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This test consists of 15 multiple choice questions and 5 short answer questions.
Multiple Choice Questions
1. What were Milken's results the first year in his new position at Drexel Burnham?
(a) Break even
(b) 100% profit
(c) Fewer clients
(d) 10% profit
2. When inflation raised the value of assets but not stock prices, what was the result?
(a) People stopped buying stocks and company values soared.
(b) It was cheaper to buy a company than to start out from scratch.
(c) Junk bonds became less useful in building wealth.
(d) People began selling their stocks to start new businesses.
3. To find more ways for their clients to make money, to what did Milken and Joseph turn their attention?
(a) entertainment properties
(b) mergers and acquisitions
(c) financial planning
(d) offshore banking
4. What was the address of the new building in L. A.?
(a) Rodeo Drive and Wilshire
(b) Sunset and Vine
(c) Avenue of the Stars in Century City
(d) Hollywood and Vine
5. For whom did Milken do trading?
(a) only for himself now because he was making so much money
(b) only for family and friends to keep attention away from himself
(c) not only for customers, but also his own account and his group's account
(d) just for Drexel Burnham Lambert because of the volume of work
6. Why did Drexel remain a privately-held company?
(a) They did not want outsiders to get in on their business.
(b) Joseph refused to allow it to happen.
(c) It was too much of a temptation for a hostile takeover.
(d) Milken could then retain his need for secrecy.
7. By 1981, what was Drexel responsible for?
(a) leading the field in high interest bonds
(b) almost all of the junk bonds in the market
(c) engineering most of the hostile takeovers
(d) moving Wall Street to Los Angeles
8. How did Milken decide to help Peltz?
(a) by underwriting $100 million in junk bonds for Triangle
(b) by making him a partner in his bond business
(c) by advision him how to avoid bankruptcy
(d) by loaning him $10 million from his personal fortune
9. Who moved to Los Angeles with Milken?
(a) most of his relatives
(b) most of his friends
(c) most of his staff
(d) several Wall Street firms
10. Why did the new Drexel Burnham company give Milken a $2 million position?
(a) Milken hid evidence from the SEC.
(b) Milken would be the token Jew.
(c) Milken ochestrated the merger of Drexel and Burnham.
(d) Milken was thinking of leaving.
11. What did Milken and Joseph devise to keep business flowing during the recession?
(a) finance services for the largest clients
(b) different kinds of instruments
(c) better communications with clients
(d) ways of trading abroad
12. What is it called when a firm decides to commit its own capital toward a takeover?
(a) highway financing
(c) marginal financing
(d) bridge financing
13. Why did the stripped bonds result in large tax benefits?
(a) stripping the securities left them worthless
(b) without the coupons the securities were untraceable
(c) no law covered the stripped Treasury security
(d) those sales did not have to be reported as income
14. What was Ichan able to do after he got a seat on the board of Tappan?
(a) He prevented the company from being taken over.
(b) He took over running the company.
(c) He was able to raise the stock prices.
(d) He maneuvered the sale of the company to AB Electrolux.
15. What did Milken offer this market segment?
(a) a protection from takeover
(b) a new kind of debt instrument
(c) a hope for recovery
(d) ten cents on the dollar
Short Answer Questions
1. What was the average net worth of members of Milken's core group after being with him five years?
2. What was the estate they bought?
3. Who was behind the success of both First Executive and Columbia Savings?
4. How did Milken break into the Las Vegas gambling business community?
5. What two large companies did Drexel underwrite bond issues for in a ten-day period?
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