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

2. To troubled businesses, what was Drexel's unregistered exchange offer?
(a) a way of using stocks or bonds to meet the interest obligations
(b) lowering their interest rates to businesses
(c) trading under the table
(d) creating additional Chinese paper

3. Why did Drexel want Carl Icahn as a client?
(a) Most other firms wouldn't handle him and he would be willing to pay the price to the investors of junk bonds.
(b) Icahn would not use junk bonds to finance his hostile takeovers.
(c) Icahn had liquid capital in offshore banks.
(d) He was a risk taker that would make money even if he failed.

4. Where did most of the money come from when Icahn actually acquired ACF, a railroad car leasing company?
(a) Milken financed much of the price.
(b) Ichan got the money from his uncle.
(c) Much of the purchase price came from the sale of some of the company's divisions.
(d) Ichan sold all of his Milken junk bonds.

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

6. When he heard on the radio about a change in options to buy stocks, what did Milken do that saved Drexel Burnham Lambert?
(a) made calls from pay phones
(b) cabeled DBL to warn them
(c) turned around and went back
(d) stopped in St. Louis and started buying

7. What did Milken's involvement in this business do for him personally?
(a) He was finally able to take the train.
(b) He finally gained respect from Burnham.
(c) He became very wealthy.
(d) He married a movie star.

8. What do raiders look for in companies to take over?
(a) companies saddled with heavy debt
(b) public good will, which continues after the takeover
(c) new research and development projects
(d) cash flow, which is one of the most important items in LBOs

9. How much money and how fast did Drexel raise for the Phillips Petroleum proxy fight?
(a) $1.5 billion in forty-eight hours
(b) $10 million in a week
(c) a half billion in three days
(d) 2 billion in one month

10. What did Joseph label his brainstorming information about LBOs?
(a) the X-Files
(b) the CIA files
(c) the M&A files
(d) Air Fund or the highly confident letter

11. For whom did Milken do trading?
(a) only for family and friends to keep attention away from himself
(b) not only for customers, but also his own account and his group's account
(c) only for himself now because he was making so much money
(d) just for Drexel Burnham Lambert because of the volume of work

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

13. What was the goal of Nelson Peltz?
(a) to corner the Los Angeles real estate market
(b) to compete with Milken
(c) to be a part of the Hollywood scene
(d) to get into the airline business

14. What was the Wall Street attitude toward low grade bonds at the time Milken started trading in them?
(a) They were used as charitable donations.
(b) They were unknown to Wall Street.
(c) Then were used for scratch paper.
(d) They were looked down on.

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

Short Answer Questions

1. What did the Milken Group do in 1983?

2. What was Milken's goal by the early 1970s?

3. What was Ichan able to do after he got a seat on the board of Tappan?

4. How did Milken decide to help Peltz?

5. What was HITS?

(see the answer keys)

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