ML4T Flash Cards

Question 1

Question 1: Why did it become a good investment to bet against
mortgage-backed securities.
A) The default rate on the mortgages kept rising.
B) Rating agencies were accurately assigning ratings.
C) Banks were incentivized to issue more and more mortgages.
D) A and C

Answer 1

D

Question 2

Question 2: In terms of the fundamental law, when aiming for high
performance, you can make up for low skill with ___.
A) low breadth
B) low sharpe ratio
C) high breadth
D) high volatility

Answer 2

C

Question 3

Question 3: Is Bollinger Bands a leading indicator?
A) Yes
B) No, Bollinger Bands is a lagging indicator
C) No, Bollinger Bands is not an indicator
D) No, Bollinger bands is neither a leading or a lagging indicator

Answer 3

B

Question 4

Question 4: What should you do when the stock hits the bottom Bollinger
Band?
A) Hold your position (don’t change your position at all)
B) Exit any position you currently have and then hold at 0 shares
C) Short the stock to have negative shares
D) Long the stock to have positive shares

Answer 4

D

Question 5

Who was the first bank Michael approached to make him the
CDSs?
A) JP Morgan
B) Goldman Sachs
C) Deutsche Bank
D) Bank of America

Answer 5

B