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

2. In Chapter 3, soon all the CDSs AIG FP sold consisted primarily of what?
(a) Gold and silver.
(b) Auto loans.
(c) Pork futures.
(d) Subprime mortgages.

3. Where did Michael Lewis work as a bond salesman after earning his Masters degree in Economics?
(a) London.
(b) Berkeley.
(c) Stockholm.
(d) Paris.

4. 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?
(a) 2001.
(b) 2005.
(c) 2007.
(d) 1999.

5. How old was Charlie Ledley when he moved to California to create a hedge fund?
(a) 27.
(b) 30.
(c) 18.
(d) 21.

Short Answer Questions

1. Steve Eisman's team discovered in Chapter 4 that the mortgage lenders were using what to alter the rating of their bonds?

2. Who offered Michael Burry bonds at $100 million a deal in Chapter 2?

3. An investment corporation needs a contract through what in order to trade in securities that are traditionally only bought and sold between large investing bodies?

4. Who began taking the bottom tranches of their mortgage bonds and packaging them together to create CDOs in Chapter 3?

5. What does CDS stand for?

Short Essay Questions

1. What report did Steve Eisman publish in 1997? Who assisted him?

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

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

4. What obstacles did Cornwall Capital Management face as a beginning business?

5. How are AIG FP's actions described in Chapter 3?

6. How are tranches differentiated in mortgage bonds?

7. What did Vincent Daniel discover about the ratings companies in Chapter 4?

8. What "expert" did Greg Lippmann bring to speak with Steve Eisman in Chapter 3? Why?

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

10. What did Goldman Sachs begin doing with their bottom tranches in Chapter 3?

(see the answer keys)

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