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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 6, The Air Fund.

Multiple Choice Questions

1. What was HITS?
(a) a government investigation agency
(b) Hard Investment Trade Secrets
(c) High Interest Tax Service
(d) a high yield mutual fund that Drexel formed

2. When inflation raised the value of assets but not stock prices, what was the result?
(a) It was cheaper to buy a company than to start out from scratch.
(b) People stopped buying stocks and company values soared.
(c) Junk bonds became less useful in building wealth.
(d) People began selling their stocks to start new businesses.

3. Who was Dr. Feelgood of Drexel?
(a) Fred Joseph
(b) Lowell Milken
(c) Michael Milken
(d) Tubby Burnham

4. When he heard on the radio about a change in options to buy stocks, what did Milken do that saved Drexel Burnham Lambert?
(a) turned around and went back
(b) stopped in St. Louis and started buying
(c) made calls from pay phones
(d) cabeled DBL to warn them

5. Who are two examples of Milken clients who became quite wealthy?
(a) Marty Ingles and Shirley Jones
(b) Lawrence Welk and Ray Milland
(c) James Brown and Kevin Bacon
(d) Fred Carr and Thomas Spiegle

Short Answer Questions

1. Why did the stripped bonds result in large tax benefits?

2. When were the tax laws changed to minimize the benefits of stripping?

3. Who dominated the market in junk bond funds from 1978 on?

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

5. Eventually, what did First Federal and Columbia Savings become?

(see the answer key)

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