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100
In the case of mortgage tranches, what happens to the owner of the first tranche? A. The owner is hit with the last wave of payments, which have the lowest interest rate B. The owner is hit with the first wave of prepayments, which have the lowest interest rate C. The owner is hit with the first wave of prepayments, which have the highest interest rate D. The owner is hit with the last wave of payments, which have the highest interest
C. The first tranche, or the first wave of prepayments (The Big Short, page 7)
100
True or False: Greece was rated the worst country with rated debt.
True (Boomerang, page 133)
100
What do you call large pools of home loan payments made by homeowners that can be bought and sold?
What are Tranches? (The Big Short, page 7)
100
Which is more heavily regulated: the U.S. bond market or the U.S. stock market?
The U.S. stock market (The Big Short, p61-62) (This is because the stock market facilitates the interactions of millions of stock investors who rely on the transparency of public stock prices, while the bond market more complex and mainly dealt with by big institutional investors who have inside information.)
100
Who was the chairman of the Federal Reserve in the years leading up to the subprime mortgage and credit crashes? A. Eric Holder B. Alan Greenspan C. Joel Greenblatt D. Greg Lippman
B. Alan Greenspan (The Big Short, page 229)
200
Which of these groups of people makes up the majority of California’s public spending in 2010? A. Guards and prison system employees B. Police officers C. Public school system employees D. None of the above
A. Guards and prison system employees (Boomerang, page 188)
200
True or False: The majority of the banks in Germany are state-backed or small-giving ops, unlike the American banks.
True (Boomerang, page 151)
200
What do you call an adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years?
What is a Teaser-Rate Loan? (The Big Short, page 251)
200
Which US-based bank loaned $ 1 billion to Greece which allows the country to “hide its indebtness”? A. JP Morgan Chase B. Bear Sterns C. Goldman Sachs D. None of the above
C. Goldman Sachs (Boomerang, page 62)
200
In 2010, a private Wall Street analyst predicted that Citigroup would be forced to cut its dividend which caused a huge controversy and public panic. This person was… A. Morgan Kelly B. Meredith Whitney C. Steve Eisner D. Michael Burry
B. Meredith Whitney (Boomerang, page 173)
300
Which bank did the government allow to fail? A. Goldman Sachs B. JP Morgan C. Lehman Brothers D. Citibank
C. Lehman Brothers (The Big Short, page 259)
300
What was the significant move that Greece made when it joined the European Monetary Union in 2001? A. Greece borrowed a significant amount of money from the EMU B. Greece swapped the drachma for the euro (pg 62) C. Most of Greece’s debt was paid by Germany D. Greece was given the chance to buy US subprime bonds
B. Greece swapped the drachma for the euro (Boomerang, page 62)
300
What do you call a second mortgage that leaves a homeowner with no equity in their home and thus no financial incentive to surrender it to the bank and walk away from it?
What are "Silent Seconds"? (The Big Short, p 100)
300
Why were big banks like Goldman Sachs, Deutsche Bank and Morgan Stanley suddenly interested in buying subprime mortgage bond insurance from Mike Burry? A. They wanted to buy and sell more bond insurance B. They wanted to diversify their portfolios with the purchase of subprime mortgage bond insurance C. They wanted to gain Burry’s investors D. The mortgage loans were going bad at an alarming rate
D. The mortgage loans were going bad at an alarming rate (The Big Short, page 59)
300
Name the man that worked for Deutsche Bank A. Mike Burry B. Greg Lippman C. Mark Baum D. Michael Lewis
B. Greg Lippman (The Big Short, page 79)
400
The IMF put losses on U.S.-originated subprime-related asset at what dollar amount? A. 100 billion B. 1 trillion C. 3 Trillion D. 10 billion
B. 1 trillion (The Big Short, page 225)
400
Which country had the least credibility to get into investment banking practices? A. Ireland B. USA C. Iceland D. Greece
C. Iceland (Boomerang, p 35)
400
What was invented to redistribute the risk of corporate and government bond defaults, as well as to disguise the risk of subprime mortgage loans to make them look like a diversified collection of assets?
What is a Collateralized Debt Obligation (CDO) (The Big Short, page 72, 129)
400
True or False: When Bear Sterns hedge funds collapsed, investors were informed that their $1.6 billion in triple-A-rated subprime backed CDOs were worthless.
True (Boomerang, page 176)
400
This person was the Icelandic Prime Minister and later appointed as the Central Bank’s governor (who privatized the banks in 2002). A. David Oddson B. Sigmundur Gunnlaugsson C. Sigurdur Einarsson D. None of the above
A. David Oddson (Boomerang, page 13)
500
According to Meredith Whitney, a Wall Street analyst, which state was deemed the “scariest state in terms of finance”? A. Arizona B. New York C. North Carolina D. California
D. California (Boomerang, page 177)
500
How was Greece able to enter the European Monetary Union? A. Years of great credit history B. Statistical manipulation (45) C. Political instability D. They were forced to join
B. Statistical manipulation (Boomerang, page 45)
500
Program that bought back the CDOs from the banks.
What is a Troubled Asset Relief Plan (TARP)? (The Big Short, page 260)
500
Companies in the subprime mortgage industry were failing to disclose what in their financial statements? A. The delinquency rate of their home loans being made B. Profits from expected future values of loans C. Their growing earnings D. Involuntary prepayments
A. The delinquency rate of their home loans being made (The Big Short, page 13)
500
Why was Mike Burry facing a run on his fund by investors? A. His investors were losing faith in his strategy B. Goldman Sachs and Morgan Stanley were deciding what Burry’s CDSs were worth to suit their needs C. Burry’s credit default contained a provision that allowed the big Wall Street firms to cancel their bets with Scion if Scion’s assets fell below a certain level D. All of the above
D. All of the above (The Big Short, page 185-89)
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