Markets, Bubbles & Crashes Quiz — 7 Free Questions

Question 1

Which American crisis of the 1980s and early 1990s saw roughly a third of the country's small mortgage-lending institutions fail, after deregulation let them chase risky loans and investments while their deposits stayed government-insured?

Question 2

Which market fall, running from late February to 23 March 2020, was the fastest descent into a bear market in history, with a leading index dropping about a third in a month as the pandemic spread, before an equally rapid rebound?

Question 3

Which Houston energy-trading company collapsed into bankruptcy in December 2001 after it emerged that much of its reported profit was fictional, sustained by hiding debt in off-the-books partnerships and by booking the full future value of deals as current income?

Question 4

What phrase did a chairman of the United States central bank use in a December 1996 speech to wonder aloud whether stock prices had been pushed too high by investor enthusiasm, briefly rattling markets around the world?

Question 5

Which stock index, nicknamed the Footsie, covers the hundred largest companies on the London exchange by market value, was launched in 1984 with a starting level of a thousand, and is weighted heavily toward miners, banks and oil firms that earn most of their money abroad?

Question 6

Which internet company of the dot-com era, famous for a sock-puppet mascot that appeared in a Super Bowl advertisement and a parade balloon, went from a stock-market listing to shutting down in about nine months in 2000?

Question 7

Which Swedish financier of the 1920s, known as the Match King, built a near-monopoly of the world match industry by lending money to cash-strapped governments in exchange for exclusive rights, financing it all by selling ever more elaborate and dubious securities to American investors?

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About Markets, Bubbles & Crashes

This quiz is about financial markets and the way they go wrong: the great speculative bubbles, the crashes and panics that ended them, the stock exchanges and indices where it all plays out, the everyday vocabulary of bulls and bears and margin and short selling, and the frauds that repeat in every generation. Eighty questions, each describing a bubble, a crash, an exchange, a market term, a fraudster or a piece of crisis machinery, and asking you to name it from four choices of the same kind, then explaining it.

The first pack is the essentials: Tulip Mania, the South Sea and Mississippi bubbles, the Wall Street Crash of 1929, Black Monday of 1987, the dot-com bubble and the crisis of 2008, together with the meaning of a bull market, a bear market, a correction, buying on margin, short selling and the Dow. The second pack widens to the exchanges and indices of the world, from the New York and London exchanges to the Bombay Stock Exchange and the Sensex, more bubbles and panics, the mechanics of listings and trading halts and stock splits, and the classic frauds: Ponzi and Madoff, the collapse of Barings, Ivar Kreuger, Enron and WorldCom, Harshad Mehta and Wirecard. The third pack covers market wisdom and warning signs, the machinery of the 2008 crisis, collateralised debt obligations, credit default swaps, subprime loans, too big to fail and the bank bailouts, the regulators in the United States and India, and recent episodes from the 2010 flash crash and the GameStop squeeze to the Paytm listing and the 2020 pandemic crash.

Indian markets run through the quiz: the Bombay exchange and the Sensex, the National Stock Exchange and the Nifty, the Harshad Mehta scam, the markets regulator, the upper circuit and the Paytm float. The wrong answers are always other bubbles, crashes or terms of the same kind, so a good guess is easily checked. About a fifth of the questions carry a neutral photograph, a trading floor, an exchange, a central bank, that fits any of the four options and gives nothing away. Currency crises and cryptocurrency crashes are covered in the separate Money quiz. Names, dates and figures have been checked against standard reference works.

The recurring lesson across four centuries is how little changes: a new technology or a new financial instrument, cheap and plentiful credit, a story about why the old rules no longer apply, a scramble of latecomers, and then a scramble for the exit. The names change, tulip bulbs to railway shares to internet stocks to mortgage bonds to meme stocks, but the shape of the curve does not.