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  The Chatter Box : Blathering On
Financial Meltdown in the markets by bIG bLOGGER on 30 September 2008 3:38pm
Question:Do you know your *rse from your elbow; or rather,your CLO from your MBS??

Well,you can easily find out by having a go at the following teasing questions:

Q1. Markets are in turmoil at present because:---
(a) money is in short supply,so everybody is making a grab for it
(b) very silly investors are taking their deposits out of banks at short notice
(c) widespread mortgage defaults in the USA caused the collapse of the under-regulated derivatives market,bringing down several large financial institutions whose debt obligations were poorly or improperly securitised

Q2. "Short selling" is:---
(a) A summer job selling shorts at Gap or M and S
(b) being unduly modest about the value of investment bank shares
(c) selling a borrowed financial instrument in the anticipation it will lose value and you can buy it back later at a lower price

Q3. The term "derivative" is used to describe any financial instrument which:--
(a) critics estimate is highly unoriginal
(b) is merely an offshoot of another financial instrument
(c) derives its value from future market indices,rather than actual investments

Q4. The SAFEST investments in the short/mid term are:---
(a) oil and gas pipeline shares in Alaska
(b) bags of sugar and wheat on the dockside at Liverpool,England
(c) Blue-chip stocks and government bonds

Q5. "Credit Default Swaps" refers to:---
(a) replacing your credit card(which has exhausted its credit limit) with a brand new credit card. Wow!
(b) banks who move 'toxic' mortgage debt to secret offshore accounts in the Bahamas
(c) A contract between 2 parties that insures one of them against default by a 3rd-party debtor,but which can also be employed speculatively

Q6. "Commercial Paper" refers to:---
(a) a business newspaper like the 'Financial Times'
(b) a cheap but inferior grade of toilet paper often used by firms in serious difficulties
(c) short-term securities issued by investment banks as a cheaper and more ready alternative to bank credit

Q7. "Foreclosures"refers to:--
(a) pens in which sheep and cattle are kept before being taken to market
(b) thin layers of skin covering a banker's p***s
(c) exclusion from further mortgage redemption,and often seizure of the property for resale

Q8. LIBOR is:--
(a) The Capital of Liboria,West Africa
(b) a plausible alternative to voting Labour
(c) The London Interbank Offered Rate,an average reference rate based on the interest rates offered by banks when they lend money to each other

Q9. CLO stands for:--
(a) cheap loan offers
(b) Chief loans Ombudsman
(c) Collateralised loan obligation

Q10. MBS stands for:--
(a) mattress-based savings
(b) merged banking services
(c) mortgage-backed securities

Well Done!! The correct answers (as you have probably gathered by now) are : wait and (c)


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