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

Multiple Choice Questions

1. What did the Revlon takeover prove?
(a) the power of Milken and junk bond financing
(b) that Perelman knew nothing about hostile takeovers
(c) that women will buy Revlon no matter who owns the company
(d) that Revlon stock was way overvalued

2. What did Milken take personally with his clients?
(a) if they divulged company secrets
(b) if they refused to attend the Predator's Ball
(c) if they made more money than he did
(d) If they did business with someone else

3. Who was James Grant?
(a) the chief of the SEC
(b) the head of Grant Investment Bank
(c) the editor of Grant's Interest Rate Observer
(d) the author of the Grant Bill in Congress

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

5. What was the result when many Drexel employees were not allowed into Milken's investment groups?
(a) Most people did not care.
(b) Many were relieved that they would not have to invest.
(c) There was some degree of hostility.
(d) Milken made sure they did not know they were excluded.

6. Who were the people Milken was happy to help in the business?
(a) people who would destroy competitors
(b) people who did not qualify to work at Drexel
(c) people who would spy on the competition
(d) people who left Drexel on friendly terms

7. When did the trading of Milken, Icahn, Posner and Boyd Jeffries, as well as others come under investigation?
(a) Within minutes of the announcement of Boesky's plea bargain
(b) In late December 1986
(c) Long before the SEC began investigating Boesky
(d) Right after the Preditors' Ball in 1987

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

9. In many ways, what became the role of Milken?
(a) the rold of peacemaker
(b) the role of adviser
(c) the role of enforcer
(d) the role of enquirer

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

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

12. When did Drexel begin dealing based on insider information?
(a) When the Phillips Petroleum deal got underway.
(b) When Milken financed Ivan Boesky.
(c) When they began backing OLTs.
(d) When Milken hooked up with Carl Ichan.

13. Who did Joseph hire with a three-year contract calling for $3 million per year plus extras?
(a) Antonio Gebauer
(b) Dennis Levine
(c) Robert Salsbury
(d) Martin Siegel

14. How was Joseph building his diversified team?
(a) by training inexpensive novices to learn the business
(b) by taking his time to get the right people together
(c) by hiring people away from other firms for huge salaries
(d) by computerizing his entire operation

15. Why was the Revlon takeover a landmark case for Perelman and Drexel?
(a) This one was almost as large as the Phillips Petroleum takeover.
(b) The most impassioned corporate defenders were united against Milken's onslaught.
(c) If Perelman won, it would set the precedent for other such takeovers.
(d) Because of its base of female customers, Revlon was vulnerable to bad publicity.

Short Answer Questions

1. What did the 1985 President's Council of Economic Advisers report on the issue of M&A conclude?

2. What was the subject of debate in the mid 1980s during the M&A onslaught?

3. What was the largest bankruptcy in 1986?

4. Why did the LTV situation not affect Drexel?

5. What happened to the plan for moving to the Seven World Trade Center?

(see the answer keys)

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