The Big Short Chapter 8

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  • 1/23 Questions

    People with Asperger’s often have an obsessive special interest. For Burry, this special interest was with:

    • Financial statements
    • Investing in gold
    • Restoring old cars
    • Lawn mower catalogues
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About This Quiz

Explore key financial decisions and strategies in 'The Big Short Chapter 8' quiz. Delve into Michael Burry's investment tactics, his premium on CDSs, and the impact of market changes on his portfolio. Essential for learners in finance and economics.

The Big Short Chapter 8 - Quiz

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  • 2. 

    Michael Burry's son (and then he himself) was diagnosed with:

    • Asperger's Syndrome

    • ADHD

    • ADD

    • Bipolar Disorder

    Correct Answer
    A. Asperger's Syndrome
    Explanation
    When Michael's son Nicholas was having issues in school, a child psychologist diagnosed him with Aspberger's Syndrome. When Michael began to look into what this syndrome entails, he recognized that he himself displayed many of the symptoms.

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  • 3. 

    How was Michael Burry able to relax himself at work?

    • Heavy Metal

    • Yoga

    • Classical music

    • Push ups

    Correct Answer
    A. Heavy Metal
    Explanation
    Burry had an interesting technique in relaxation techniques---Metallica really cooled him off.

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  • 4. 

    What was the annual premium that Michael Burry was paying on his CDSs?

    • 10%

    • 8%

    • 25%

    • 3.75%

    Correct Answer
    A. 8%
    Explanation
    This percentage began to add up--- paying this premium for five years will result in paying out 40% in premiums!

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  • 5. 

    In what year did Michael Burry found Scion Capital?

    • 1992

    • 2000

    • 2004

    • 1776

    Correct Answer
    A. 2000
    Explanation
    Michael Burry founded Scion Capital in the year 2000.

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  • 6. 

    Why was it ironic that Gotham Capital wanted to sue Michael Burry?

    • Michael Burry was already bankrupt

    • Joel Greenblatt had family ties with Burry

    • Gotham Capital had never filed a lawsuit

    • Joel Greenblatt named Michael Burry his favorite "value investor."

    Correct Answer
    A. Joel Greenblatt named Michael Burry his favorite "value investor."
    Explanation
    Gotham Capital, whose CEO was Joel Greenblatt, threatened to sue Scion Capital for this move. This crushed Mike Burry, as Joel Greenblatt was an incredible influence on his life.

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  • 7. 

    Over the six years in which he had managed Scion Capital's investments, Mike Burry had realized returns of _________.?

    • 1,000%

    • 15%

    • 50.78%

    • 186%

    Correct Answer
    A. 186%
    Explanation
    Scion had realized 186% in returns on their investments over the six years Burry had managed the fund, compared to the 10.13% returns in the S&P 500 (this guy was goooooood.)

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  • 8. 

    Which of the following is NOT a rumor that Michael Burry heard about himself in 2007?

    • He installed a security system on his house.

    • He left his wife

    • He went into hiding

    • He moved to South America

    Correct Answer
    A. He installed a security system on his house.
    Explanation
    Many rumors floated around when Burry's investors became more restless throughout early 2007.

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  • 9. 

    What founding banker threatened to sue after Burry side-pocketed their investment?

    • Gotham Capital

    • Cornwall Capital

    • Greenblatt Capital

    • White Mountains

    Correct Answer
    A. Gotham Capital
    Explanation
    Gotham Capital is the correct answer because they were the founding banker that threatened to sue after Burry side-pocketed their investment.

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  • 10. 

    At the end of the chapter, what did Burry comment on that he was surprised about?

    • He was surprised that his investments had actually begun to pan out--he'd had little faith.

    • That he had not yet been sued by his investors for fraudulent activity.

    • That his wife had not left him for another investment banker.

    • There have been relatively few reports of investors actually being hurt by subprime mortgage troubles.

    Correct Answer
    A. There have been relatively few reports of investors actually being hurt by subprime mortgage troubles.
    Explanation
    The default rises had not yet seemed to tear the market down like he had thought. (Oh boy was he in for a surprise.)

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  • 11. 

    In 2007, at the height of his portfolio, Burry had $__________ placed in bets against subprime mortgages?

    • $100 million

    • $320 million

    • $1.9 billion

    • $7.33 billion

    Correct Answer
    A. $1.9 billion
    Explanation
    Even though his portfolio was only worth $555 million, due to the nature of CDSs he was able to put on a staggering $1.9 billion in bets against the subprime mortgage market.

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  • 12. 

    The tactic that Michael Burry used to freeze his investors' money in his fund:

    • Side-Pocketing

    • Freeze Funding

    • Stop Transaction

    • Option 4

    Correct Answer
    A. Side-Pocketing
    Explanation
    Side-pocketing was the tactic that Burry used to ensure that his investors were unable to withdraw their funds from his firm.

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  • 13. 

    What specific factors allowed for Michael Burry to "side-pocket" an investment?

    • If the market were performing poorly.

    • If the market was temporarily not functioning

    • If the market was fraudulent

    • Temporarily not functioning AND was fraudulent.

