Name: _________________________ | Period: ___________________ |
This test consists of 15 multiple choice questions and 5 short answer questions.
Multiple Choice Questions
1. Why was Drexel Burnham's investment banking business diminished by 1975?
(a) The bigger firms were copying its business model.
(b) It had nothing to sell.
(c) Bond prices had risen too high.
(d) Most of the major customers had fled.
2. What advantage did Milken's kind of debt offer?
(a) It was done under the table so the banks did not know about it.
(b) It was easier to use than getting a bank loan.
(c) It was separate from bank loans and the bondholder could sell his bonds whenever he wanted
(d) It did not tie up cash the way loan repayments did.
3. What was the goal of Nelson Peltz?
(a) to get into the airline business
(b) to be a part of the Hollywood scene
(c) to compete with Milken
(d) to corner the Los Angeles real estate market
4. What was Milken's problem with back office people at Drexel?
(a) He did not understand their work.
(b) He did not work well with Jewish people.
(c) He could not communicate with them.
(d) He was less educated than they were.
5. To troubled businesses, what was Drexel's unregistered exchange offer?
(a) a way of using stocks or bonds to meet the interest obligations
(b) trading under the table
(c) creating additional Chinese paper
(d) lowering their interest rates to businesses
6. What company was a proxy fight that Carl Ichan lost?
(a) the Times, Inc.
(b) AB Electrolux
(c) Tappan
(d) Hammermill
7. What was the estate they bought?
(a) the Judy Garland estate
(b) the Clark Gable-Carole Lombard estate
(c) the Pickford estate
(d) the Jackie Coogan estate
8. For whom did Milken do trading?
(a) only for himself now because he was making so much money
(b) not only for customers, but also his own account and his group's account
(c) only for family and friends to keep attention away from himself
(d) just for Drexel Burnham Lambert because of the volume of work
9. What is sometimes the result of an LBO?
(a) a corporation that is laden with debt
(b) a loss of company assets
(c) a need to acquire other companies to pay for the buyout
(d) a company that has more assets than liabilities
10. Who was Dr. Feelgood of Drexel?
(a) Tubby Burnham
(b) Fred Joseph
(c) Lowell Milken
(d) Michael Milken
11. Where did Milken and his wife buy a house?
(a) Encino
(b) Santa Monica
(c) Beverley Hills
(d) San Clemente
12. Who was another player involved in the National Can takeover attempt?
(a) Oscar Wyatt
(b) Gerald Guteman
(c) Victor Posner
(d) Lowell Milken
13. What did Milken and Joseph devise to keep business flowing during the recession?
(a) finance services for the largest clients
(b) better communications with clients
(c) different kinds of instruments
(d) ways of trading abroad
14. Why did Milken take the bus from New Jersey to Wall Street?
(a) to avoid talking to Wall Street people
(b) because he liked the people on the bus
(c) because he did not drive a car
(d) because he could not afford the train
15. What is RICO?
(a) Mexican Stock Exchange
(b) The Bank of Brazil
(c) Racketeer Influenced Corrupt Organizations Act
(d) Reporting Interest In Company
Short Answer Questions
1. What did Milken offer this market segment?
2. Where was much of the money coming from for takeovers in the 1980s?
3. Why did the stripped bonds result in large tax benefits?
4. What was Drexel's only real competition by the 1980s?
5. How much money and how fast did Drexel raise for the Phillips Petroleum proxy fight?
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