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This quiz consists of 5 multiple choice and 5 short answer questions through Part 3: Chapter 12, Milken's Money Machine.

Multiple Choice Questions

1. What is it called when a firm decides to commit its own capital toward a takeover?
(a) piggybacking
(b) highway financing
(c) bridge financing
(d) marginal financing

2. On May 12, 1986, who was charged with insider trading and agreed to cooperate with the government?
(a) Car Icahn
(b) Lowell Milken
(c) Fred Joseph
(d) Dennis Levine

3. What is sometimes the result of an LBO?
(a) a company that has more assets than liabilities
(b) a need to acquire other companies to pay for the buyout
(c) a corporation that is laden with debt
(d) a loss of company assets

4. What kind of business did Milken's Belvedere Securities do?
(a) traded the body of the bond separate from its coupons
(b) traded business secrets learned in hostile takeovers
(c) traded bonds anonymously for clients of Drexel
(d) traded new lamps for old in a manner of speaking

5. What was Drexel able to do that made it so successful?
(a) to get around banking laws
(b) to avoid reporting many of the transactions
(c) to place the unsecured debt that banks wouldn't touch
(d) to hear about acquisitions before anyone else

Short Answer Questions

1. When inflation raised the value of assets but not stock prices, what was the result?

2. What was a cause of the market crash of 1974?

3. What was one thing Lowell Milken did for the company?

4. How did Drexel get around the law and continue the takeovers?

5. Why did Drexel want Carl Icahn as a client?

(see the answer key)

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