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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. Who moved to Los Angeles with Milken?
(a) most of his relatives
(b) several Wall Street firms
(c) most of his staff
(d) most of his friends

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

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

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

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 easier to use than getting a bank loan.
(c) It was separate from bank loans and the bondholder could sell his bonds whenever he wanted
(d) It was done under the table so the banks did not know about it.

Short Answer Questions

1. What was Milken's problem with back office people at Drexel?

2. What are REITs?

3. Why did Milken take the bus from New Jersey to Wall Street?

4. Why did Drexel have to separate from J. P. Morgan?

5. What benefit did Milken arrange for his low grade investment group for the next 14 years?

(see the answer key)

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