As Attorney General of the United States, the current presidential administration has instructed you to prosecute investment bank CEOs and other high-level officials in the investment banking industry. Where do you start to build your case?

1. Interrogate mortgage originators
2. Interrogate contract mortgage underwriters
3. Interview homeowners
4. Interview staff in the credit department of the investment banks

As the CEO of the Federal Reserve you have been notified by your staff that CDOs sold to investors by major investment banks are comprised of 65% mortgages with FICO scores below 550 (subprime) and they are AAA rated.What is theappropriate courseof action to address thesourceof this issue?

1. Tell your staff that the market will self-correct
2. Have your regulators visit banks and mortgage brokers who are originating these types of mortgages and order them to stop this practice immediately.
3. Have your regulators wait until the market crashes and then act.
4. Purchase Credit Default Swaps to bet against bad CDOs.

As a savvy investor you find out that a number of CDOs sold by major investment banks are comprised of 65% mortgages with FICO scores below 550 (subprime) and they are AAA rated.What is your appropriate course of action?

1. Purchase a Credit Default Swap (CDS) on some, or all, of these CDOs.
2. Purchase some, or all, of these CDOs and then buy a CDS on each one you buy.
3. Contact your regional Federal Reserve Bank and report this practice immediately
4. Contact your congressperson and ask for an investigation into this practice.