Weekly Review Quiz As of 2008-01-31

Weekly Review Quiz as of 2008-01-31
Finance

French Bank Rocked by Rogue Trader
by David Gauthie-villars, Carrick Mollenkamp and Alistair MacDonald
01/25/2008

1. France's Société Générale SA said that trader Jerome Kerviel had cost the bank €4.9 billion, equal to $7.2 billion, by

a) writing forged checks against customer accounts
b) providing security clearance to a bank-robbery gang
c) helping a Columbian drug cartel launder euros
* d) making huge unauthorized trades that he hid for months by hacking into the bank’s computers
e) transferring to his personal account one-half of the interest that each of the bank’s customers earned each month

2. Some analysts speculate that the French bank's frantic efforts to unwind the unauthorized trades over 72 hours may have

* a) contributed to the volatility and declines that rattled European markets on Monday, January 21
b) driven the bank into bankruptcy
c) created all of the losses the bank realized from Mr. Kerviel’s trading
d) reduced the bank’s losses from nearly $500 billion
e) allowed the bank to earn an overall profit on Mr. Kerviel’s positions

3. Which of the following statements about 31-year old trader Jerome Kerviel is false.

a) at some point last year, bank executives say, he started using futures on the European stock indexes to place huge bets that European markets would continue to rise
b) he was able to skillfully circumvent controls because he had worked in the
c) he is said to have hacked the banks computer systems to eliminate credit and trade-size controls, so the bank's risk managers couldn't see his giant trades on the direction of indexes
* d) he was a trading legend who let a transaction get out of hand
e) he used the computer log-in and passwords of colleagues both in the trading unit and the technology section

Countrywide Bonds Stir Angst As BofA Avoids Voicing Support
by David Reilly and Peter Eavis
01/28/2008

4. Who is planning to acquire mortgage lender Countrywide Financial Corp.?

* a) Bank of America
b) Sears
c) Wal-Mart
d) Merrill Lynch
e) Microsoft

5. Why are Countrywide’s bondholders worried about the deal?

a) Countrywide’s acquirer has stated that it will not be responsible for paying any off any of the bonds
b) the combined firm is expected to file for bankruptcy
* c) Countrywide’s acquirer has not made it clear that they will fully back Countrywide’s bonds
d) investors fear that the Fed will cut interest rates again
e) all of the above