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

Multiple Choice Questions

1. By the fall of 1989, what were many people doing?
(a) changing the rules for junk bonds
(b) junk bond financing
(c) complaining about Milken
(d) getting rid of junk bonds

2. Before Sigoloff switched to Drexel, who was handling his takeover bid for Wickes?
(a) Lehman Brothers
(b) Merrill Lynch
(c) Morgan Stanley
(d) Salomon Brothers

3. What was coming to an end?
(a) Milken's ability to raise millions of dollars in a few days
(b) Drexel's presence on Wall Street
(c) Milken's anonymity
(d) Drexel's plans for selling the firm

4. What did the 1985 President's Council of Economic Advisers report on the issue of M&A conclude?
(a) that M&A was written into the Constitution
(b) that they were very beneficial for the economy
(c) that it was too small a matter to be concerned with
(d) that more study needed to be done

5. What did Grant say the public was competing for at that point?
(a) for securities of high and higher yield - and poorer quality
(b) for ownership in television stations and newspapers
(c) for invitations to the Preditors' Ball
(d) for more and more media attention

6. Why did the LTV situation not affect Drexel?
(a) Drexel pointed out the way LTV misused junk bonds.
(b) The thrifts that collapsed and the defaults that occurred were not among Milken's customers
(c) Drexel used its own money to secure the LTV bonds.
(d) Drexel engineered a second buyout of LTV.

7. Who did Joseph hire with a three-year contract calling for $3 million per year plus extras?
(a) Martin Siegel
(b) Antonio Gebauer
(c) Dennis Levine
(d) Robert Salsbury

8. What did Milken take personally with his clients?
(a) if they divulged company secrets
(b) If they did business with someone else
(c) if they refused to attend the Predator's Ball
(d) if they made more money than he did

9. What were many of the money managers who started with Milken in the late 1970s doing in the 1980s?
(a) staying with Milken because he was the best
(b) running their own funds
(c) creating new ways of financing takeovers
(d) retiring and taking extended vacations

10. What often benefited Drexel in dealing with its clients?
(a) positive publicity
(b) leads for new clients
(c) equity from the deals they took part in
(d) inside information

11. What was another company Wedvick used in his investment scheme?
(a) Kansa General Insurance Company in Helsinki, Finland
(b) Barzil International Insurance
(c) Caribbean Investment Corporation
(d) Banco de Mexico

12. What was the largest bankruptcy in 1986?
(a) Metromedia
(b) TWA
(c) LTV Corporation
(d) Revlon

13. What did Milken do for people who had worked with him?
(a) contributed to their children's education
(b) got rid of all of them
(c) helped people find jobs
(d) gave them no competition contracts

14. What was the result when many Drexel employees were not allowed into Milken's investment groups?
(a) Many were relieved that they would not have to invest.
(b) Most people did not care.
(c) There was some degree of hostility.
(d) Milken made sure they did not know they were excluded.

15. Why did Drexel become the target of both an SEC and federal grand jury investigations?
(a) Milken and Drexel had underwritten quite a bit of Boesky debt.
(b) Milken and Drexel refused to cooperate with the investigation.
(c) Milken and Drexel immediately hired high powered lawyers.
(d) Milken and Drexel began making off-shore deposits.

Short Answer Questions

1. Why were Milken's imitators not as successful as he was?

2. What became the craze on Wall Street in 1986?

3. Who were some customers who received better deals from Milken?

4. What was Peer Wedvick devising?

5. In what was Atlantic Capital involved?

(see the answer keys)

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