Markets, Bubbles & Crashes Quiz — 7 Free Questions

Question 1

Which financier, a former chairman of the Nasdaq stock market, ran the largest fraud of its kind in history, with fictitious account statements totalling around sixty-five billion dollars, undetected for decades and only exposed when he confessed to his sons in December 2008?

Question 2

What is the name for a very low-priced share in a small, often obscure or speculative company, typically trading thinly and swinging wildly, and a favourite vehicle for a fraud in which promoters inflate the price with false hype and then sell out?

Question 3

Which stock index tracks fifty large-company shares on India's National Stock Exchange, and shares its name, confusingly, with a group of American growth stocks that were fashionable in the early 1970s?

Question 4

What is the name for the piece of market folklore, attributed to Joseph Kennedy, who is said to have decided to sell all his shares before the 1929 crash after a boy polishing his shoes offered him stock tips?

Question 5

What is the name for the English law of 1720, passed at the urging of the very company whose shares were then soaring, that made it illegal to form a joint-stock company without a royal charter?

Question 6

Which bubble, running in France in 1719 and 1720 almost in parallel with a similar mania across the Channel, was built on a Scottish economist's scheme in which a royal bank issued paper money and a linked company held a monopoly on trade with French territory in North America?

Question 7

What is the name for a share in a large, long-established, financially solid company with a dependable record of earnings and dividends through good times and bad, considered a relatively safe holding?

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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.