(see the answer keys)

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