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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 5, The Cloister at Wilshire and Rodeo.

Multiple Choice Questions

1. What was Milken's problem with back office people at Drexel?
(a) He did not understand their work.
(b) He was less educated than they were.
(c) He could not communicate with them.
(d) He did not work well with Jewish people.

2. Why did the stripped bonds result in large tax benefits?
(a) without the coupons the securities were untraceable
(b) stripping the securities left them worthless
(c) those sales did not have to be reported as income
(d) no law covered the stripped Treasury security

3. Who becomes Milken's ally and public face in 1974?
(a) Khun Loeb
(b) Cary Grant
(c) Fred Joseph
(d) Tubby Burnham

4. What advantage did Milken's kind of debt offer?
(a) It was easier to use than getting a bank loan.
(b) It was separate from bank loans and the bondholder could sell his bonds whenever he wanted
(c) It did not tie up cash the way loan repayments did.
(d) It was done under the table so the banks did not know about it.

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

Short Answer Questions

1. What was Milken's biggest contribution to Drexel in the early years?

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

3. What was the result of changes in the investment banking industry in the 1970s?

4. How did Milken break into the Las Vegas gambling business community?

5. Where did Milken want to move his bond operation unit in 1978?

(see the answer key)

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