10.2

1. 1. Listen to Track 70.

      Now answer the questions.

   1. What is the main purpose of this talk?

      1. To evaluate the causes of market crashes in the twentieth century
      2. To explore the dot-com crash as a way to understand boom-and-bust cycles in general
      3. To argue in favor of better regulation to reduce the likelihood or severity of market crashes
      4. To predict that boom-and-crash cycles will become less common in the future

   2. What is the speaker’s opinion about the housing bubble and credit crisis?

      1. Most people were ignoring the ability of borrowers to repay the loans given to them.
      2. The investment banks would have preferred that lenders were more selective in choosing homebuyers to lend money to.
      3. Investors believed that the loans being given to homebuyers were safer than United States Treasury bonds.
      4. The increase in home values during the housing bubble was justified.

   3. According to the professor, when did the dot-com bubble “mania” reach its peak?

      1. In 2008
      2. In 2001
      3. In 1998 and 1999
      4. In 1997

   4. Why does the professor mention “other investors from other areas” that began to invest in dot-com companies?

      1. To highlight the relative inexperience of these investors
      2. To emphasize that traditional investors in technology were not interested in dot-com companies
      3. To argue that the dot-com crash had already begun before these other investors got involved
      4. To suggest that these investors lacked attractive opportunities in areas they typically invested in

   5. According to the professor, which of the following factors contributed to the dot-com crash in 2000–2002? Choose 3 answers.

      1. A lack of competition among investors in technology businesses
      2. A high demand to invest in dot-com companies relative to the amount of investment funds being sought
      3. The development of a new product or innovation with great potential
      4. A great deal of uncertainty about which companies will succeed and which will fail
      5. A loss of interest in pursuing non-technology investments

   6. The professor mentions that the investment landscape for a new, promising innovation often becomes overcrowded. What does this fact explain? Choose 2 answers.

      1. Why having a solid business plan becomes less important to prospective investors
      2. Why a general “mania” or “euphoria” overcomes the investing public
      3. Why there will often be many investments made in fundamentally unsound businesses
      4. Why the companies working on developing this innovation typically need cash from investors to grow