The Predators' Ball Test | Mid-Book Test - Easy

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

Multiple Choice Questions

1. What is sometimes the result of an LBO?
(a) a company that has more assets than liabilities
(b) a need to acquire other companies to pay for the buyout
(c) a corporation that is laden with debt
(d) a loss of company assets

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. Eventually, what did First Federal and Columbia Savings become?
(a) part of the Drexel company
(b) enormous appendages of Milken
(c) regular commercial banks
(d) big players in the construction industry

4. What is it called when someone holds a financial advantage over a company to force a sale?
(a) investment banking
(b) hijacking
(c) proxy fighting
(d) greenmail

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

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

7. What was HITS?
(a) a government investigation agency
(b) Hard Investment Trade Secrets
(c) High Interest Tax Service
(d) a high yield mutual fund that Drexel formed

8. Who informed the SEC that he was attempting to gain control of Triagle Acquisition Corporation?
(a) Nelson Peltz
(b) Gerald Guterman
(c) Mike Milken
(d) Oscar Wyatt

9. Who are two examples of Milken clients who became quite wealthy?
(a) Fred Carr and Thomas Spiegle
(b) Marty Ingles and Shirley Jones
(c) Lawrence Welk and Ray Milland
(d) James Brown and Kevin Bacon

10. What was Ichan able to do after he got a seat on the board of Tappan?
(a) He took over running the company.
(b) He was able to raise the stock prices.
(c) He maneuvered the sale of the company to AB Electrolux.
(d) He prevented the company from being taken over.

11. What is RICO?
(a) Mexican Stock Exchange
(b) Racketeer Influenced Corrupt Organizations Act
(c) Reporting Interest In Company
(d) The Bank of Brazil

12. What did Joseph need to achieve his goal of making Drexel a world-class institution?
(a) to stop dealing in junk bonds
(b) to mastermind an M&A for Drexel
(c) to learn the definition of leveraged buyouts
(d) to get into M&A

13. Why did the new Drexel Burnham company give Milken a $2 million position?
(a) Milken would be the token Jew.
(b) Milken ochestrated the merger of Drexel and Burnham.
(c) Milken hid evidence from the SEC.
(d) Milken was thinking of leaving.

14. How did the firm now have equity stakes in most of the companies that it financed?
(a) by using the firm's capital to finance the companies
(b) by swapping Chinese paper for stock in the companies
(c) by buying stakes in many companies instead of financing them
(d) by demanding larger stakes in the companies

15. What was the result of Tax Law reform in 1981?
(a) More and more companies were burdened with higher taxes.
(b) Only very large companies could make mergers and accquistions.
(c) The increase in cash flow put companies in a better position to service debt.
(d) Big corporations faced running out of money.

Short Answer Questions

1. Why was Milken nervous about the large deals?

2. What was the result in 1974 when International Nickel Company raided ESB?

3. What is a proxy fight?

4. Why did Milken's people say they performed so well?

5. What was it about Milken that impressed his clients?

(see the answer keys)

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