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

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

3. With how much capital did Charlie Ledley and his partner begin a hedge fund in Chapter 5?

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

5. Steve Eisman discovered that what company was fraudulently selling fifteen year mortgages under the guise of thirty year mortgages?

Short Essay Questions

1. What was AIG FP's role in the stock market crash, as described in Chapter 3?

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

3. How are tranches differentiated in mortgage bonds?

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

5. How did Greg Lippmann believe he could make a fortune in the subprime mortgage industry in Chapter 3?

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

7. How did Charlie Ledley enter the bond market in Chapter 5?

8. How did Steve Eisman come to work for Oppenheimer Co.? How is he described?

9. How do stocks and bonds differ in trading?

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Discuss ISDAs, Ace Greenburg, Bear Sterns and Ben Hockett. How did Hockett contribute to the evolution of Cornwall Capital Management?

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

Analyze and discuss the market strategies of Cornwall Capital Management after the Las Vegas conference. What concerns did Ledley and Mai bring to the SEC and what response did they get?

(see the answer keys)

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