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

Multiple Choice Questions

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

2. How did the investigation appear at first?
(a) It seemed to be only aimed at Milken.
(b) It seemed flimsy and not much to worry about.
(c) It seemed to involve Wall Street figures other than Milken and Drexel.
(d) It seemed impossible to find all the needed evidence.

3. 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 began making off-shore deposits.
(c) Milken and Drexel refused to cooperate with the investigation.
(d) Milken and Drexel had underwritten quite a bit of Boesky debt.

4. What was the largest bankruptcy in 1986?
(a) Revlon
(b) Metromedia
(c) TWA
(d) LTV Corporation

5. What was Drexel able to do that made it so successful?
(a) to avoid reporting many of the transactions
(b) to place the unsecured debt that banks wouldn't touch
(c) to hear about acquisitions before anyone else
(d) to get around banking laws

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

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

8. Why did people like Lawrence Coss of Green Tee Acceptance feel they were targets of hostile takeovers?
(a) because Milken did not like them
(b) because they wouldn't give in to Milken
(c) because they were not Jewish
(d) because they wanted more money for their companies

9. What made Drexel's troubles even worse after Boesky Day?
(a) The firm defaulted on its building mortgage.
(b) The FBI wiretapped Milken's and Drexel's offices.
(c) The firm was hated by many on Wall Street.
(d) Both New York and California started independent investigations.

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

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

12. For whose benefit were most of the investment partnerships?
(a) for Milken
(b) for the Drexel firm
(c) for the corporate employees
(d) for potential clients

13. 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

14. In what was Atlantic Capital involved?
(a) forging bond documents
(b) selling bond coupons
(c) ponzi schemes
(d) unmonitored investments

15. What did Bergerac and his allies forget in the process of fighting the takeover?
(a) The large cash bids by Pereleman would benefit the shareholders.
(b) That Perelman had Minken behind him.
(c) That the courts could prevent them from offering a management contract.
(d) The company was failing during that time.

Short Answer Questions

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

2. What was the result when rules on M&A were finally adopted by the Congress?

3. In many ways, what became the role of Milken?

4. What was another company Wedvick used in his investment scheme?

5. What was Samuel Heyman able to get from Milken?

(see the answer keys)

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