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

2. What was the advantage FIFI and other like funds offer?
(a) a higher yield than Treasury bonds
(b) better availability
(c) more security than Treasury bonds
(d) simplicity of buying

3. Why was Drexel Burnham's investment banking business diminished by 1975?
(a) It had nothing to sell.
(b) The bigger firms were copying its business model.
(c) Most of the major customers had fled.
(d) Bond prices had risen too high.

4. How did Milken and his wife travel to Los Angeles?
(a) by private jet
(b) by bus
(c) by car
(d) by train

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

Short Answer Questions

1. What was the Wall Street attitude toward low grade bonds at the time Milken started trading in them?

2. Who becomes Milken's ally and public face in 1974?

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

4. What advantage did Milken's kind of debt offer?

5. Why was Milken so interested in low grade bonds?

(see the answer key)

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