TRIVIA!

• The first recorded use of this product was in 332BC when Thales (pronounced Tha-leez) turned a profit on olives.

• The first market exchange of these products occurred in seventeenth century London.

• By 1872, Russel Sage introduced the OTC version of these options to the United States.

• This product is often embedded in debt securities which can either bought back at specific prices. For ten points, name this option to buy.

• Answer: Call

• This company was taken private for three times its free cash flow in 1996.

• Headquartered in Maryland, its lesser known name starts with the words, "Government Employee."

• Known for selling insurance to the general public since 1974, the company was bought by Berkshire Hathaway.

• For ten points, name the famous insurance company known for their gecko-narrated car ads.

• Answer: Geico

• Warren Buffett evaluated the possibility of buying the portfolio of this company through a consortium of Goldman Sachs, AIG, and Berkshire Hathaway for $250MM, but rescinded his offer.

• Compensation for partners was structured via a 7-year call option on 1 million shares of the company, issued by UBS. The fund's main strategy involved fixed income arbitrage convergence trades, but eventually by 1997 the firm had began trading equities, partially due to the enormous volume of its strategies.

• Founded in 1994 by a famous Solomon Brothers bond trader, this hedge fund hired notable partners, such as Myron Scholes and Robert Merton.

• For ten points, name the hedge fund which collapsed during the Russian Ruble default crisis of 1997 and required a $3.6BN bailout.

• Answer: Long-Term Capital Management

• In 2011, the global reserves of this amounted to 530,000 tonnes.

• Traditional uses include industrial uses and tomahawk missiles.

• In 1980, the Hunt Brothers attempted to corner this market, resulting in a high price of $50.35 per ounce.

• For ten points, name this base metal of the Roman Denarius and the Chinese Tael, and the precious metal component of the ETF, SLV.

• Answer: Silver

• This is the world's largest company, measured by amount of profits.

• The company is publicly traded in Asia. It makes loans to firms in many sectors, but focuses on industrial and construction loans.

• Today, the bank performs a variety of other services, including investment banking and private equity.

• What is the name of China's largest bank?

• Answer: ICBC

• This man, along with the Rothschilds, offered to supply the US Treasury with 3.5 million ounces of gold when the US was still on the gold standard as a method to mitigate the Panic of 1893.

• A famous Puck Magazine political cartoon featured a caracture of him helping a relatively tiny Uncle Sam row the US economy.

• For ten points, name this financier who facilitated the merger of General Electric, the United States Steel Company, and who is the namesake of a famous bulge-bracket investment bank.

• Answer: John Piermont Morgan

• This type of event can be captured as a tail risk event, but is not necessarily so.

• An example of this event led to Volkswagen temporarily becoming the largest company in the world, by market cap.

• For ten points, name this event whose likelihood is typically measured in terms of short interest and short interest ratios, caused by short positions being forced to liquidate at losses due to liquidity reasons.

• Answer: Short Squeeze

• GM agreed to repurchase back $2.1 billion worth of these financial instruments from the US Treasury as part of its privatization by the US government following bankruptcy.

• Types include convertibles, which can be exchanged for common stock;

• typically in calculating weighted average cost of capital, this insturment is incorporated into equity, or is multiplied by its respective cost of capital.

• For ten points, name this product typically subordinate to the lowest tranches of debt, whose dividends are held in arrears and must be paid before that of common equity.

• Answer: Preferred Equity

• The market for these exceeds $300 billion dollars. • In the interest rate product, the principal is purely

notional, whereas currency ones suffer from exchange rate exposure.

• The first example of this product occured between World Bank and IBM, facilitated by David Swensen from Salomon Brothers.

• For ten points, name this contract invented in 1981 whose categories include currencies, interest rates, and equities, used to exchange cash flows between two counterparties.

• Answer: Swap

• One of this fund's department is currently engaged in work with TXU, the largest LBO and one of the largest bankruptcies in history.

• With assets under management exceeding over 200 billion, the fund is mainly engaged in private equity, and recently announced spinning off its advisory division.

• However, it is more renown for another LBO which netted it over 10 billion in profits, that of Hilton.

• For ten points, name this private equity fund whose name is derived as a portmonteau of the names of two of its founders, Peter Peterson and Steve Schwartzmann. 

• Answer: Blackstone

• This nickname makes reference to a certain Asian delicacy.

• It is commonly used for someone who takes outsides delta positions.

• Recently, it was used in reference to a certain Mr Iksil, regarding a position with CDX IG 9.

• What is the animal nickname given to the JP Morgan trader that lost the bank $2bn trading CDS.

• Answer: Whale

• Rate traders use this phrase in reference to changes in their underlying.

• Often deemed too small to care for equity investors or private equity type-guys, a movement of 1 unit of this on a long duration generates significant price change.

• Often used as the smallest amount something can change by,

• what is the phrase for a hundredth of a percentage point?

• Answer: Basis Point

• Initially designed as a structure to pay off operating costs of the due diligence process.

• This structure has grown to be a fundamental economic driver of low tax income.

• Made up of 2 separate fees, this classic incentive structure aims to reward a GP.

• Both in terms of AUM and in terms of alpha generated. What is the famous percentage pay for the GP in a hedge fund?

• Answer: 2 and 20

• Compared to the general type, the liability of these is limited.

