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

Multiple Choice Questions

1. What did Bergerac's associates tell him about Perelman?
(a) that Perelman would use illegal means to take Revlon over
(b) that Perelman had never done a hostile takeover
(c) that Perelman knew all about hostile takeovers
(d) that Perelman was known as a blowhard

2. What did the 1985 President's Council of Economic Advisers report on the issue of M&A conclude?
(a) that M&A was written into the Constitution
(b) that it was too small a matter to be concerned with
(c) that they were very beneficial for the economy
(d) that more study needed to be done

3. Why was the partner Groupe Bruxelles Lambert S.A. not happy with Drexel and trying to take it over?
(a) the Drexel continued support of Mike Milken
(b) the falling stock price of drexel
(c) Drexel's secret bookkeeping
(d) the Drexel practice of not paying dividends

4. What was beginning to happen during this time?
(a) People were making vast amounts of money trading junk bonds.
(b) Unemployment shot up as a results of the mergers and acquisitions.
(c) Junk bonds were becoming poorer in quality and there were more bankruptcies and defaults
(d) Junk bonds began to disappear from the market.

5. Why did none of the thirty bills introduced covering takeovers in 1984-85 pass?
(a) Drexel took leading politicians on a vacation to the Bahamas.
(b) Congress was waiting for a supreme court decision.
(c) Many politicians who received large contributions attended the Predators' Ball in 1986.
(d) The Congress did not think it was an important matter.

6. Why did Milken hold a mini-Predators' Ball in Tokyo?
(a) He did things like that on a whim.
(b) He was looking at getting into foreign markets.
(c) He was invited by Japanese businessmen.
(d) The Balls in Los Angeles were drawing too much publicity.

7. Why did Drexel become the target of both an SEC and federal grand jury investigations?
(a) Milken and Drexel immediately hired high powered lawyers.
(b) Milken and Drexel refused to cooperate with the investigation.
(c) Milken and Drexel began making off-shore deposits.
(d) Milken and Drexel had underwritten quite a bit of Boesky debt.

8. Why was Revlon attracting raiders?
(a) Its stock was steadily growing.
(b) The company was getting larger every year.
(c) The company's stock was trading below its breakup value.
(d) Some were trying to take advantage of the death of Charles Revson.

9. How were some people able to beat Milken on deals?
(a) by using illlegal means
(b) by offering better prices
(c) by hiring better salesmen
(d) by attacking Milken

10. What concept did Milken continue to support?
(a) the legality of takeovers
(b) the owner-manager of businesses
(c) the switch to high-yield securities
(d) the cautions of using junk bonds

11. How did Perelman acquire Technicolor?
(a) buying on credit
(b) selling junk bonds
(c) paying full price
(d) directing a hostile takeover

12. By the fall of 1989, what were many people doing?
(a) changing the rules for junk bonds
(b) junk bond financing
(c) getting rid of junk bonds
(d) complaining about Milken

13. Why did the LTV situation not affect Drexel?
(a) The thrifts that collapsed and the defaults that occurred were not among Milken's customers
(b) Drexel used its own money to secure the LTV bonds.
(c) Drexel pointed out the way LTV misused junk bonds.
(d) Drexel engineered a second buyout of LTV.

14. What happened in April of 1987 while the investigation of Milken and Drexel was proceeding?
(a) Milken fled the country.
(b) Milken tried to bribe an FBI undercover agent.
(c) The Predators' Ball was cancelled.
(d) The 1987 Predators' Ball was held.

15. Who at Drexel became a problem because of a lawsuit by Beverly Hills Savings and Loan?
(a) Jim Dahl
(b) Fred Joseph
(c) Martin Siegel
(d) Carl Ichan

Short Answer Questions

1. What did Grant say the public was competing for at that point?

2. Where did Grant point out most of the junk bonds were held?

3. Who were the people Milken was happy to help in the business?

4. Who paid $2-billion for the Metromedia television stations and their assets?

5. What is it called when one investor holds stock for another investor and thus conceals the identity of the owner?

(see the answer keys)

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