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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. In Michael Burry's first credit default swap, what was the rate of each bond purchased?

2. What had Steve Eisman studied in college?

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

4. What refers to loans made to customers with less than perfect credit?

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

Short Essay Questions

1. How did Cornwall Capital Management secure an ISDA? What did this mean for the company?

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

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

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

5. With whom did Charley Ledley work in New York? What individual did he meet from Berkeley, California in Chapter 5?

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

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

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

9. How did Greg Lippmann go about finding investors in Chapter 3?

10. What important individuals and concepts are introduced in Chapter 1?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Discuss Eisman and Daniel's 1997 report and its conclusions about subprime mortgage lending. How did the market change after the report's publication?

Essay Topic 2

Discuss Cornwall Capital Management in comparison with Scion and FrontPoint. How did each of these companies compare in terms of assets and investors?

Essay Topic 3

Describe Michael Burry's deals with Bank of America and Goldman Sachs in Chapter 2. How many CDSs did Burry purchase?

(see the answer keys)

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