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This quiz consists of 5 multiple choice and 5 short answer questions through Part 3: Chapter 10, 'Drexel is like a God'.

Multiple Choice Questions

1. What was Drexel able to do that made it so successful?
(a) to avoid reporting many of the transactions
(b) to place the unsecured debt that banks wouldn't touch
(c) to hear about acquisitions before anyone else
(d) to get around banking laws

2. What did Milken's involvement in this business do for him personally?
(a) He finally gained respect from Burnham.
(b) He was finally able to take the train.
(c) He married a movie star.
(d) He became very wealthy.

3. Why was Milken so interested in low grade bonds?
(a) he liked to gamble big time
(b) equity offerings were not an option for the Drexel Burnham market
(c) that was all he could afford
(d) they were the only ones he really understood

4. What was the advantage FIFI and other like funds offer?
(a) better availability
(b) a higher yield than Treasury bonds
(c) more security than Treasury bonds
(d) simplicity of buying

5. Why did Drexel remain a privately-held company?
(a) They did not want outsiders to get in on their business.
(b) Milken could then retain his need for secrecy.
(c) Joseph refused to allow it to happen.
(d) It was too much of a temptation for a hostile takeover.

Short Answer Questions

1. What commission did Drexel make on these funds?

2. With whom was the firm of Drexel Burnham Lambert identified by the late 1970s?

3. To find more ways for their clients to make money, to what did Milken and Joseph turn their attention?

4. How did the firm now have equity stakes in most of the companies that it financed?

5. What was the result when rules on M&A were finally adopted by the Congress?

(see the answer key)

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