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This quiz consists of 5 multiple choice and 5 short answer questions through Part 2: Chapter 8, Icahn-TWA: From Greenmailer to Manager-Owner.

Multiple Choice Questions

1. What advantage did Milken's kind of debt offer?
(a) It was done under the table so the banks did not know about it.
(b) It was easier to use than getting a bank loan.
(c) It did not tie up cash the way loan repayments did.
(d) It was separate from bank loans and the bondholder could sell his bonds whenever he wanted

2. Why did Drexel want Carl Icahn as a client?
(a) Icahn had liquid capital in offshore banks.
(b) Most other firms wouldn't handle him and he would be willing to pay the price to the investors of junk bonds.
(c) Icahn would not use junk bonds to finance his hostile takeovers.
(d) He was a risk taker that would make money even if he failed.

3. What is it called when someone holds a financial advantage over a company to force a sale?
(a) investment banking
(b) proxy fighting
(c) hijacking
(d) greenmail

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

5. What company was a proxy fight that Carl Ichan lost?
(a) AB Electrolux
(b) Tappan
(c) Hammermill
(d) the Times, Inc.

Short Answer Questions

1. By 1986, who was the largest stockholder in Drexel Burnham Lambert?

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

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

4. To find more ways for their clients to make money, to what did Milken and Joseph turn their attention?

5. What do raiders look for in companies to take over?

(see the answer key)

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