    Correct Answer
    A. Temporarily not functioning AND was fraudulent.
    Explanation
    This was a clause within the agreement that Burry's investors signed when agreeing to invest in Scion.

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  • 14. 

    What fraction of subprime mortgages issued in 2005 & 2006 did the Center for Responsible Learning predict would default?

    • 1/5

    • 1/2

    • 1/6

    • 1/10

    Correct Answer
    A. 1/5
    Explanation
    The Center for Responsible Learning predicted that 1/5 or 20% of the subprime mortgages issued in 2005 & 2006 would default.

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  • 15. 

    How much was the 2006 bonus pool at Goldman Sachs per employee?

    • $542,000

    • $355,900

    • $736,000

    • $871,000

    Correct Answer
    A. $542,000
    Explanation
    Burry thought that this was a ridiculous amount and was enraged at his salesperson.

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  • 16. 

    The name of the specific mortgage bond pool made by Option One that began to experience huge losses in 2007:

    • TABX-1-2000

    • Option One Select Pool

    • OOMLT 2005-3

    • HOME-100%

    Correct Answer
    A. OOMLT 2005-3
    Explanation
    This was the name of the pool of subprime mortgage bonds that began to experience high default rates in 2007. Burry had bet against this pool of bonds and began to realize high returns when the bonds went bad.

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  • 17. 

    What three banks did Burry send his CDSs to, in order to get a better idea of the market?

    • Goldman Sachs, Bank of America, Morgan Stanley

    • Goldman Sachs, Bank of America, Merrill Lynch

    • Goldman Sachs, Smith Barney, Citigroup

    • Goldman Sachs, Deutsche Bank, Bear Stearns

    Correct Answer
    A. Goldman Sachs, Bank of America, Morgan Stanley
    Explanation
    Burry sent his CDSs to Goldman Sachs, Bank of America, and Morgan Stanley in order to gain a better understanding of the market. These banks were known for their expertise and involvement in the financial industry, making them reliable sources for market information. By analyzing the data and insights provided by these banks, Burry was able to make informed investment decisions.

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  • 18. 

    What did the Bank of America salesman claim was the issue as to why they wouldn't respond to Mike Burry in June of 2007?

    • Power outage

    • Systems failure

    • Earthquake

    • Plumbing issues

    Correct Answer
    A. Power outage
    Explanation
    When things began to take a turn for the worse, the big investment banks stopped returning Burry's calls, presumably to try to understand the crisis at hand. Goldman claimed systems failure, BoA "power outage."

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  • 19. 

    How were the values of Michael Burry's Credit Default Swaps calculated?

    • Fair value

    • Market value

    • What Goldman Sachs/Morgan Stanley said they were worth.

    • Dependent upon the status of the housing market.

    Correct Answer
    A. What Goldman Sachs/Morgan Stanley said they were worth.
    Explanation
    Even though subprime loans began to default in large numbers throughout 2007, the big investment banks found reasons to skew the data in their favor so that Burry's portfolio was unprofitable.

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  • 20. 

    What political dictator was Burry compared to, because of the emails he sent out?

    • Kim Jung Il

    • Adolf Hitler

    • Joseph Stalin

    • Kim Jung Un

    Correct Answer
    A. Kim Jung Il
    Explanation
    The correct answer is Kim Jung Il. This comparison is made because of the emails that Burry sent out. Kim Jung Il was a political dictator known for his authoritarian rule in North Korea. The comparison suggests that the content or tone of the emails sent by Burry resembled the actions or behavior of Kim Jung Il.

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  • 21. 

    What was an Alt-A mortgage?

    • Referred to a mortgage issued to a FICO score below 700

    • Referred to a mortgage issued to a FICO score above 680

    • Referred to a mortgage issued to a FICO score below 680

    • The worst FICO scores an individual could receive.

    Correct Answer
    A. Referred to a mortgage issued to a FICO score above 680
    Explanation
    This was a superficial description of loans, so even though subprime mortgages were technically classified as mortgages lent to individuals with FICO scores below 680, these Alt-A mortgages were not backed by legitimate income research. This basically misclassified individuals with high credit scores, even though this rating was unwarranted.

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  • 22. 

    What period is referred to as the "Long Quiet?"

    • June through October

    • January through May

    • February through June

    • December through September

    Correct Answer
    A. February through June
    Explanation
    The period referred to as the "Long Quiet" is from February through June. This suggests that during this time, there is a relatively calm and peaceful atmosphere, possibly characterized by less activity or events.

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  • 23. 

    The Goldman Sachs fund that was heavily invested in subprime mortgages that began to take on huge losses in 2007

    • GS-2005

    • Global Alpha

    • Asset-Backed Securities Fund

    • Goldman High Growth

    Correct Answer
    A. Global Alpha
    Explanation
    This fund, "Global Alpha," was Burry's first sign that the immense losses on subprime mortgages were finally beginning to be felt in the market.

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Quiz Review Timeline (Updated): Mar 16, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 16, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 11, 2016
    Quiz Created by
    Walterjungbauer1
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