• For most funds, these make up the vast majority of contributed capital.

• Sovereign funds and Adam Streets are two examples of these.

• For ten points, name this type of investor, who does not take an active role in portfolio management and thus has limited risk.

• Answer: Limited Partner

• Unfortunately, this value cannot be found directly on Google Finance, although it can be found on Yahoo Finance.

• Ranked by this, Apple is greater than Berkshire Hathaway, is greater than Novartis.

• This is typically preferred to market value of equity due to capital structure neutral properties.

• For ten points, name this value calculated as undervalued pensions minus majority interest plus market value of preferred plus minority interest plus market value of debt minus cash plus market capitalization.

• Answer: EV (accept Enterprise Value)

• This ended in June 2009. • It was cited as a cause of the increasing income

disparity within the US. • Some practitioners qualify the failure of two of Bear

Stern's hedge funds as the first signs of this event. • For ten points, name this market crash that is

typically discussed in conjunction with collateralized debt obligations and credit default swaps. 

• Answer: Great (or 2008) Recession

• Milton Friedman claimed that this event was caused by monetary contraction and poor management of the Federal Reserve at the time.

• Other evidence points to a crash in real estate prices within Florida as a main catalyst for this event, although the true cause of the crisis is still under scrutiny.

• For ten points, name this event which led peak unemployements of over 25%, considered the greatest financial disaster in the 20th century.

• Answer: Great Depression (Accept 1929 Stock Market crash)

• This underpins trillions in derivative products. • A series of actions exposing fraudulent activities

regarding this resulted in several banks paying billions worth in financial settlements in 2013.

• As of this week, the current 1-year interest rate for this is 57 basis points.

• For ten points, name this rate derived from the average inter-bank interest rate London banks offer each other, whose name is an acronym from the London Interbank Offered Rate.

• Answer: LIBOR

• In 1987, one of its founding partners resigned due to differences with the other two.

• In 2010, this company's holding company went through an initial public offering, as was the trend for private equity firms at the time.

• One of its most famous deals involved RJR Nabisco, featured in the novel, Barbarians at the Gate.

• For ten points, name this fund whose namesake is derived as an acronym of its three founding partners, Kolhberg, Kravis and Roberts.

• Answer: KKR

• Introduced in the 1960s, this resulted in groundbreaking changes in the field of finance.

• This equation is a fundamental basis for discounted cash flow analysis, among many other applications.

• While it was proved incorrect in its typically-used form in actual markets, adjustments to this include accounting for growth factors, firm size, and other variables.

• For ten points, name the basis of the French-Fama 3-factor model, modeled as a function of excess returns of the market, the risk free rate, and beta.

• Answer: CAPM

• This was originally not a unique product, rather an unfortunate result of markets at the time, resulting in huge underpricings that helped kickstart its market in the 20th century.

• The formal name of this product may not live up to its reputation due to current market conditions.

• However, this asset class is still considered less correlated to interest rate environments than its safer counterparts.

• For ten points, name this type of product popularized by billionaire Michael Milken, which is used to describe a certain non-investment grade type of debt rated Ba or BB or lower.

• Answer: Junk Bond (accept high-yield)

• Through this, outsiders can gain a typical understanding of the lexicon within finance

• Then again this probably would not have been written had the author not received a job offer from a colleague during a dinner at London.

• Likewise, it would not have received its namesake had employees at the firm not engaged in the book's namesake dollar-bill game during work.

• For ten points, name this novel about the excesses of the bond trading desk at Salomon Brothers, written by Michael Lewis, named after a type of poker.

• Answer: Liar's Poker

• This was originally conceptualized as a way of protecting deposits from investment risks.

• Named after a Virginian and Alabamian, it became arguably obsolete in 1999, with the introduction of the Gramm-Leach-Bliley Act.

• For ten points, name the provisions of the US Banking Act of 1933, which had separated the functions of commercial and investment banks.

• Answer: Glass-Steagall Act

• MBS were first originated at this firm, which IPOed in 1978.

• Former staff included chairman Warren Buffett, Bloomberg, Blankfein, among other employees.

• Traders within this firm, which was undisputedly one of the best investment banks of its time, were notable for their crass and ruthless personalities.

• For ten points, name this firm once headed by John Gutfreund, "the King of Wall Street," whose bond trading desk headed by John Meriwether was featured in Michael Lewis' famous novel, Liar's Poker.

• Answer: Salomon Brothers

• Snoop Lion, Michael Phelps, and Wen Jiabao have all visited this organization's headquarters, which has housed several notable presidents, including former Goldman Sachs presidents.

• Daily trading value exceeds $100 billion dollars. • Specialists function as principals, agents, catalists,

auctioneers as part of their chartered duties. • For ten points, name this organization located at 11

Wall Street, by market capitalization the world's largest stock exchange.

• Answer: New York Stock Exchange

Lightning

A. For 2 points each, -1 points per wrong answer• List as many financial Greeks, that DO NOT use a

Greek letter.• List as many private equity and hedge funds with

AUM of over 15BN as you can• List as many ADRs on the NYSE or Nasdaq as you

can.• List as many publicly listed partnerships as you can.• List as many GAAP consolidated income statement

items List as many investment banks that no longer exist.

60 seconds each