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This quiz consists of 5 multiple choice and 5 short answer questions through Prologue and Chapter 1.

Multiple Choice Questions

1. What are divisions of mortgage bonds in which the mortgage bonds are divided into pieces?
(a) Collateral debt obligation.
(b) Tranches.
(c) Credit default swap.
(d) FICO Scores.

2. In finance, what occurs when a debtor has not met his or her legal obligations according to the debt contract?
(a) Default.
(b) Repossesion.
(c) Forclosure.
(d) Refinancing.

3. What is the name of the investment group Steve Eisman formed after quitting his job as a bond analyst?
(a) Deutsche Bank.
(b) Cornwall Capital Management.
(c) Scion Capital.
(d) FrontPoint.

4. What was Michael Lewis' first book?
(a) Digital Money.
(b) Liar's Poker.
(c) Trade or Die.
(d) Stock Junkies.

5. In 2007, Meredith Whitney announced that what company had so mismanaged its affairs that it would slash its dividend or crash?
(a) Citigroup.
(b) The Fitch Group.
(c) Salomon Brothers.
(d) Gotham Capital.

Short Answer Questions

1. On what date did the head of the International Monetary Fund warn that the world financial system was teetering on the "brink of systemic meltdown"?

2. By what year had Steve Eisman gathered a group of investors around himself filled with people who believed as he did that no one on Wall Street knew what they were doing, as described in Chapter 1?

3. What is often referred to as a form of insurance that protects a lender if a borrower of capital defaults on a loan?

4. In what year did Steve Eisman stop working as an analyst and start his own hedge fund?

5. What is a collection of one hundred different mortgage bonds, usually the riskiest that are combined to create a new group of bonds that could take the low rated bonds and reclassify them at a higher rate?

(see the answer key)

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