About the Author
School, originally named College of New Jersey, attended by Michael Lewis as an undergraduate
What is Princeton University?
Floor that housed Salomon Brothers principal trading floor in their New York office
What is the 41st floor?
Bond feature that moves inversely, in lockstep, to interest rates
What are prices?
Trade that decreases or transfers risk to protect a portfolio from market uncertainty
What is a hedge?
Measure of how much bond prices will likely change if interest rates move
What is duration?
School Michael Lewis attended to pursue a masters in economics
What is the London School of Economics?
Salomon Brothers trader known as the "King of the Game" and thought by many to be the best bond trader on Wall Street
Who is John Meriwether?
The three major bond issuance types
What are government, corporate, and mortgages?
Process of creating mortgage-backed securities from a pool of mortgages
What is mortgage securitization?
Process of reducing the existing unpaid principal balance of a mortgage by making extra principal payments
What is mortgage curtailment?
Michael Lewis' major as an undergraduate
What is art history?
Head of mortgage trading at Salomon Brothers
Who is Lewie Ranieri?
Trading lingo meaning "buy" and "sell"
What are "bid" and "ask"?
Derivative instrument in which two parties agree to make exchange interest payments for a set period into the future
What are interest rate swaps?
Fee paid to the mortgage bank for advance monthly principal and interest payments from the homeowner to the investor
What is servicing fee?
Wall Street firm that rejected Lewis' application for an investment banking analyst position when he was a senior in college (at least it wasn't September, 2008)
What is Lehman Brothers?
What is equities in Dallas?
**************** DAILY DOUBLE! **************
According to Michael Lewis (or David and Andreas), this investment strategy consisting of using debt rather than equity in the purchase of assets, was the most distinctive feature of the 80s financial era (or one of the reasons Lehman and LTCM went down)
What is leverage?
Sale of security to an investor with the agreement to buy it back at a specified price at a future date
What is a repurchase agreement (repo)?
Risks MBS investors assume and receive compensation for
What are duration, convexity, and mortgage basis risks?
Place where Michael Lewis was first asked to join Salomon Brothers by the wife of a senior managing director
What is St. James's Palace?
According to Lewis, this "Breakfast of Champions" author nicely summarized the good fortune of bond traders by comparing them to toll takers (although he was originally referring to lawyers)
Who is Kurt Vonnegut?
Critical assumption to calculate the forward rate that tells us an investor is indifferent between investing over a 2-year period and investing for 1-year and rolling over the investment for a second 1-year period
What is the Law of no Arbitrage?
Yield curve movement that typically occurs as demand soars for long-term securities
What is bull flattening?
Main reason why mortgages are acknowledged to be the most mathematically complex securities in the market place
What is loan prepayment option?