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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What did the Milken Group do in 1983?
(a) cancel the annual Preditors' Ball
(b) began making large charitable contributions
(c) started buying up real estate in Los Angeles
(d) moved from Century City to a building at Wilshire Boulevard and Rodeo Drive

2. Who was behind the success of both First Executive and Columbia Savings?
(a) Fred Carr
(b) Thomas Spiegle
(c) Lowell Milken
(d) Mike Milken

3. What was a cause of the market crash of 1974?
(a) stock prices soaring
(b) low prices and a lot of bargains among companies
(c) economic inflation in Asia
(d) a slow down of foreign business

4. What became the name of bonds that come into being during highly leveraged takeovers?
(a) Chinese paper
(b) Tickertape
(c) Hot paper
(d) Paper trails

5. Where did Milken want to move his bond operation unit in 1978?
(a) Las Vegas
(b) Las Cruces
(c) Los Alamos
(d) Los Angeles

6. What did the Federal Home Loan Bank Board discover about what Spiegle at Columbia Savings and Loan was doing?
(a) manipulating his competitors out of business
(b) making fictitious home loans
(c) using Columbia Savings and Loan money to finance his own investments
(d) financing his junk bond purchases with federally insured funds

7. How did Milken decide to help Peltz?
(a) by underwriting $100 million in junk bonds for Triangle
(b) by advision him how to avoid bankruptcy
(c) by making him a partner in his bond business
(d) by loaning him $10 million from his personal fortune

8. What was the object of gaining control of a company and sell off many of its divisions?
(a) to be left with the best part of the company almost for free
(b) to make money on the sales and then dump the parent company
(c) to bring the bought company down to manageable size
(d) to avoid reporting where the purchas price was coming from

9. What was Milken's biggest contribution to Drexel in the early years?
(a) an entry into the social circles of high-yield bond traders
(b) engineering the change over to computers
(c) a study of the securities delivery system which cut the delivery time from five days to one
(d) a recruiting system to get the brightest Ivy League graduates

10. To troubled businesses, what was Drexel's unregistered exchange offer?
(a) creating additional Chinese paper
(b) trading under the table
(c) a way of using stocks or bonds to meet the interest obligations
(d) lowering their interest rates to businesses

11. Who was another player involved in the National Can takeover attempt?
(a) Oscar Wyatt
(b) Victor Posner
(c) Gerald Guteman
(d) Lowell Milken

12. What was it about Milken that impressed his clients?
(a) his knowledge and memory for details about every bond there was.
(b) his willingness to bargain when he sold them junk bonds
(c) his inside information about the junk bond companies
(d) his connections with politicians and movie stars

13. What was Milken's goal by the early 1970s?
(a) He wanted to have his own firm.
(b) He wanted low-yield bonds to be its own specialty.
(c) He wanted to own Drexel Burnham.
(d) He wanted to move into high-yield bonds.

14. Keeping New York office hours, at what time did they begin work in L. A.?
(a) 10:00 a.m.
(b) 4:30 a.m.
(c) 6:30 a.m.
(d) 7:00 a.m.

15. What did Milken and Joseph devise to keep business flowing during the recession?
(a) different kinds of instruments
(b) ways of trading abroad
(c) finance services for the largest clients
(d) better communications with clients

Short Answer Questions

1. What company was a proxy fight that Carl Ichan lost?

2. What were Milken's results the first year in his new position at Drexel Burnham?

3. What did Joseph need to achieve his goal of making Drexel a world-class institution?

4. By 1983, what was the worth of Drexel's junk bond business?

5. What is it called when a firm decides to commit its own capital toward a takeover?

(see the answer keys)

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