Test Your Knowledge of "The Big Short" by Michael Lewis
kylie genner
Created 6/8/2024
Think you know everything about "The Big Short"? Test your knowledge with this quiz and see how many correct answers you can get out of 15.
1. Who was at the top of Whitney's list of people she advised who predicted the financial catastrophe?
Michael Lewis
Steve Eisman
John Paulson
Howie Rubin
2. What was Michael Lewis's book mainly about?
The stock market
The bond market
The housing market
The insurance market
3. How much was the CEO of Salomon Brothers, John Gutfreund, paid in 1986?
$1 million
$3.1 million
$5 million
$10 million
4. What notorious event was Howie Rubin known for?
Losing $9 billion
Losing $250 million
Predicting the financial crash
Creating credit default swaps
5. Which company's CEO, Herb Sandler, avoided free checking and why?
Salomon Brothers, because it was too costly
Merrill Lynch, because it's risky
Golden West Financial Corporation, because it was a tax on poor people
Morgan Stanley, because it drew regulatory scrutiny
6. In what way were companies in the subprime mortgage industry allowed to falsely boost their earnings?
By not disclosing losses
By selling off risky loans
By booking the expected future value of loans as profit
By buying back bonds at a lower price
7. What realization did Eisman come to about the financial system after hearing Herb Sandler speak?
It was designed to benefit the wealthy
It was fair and balanced
It was overly regulated
It prioritized helping the poor
8. What was one of the outcomes Michael Lewis predicted in his book regarding the financial system?
A stable economy
A major financial disaster
Increased transparency in trading
Regulatory improvements
9. What misleading impression did subprime mortgage companies give about their loans?
They were high-risk
They had a high delinquency rate
They were backed by solid collateral
They were often refinanced
10. What obstacle did investors face when trying to sell subprime mortgage bonds short?
High regulation
Lack of borrowing options
Direct market intervention
Expensive fees
11. What realization did the character have about making the poor feel wealthy?
Provide free financial education
Increase wages
Give them cheap loans
Reduce taxes
12. What did the initial creators of mortgage bonds never anticipate?
The bonds' potential to be resold
The involvement of small investors
The massive financial disaster they'd cause
Government bailouts
13. What was Eisman's initial impression of the bond market?
Complex yet stable
Profitable but risky
Unfamiliar and complex
Regulated and transparent
14. What made predicting the collapse of the subprime mortgage market difficult?
Lack of data on home prices
Inability to sell mortgage bonds short
Insufficient demand for bonds
Low interest rates
15. Which financial instrument did the character use to bet against the housing market?
Options
Credit default swaps
Futures contracts
Government bonds
