In response to Long Term Capital Management (LTCM):

	In 2002, the Sarbanes-Oxley Act was passed to impose significant regulations on derivatives trading.
	The bailout of LTCM resulted in a ban on all derivatives trading by hedge funds.
	The government saw the benefits of unregulated hedge funds and fully deregulated derivatives trading.
	The government allowed derivatives trading to continue without regulation.

David Li's formula:

Question 3 options:

	Was only used by the rating agencies in the evaluation of newly issued CDOs.
	Could not account for decreases in real estate values.
	Was seldom used by banks and Wall Street.
	When combining high risk assets, created CDOs that were all (100%) AAA rated.

Which of the following is not accurate regarding David Li's formula:

Question 4 options:

	The formula modeled the relationship among different assets in a portfolio.
	The formula was used to combine high risk assets into AAA rated CDOs.
	The formula yielded a default correlation among the assets being combined.
	Due to problems with the application of the formula it was not used by debt rating agencies.

Which of the following did not contribute to positive economic growth during the 2002-2006 years:

Question 5 options:

	A significant increase in housing values resulted in increases in consumption as homeowners refinanced existing mortgages.
	A significant increase in real median household income resulted in increases in consumption.
	Deregulation of the financial sector allowed Wall Street to generate an increase in revenues.
	A minimal change in long term interest rates.