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

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

3. What was one thing Lowell Milken did for the company?
(a) make political contacts
(b) keep out unwanted visitors
(c) make the coffee
(d) find tax shelters for them

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

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

Short Answer Questions

1. What did Milken's involvement in this business do for him personally?

2. Why did Drexel remain a privately-held company?

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

4. What was the purpose of Fred Joseph's meeting at the Barbizon Plaza in New York?

5. What did Milken offer this market segment?

(see the answer key)

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