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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 3, Transformation.

Multiple Choice Questions

1. What became the name of bonds that come into being during highly leveraged takeovers?
(a) Paper trails
(b) Hot paper
(c) Chinese paper
(d) Tickertape

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

3. What does FIFI stand for?
(a) Field Investment File Information
(b) Five Investment Features Initiative
(c) Fund Income from Favored Investors
(d) First Investors Fund for Income

4. Why was Milken so interested in low grade bonds?
(a) they were the only ones he really understood
(b) he liked to gamble big time
(c) equity offerings were not an option for the Drexel Burnham market
(d) that was all he could afford

5. What was the estate they bought?
(a) the Clark Gable-Carole Lombard estate
(b) the Judy Garland estate
(c) the Pickford estate
(d) the Jackie Coogan estate

Short Answer Questions

1. What commission did Drexel make on these funds?

2. What did Milken offer this market segment?

3. What were Milken's results the first year in his new position at Drexel Burnham?

4. Why was Drexel Burnham's investment banking business diminished by 1975?

5. Why did Drexel Burnham Lambert agree to let Milken move his operation at a cost of millions of dollars?

(see the answer key)

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