Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac

• A.Under-management and under-measurement of market and liquidity risk
• B.Lawmakers postponed strenghtening regulatory oversight due to partisan infighting
• C.They did not raise enough capital to weather the storm as the housing slump expanded
• D.Extreme exposure to foreign currency exposures and losses from non-US$ mortgages

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Unlike the case at Barings Bank, National Australia Bank:

• A.Had a risk management infrastructure that was credited with doing its' job well, despite the losses
• B.Was not dealing in derivatives
• C.Had a separation of duties between trading and back office
• D.Had a Board of Directors that was unaware of the true nature of trading activities

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What was the most important loss for Bankers Trust?

• A.Time spent on legal proceedings in courts
• B.Loss of its' reputation due to actions seen as detrimental to their clients
• C.Loss of market share due to their licenses being revoked
• D.Money due to unfavourable market moves

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Barings Bank and Orange County have many similarities. Which of the following is NOT a similarity?

• A.Both losses were eventually exposed by massive margin calls.
• B.Both relied on a star manger, supposedly in a low risk business.
• C.Both losses grew over time, but were not discovered by management until too late.
• D.Both traded in illiquid and obscure markets that were easy to manipulate.

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The financial intermediary services provided by Fannie Mae and Freddie Mac were designed to

• A.Compete directly with banks in selling mortgaged to would-be home owners
• B.Offer loans directly to the consumer
• C.Repackage mortgage loans made by banks and sell them on to investors as asset backed securities
• D.Buy mortgage-backed loans for banks and keep them all on their books, using them as collateral for the US government to borrow

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