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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

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

2. What did the Milken brothers do probably without notifying Drexel?
(a) set up their own investment banking business
(b) investment partnerships that were to be registered with Bear Stearns
(c) buy into a number of smaller investment firms
(d) underwrite bond issues in excess for $1 trillion

3. What was one thing Lowell Milken did for the company?
(a) keep out unwanted visitors
(b) make the coffee
(c) make political contacts
(d) find tax shelters for them

4. Why did Milken takeovers work?
(a) because of inside information
(b) because Milken personally supervised the takeovers
(c) because the raiders were backed by pools of capital
(d) because of Milken's name associated with the takeover

5. What was the result of changes in the investment banking industry in the 1970s?
(a) Business concentrated in New York and Los Angeles.
(b) Regulations now made it harder to trade in junk bonds.
(c) Many new firms came into existence and were soon taken over.
(d) Firms became highly competitive and business moved around.

Short Answer Questions

1. What influenced Milken to become interested in low grade bond portfolios?

2. Who informed the SEC that he was attempting to gain control of Triagle Acquisition Corporation?

3. What are REITs?

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

5. What commission did Drexel make on these funds?

Short Essay Questions

1. Explain Milken's relationship with his staff.

2. How did Milken and Joseph create diversification for high-yield funds?

3. Why was Milken not employed by some of the biggest Wall Street firms?

4. How did HITS come about and what was it?

5. Describe Drexel's part in the National Can hostile takeover.

6. What happened that started the Merger & Acquisition craze in the late 1970s and early 1980s?

7. Why did Thomas Spiegel come under investigation by the FHLBB?

8. Describe the National Can Company takeover.

9. How did Milken help Drexel on his drive from New York to California?

10. Tell something about Milken's first house in California.

(see the answer keys)

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