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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. The sale of CDSs grew AIG FP so quickly that it provided what percent of AIG's profits in Chapter 3?
(a) 25.
(b) 20.
(c) 35.
(d) 15.

2. 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?
(a) Capital One Financial.
(b) Deutsche Bank.
(c) Cornwall Capital Management.
(d) Oppenheimer and Co.

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) FrontPoint.
(d) Scion Capital.

4. What is often referred to as a form of insurance that protects a lender if a borrower of capital defaults on a loan?
(a) Collateral debt obligation.
(b) Credit default swap.
(c) Tranches.
(d) FICO Scores.

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

Short Answer Questions

1. Steve Eisman got his job with Oppenheimer and Co. through whom?

2. Who went to a conference of subprime mortgage bond professionals and learned from a woman that her supervisors picked and chose which mortgage bonds would be triple-A rated despite her frequent recommendations that most of them be downgraded?

3. Gene Park discovered that the CDSs being sold by his company contained more what than anyone knew?

4. In Michael Burry's first credit default swap, he bought how many bonds?

5. What does AIG FP stand for?

Short Essay Questions

1. What patterns did Steve Eisman's team discover in mortgage trading in Chapter 4?

2. How are tranches differentiated in mortgage bonds?

3. Who was the only person at AIG FP to investigate the company's CDSs in Chapter 4? What did he discover?

4. What picture does the author paint of Steve Eisman and Wall Street in 2005 in Chapter 1?

5. What intrigued Steve Eisman about CDSs in Chapter 3?

6. How is Mike Burry described in Chapter 3? What did he study before entering the stock market?

7. How did Charlie Ledley's first investment pay out? What was the company's worth?

8. What drew Mike Burry to an interest in CDSs?

9. Discuss Steve Eisman's work with mortgage bonds. How were mortgage bonds divided?

10. What led to mortgage companies extending loans to unreliable clients, as described in Chapter 1?

(see the answer keys)

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