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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. By 1986, who was the largest stockholder in Drexel Burnham Lambert?
(a) Michael Milken
(b) Lowell Milken
(c) the Milken Family Trust
(d) Grace Milken

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

3. What was the result of changes in the investment banking industry in the 1970s?
(a) Many new firms came into existence and were soon taken over.
(b) Firms became highly competitive and business moved around.
(c) Regulations now made it harder to trade in junk bonds.
(d) Business concentrated in New York and Los Angeles.

4. To troubled businesses, what was Drexel's unregistered exchange offer?
(a) creating additional Chinese paper
(b) lowering their interest rates to businesses
(c) a way of using stocks or bonds to meet the interest obligations
(d) trading under the table

5. Why did Drexel Burnham Lambert agree to let Milken move his operation at a cost of millions of dollars?
(a) Milken was responsible for almost all of the firm's profits.
(b) Milken had some inside information he could use in L. A.
(c) Milken threatened to leave.
(d) Milken was then major stock holder in the company.

Short Answer Questions

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

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

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

4. What was the estate they bought?

5. What was Drexel's only real competition by the 1980s?

(see the answer key)

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