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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 5, The Cloister at Wilshire and Rodeo.

Multiple Choice Questions

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

2. What was Milken's goal by the early 1970s?
(a) He wanted to own Drexel Burnham.
(b) He wanted to have his own firm.
(c) He wanted to move into high-yield bonds.
(d) He wanted low-yield bonds to be its own specialty.

3. What commission did Drexel make on these funds?
(a) seven eighths of a percent
(b) five eighths of a percent
(c) three quarters of a percent
(d) one percent

4. What influenced Milken to become interested in low grade bond portfolios?
(a) an unexpected profit from his own low grade bonds
(b) the Hickman study, an analysis of bond yields
(c) the Morgan report on bond yields
(d) a course he took at Wharton

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

Short Answer Questions

1. By 1981, what was Drexel responsible for?

2. What was the address of the new building in L. A.?

3. What was the Milken philosophy?

4. Why did Milken's people say they performed so well?

5. What became the name of bonds that come into being during highly leveraged takeovers?

(see the answer key)

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