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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. How much money did Charlie Ledley and Jamie Mai make from their first major investment in a company with legal trouble in Chapter 5?
(a) Over $3 million.
(b) Over $5 million.
(c) Over $1 million.
(d) Over $500,000.

2. 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?
(a) FICO Scores.
(b) Tranches.
(c) Credit default swap.
(d) Collateral debt obligation.

3. When Cornwall Capital Management moved to Bear Sterns, their account was handled by whom?
(a) Lewis Ranieri.
(b) Michael Lewis.
(c) Ace Greenburg.
(d) Steve Eismann.

4. When was Michael Lewis born?
(a) 1960.
(b) 1963.
(c) 1956.
(d) 1957.

5. Where did Michael Lewis earn his Masters degree in Economics?
(a) The Chicago School of Economics.
(b) The London School of Economics.
(c) The New York School of Economics.
(d) The Paris School of Economics.

6. In a short time, Michael Burry had credit default swaps worth what in subprime mortgage bonds in Chapter 2?
(a) $1 billion.
(b) $550 million.
(c) $200 million.
(d) $750 million.

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

8. With the creation of ______, mortgage companies became inspired to grow quickly and offer a great many loans to customers.
(a) FICO Scores.
(b) Standard & Poor's.
(c) Mortgage bonds.
(d) Moody's.

9. What companies approached Michael Burry and provided him with capital to begin his new company?
(a) Oppenheimer and Co. and Deutsche Bank.
(b) FrontPoint and Oppenheimer and Co.
(c) Gotham Capital and White Mountains.
(d) Deutsche Bank and Standard & Poor's.

10. In whose garage did Charlie Ledley begin operating a hedge fund in Chapter 5?
(a) Mike Burry's.
(b) Steve Eisman's.
(c) Jamie Mai's.
(d) Greg Lippmann's.

11. Who was Gene Park's boss in Chapter 4?
(a) Theodore Williams.
(b) Joe Cassano.
(c) Amos Robinson.
(d) John Weatherfield.

12. With Ben Hockett's help, Cornwall received a contract which allowed them to buy what?
(a) CDSs.
(b) CDOs.
(c) FICOs.
(d) ISDAs.

13. When did Steve Eisman publish a report outlining the bad practices of the subprime mortgage lender in Chapter 1?
(a) 1990.
(b) 1994.
(c) 1997.
(d) 1988.

14. What refers to a cumulative number that suggests a consumer's credit risk?
(a) Credit default swap.
(b) Tranches.
(c) FICO Score.
(d) Collateral debt obligation.

15. In what year did Steve Eisman stop working as an analyst and start his own hedge fund?
(a) 1992.
(b) 1997.
(c) 1988.
(d) 2004.

Short Answer Questions

1. 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?

2. What did Michael Burry study in college?

3. Michael Burry could not bet against mortgage bonds in the same way he could other bonds because he could not short houses, only what?

4. Who thought that if AIG stopped buying the bonds, the subprime mortgage bond market would collapse, making him a fortune in Chapter 3?

5. What company did Charlie Ledley and Jamie Mai investigate because of some legal troubles, deciding that the legal trouble would blow over and their low stock would soon rally in Chapter 5?

(see the answer keys)

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