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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 4, Merge with Mike.

Multiple Choice Questions

1. What benefit did Milken arrange for his low grade investment group for the next 14 years?
(a) half the profits
(b) extensive paid vacations
(c) higher salaries and larger offices
(d) 35% of the profits

2. How did the firm now have equity stakes in most of the companies that it financed?
(a) by using the firm's capital to finance the companies
(b) by swapping Chinese paper for stock in the companies
(c) by buying stakes in many companies instead of financing them
(d) by demanding larger stakes in the companies

3. What were Milken's results the first year in his new position at Drexel Burnham?
(a) 10% profit
(b) Fewer clients
(c) Break even
(d) 100% profit

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

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

Short Answer Questions

1. Who dominated the market in junk bond funds from 1978 on?

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

3. What was the result of changes in the investment banking industry in the 1970s?

4. What was the advantage FIFI and other like funds offer?

5. What commission did Drexel make on these funds?

(see the answer key)

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