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This quiz consists of 5 multiple choice and 5 short answer questions through Part 1: Chapter 6, The Air Fund.

Multiple Choice Questions

1. Why did Drexel remain a privately-held company?
(a) They did not want outsiders to get in on their business.
(b) It was too much of a temptation for a hostile takeover.
(c) Joseph refused to allow it to happen.
(d) Milken could then retain his need for secrecy.

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

3. What was the Milken philosophy?
(a) to go after businesses listed on the NYSE
(b) to go after businesses that were sure to fail
(c) to go after businesses that were owner-managed
(d) to go after startup businesses

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

5. 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) Regulations now made it harder to trade in junk bonds.
(c) Firms became highly competitive and business moved around.
(d) Business concentrated in New York and Los Angeles.

Short Answer Questions

1. Why was Milken nervous about the large deals?

2. What were Milken's results the first year in his new position at Drexel Burnham?

3. What two large companies did Drexel underwrite bond issues for in a ten-day period?

4. What did the Federal Home Loan Bank Board discover about what Spiegle at Columbia Savings and Loan was doing?

5. By 1981, what was Drexel responsible for?

(see the answer key)

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