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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 did the Milken brothers do probably without notifying Drexel?
(a) investment partnerships that were to be registered with Bear Stearns
(b) set up their own investment banking business
(c) underwrite bond issues in excess for $1 trillion
(d) buy into a number of smaller investment firms

2. How were some people able to beat Milken on deals?
(a) by hiring better salesmen
(b) by using illlegal means
(c) by attacking Milken
(d) by offering better prices

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

4. When inflation raised the value of assets but not stock prices, what was the result?
(a) People began selling their stocks to start new businesses.
(b) Junk bonds became less useful in building wealth.
(c) People stopped buying stocks and company values soared.
(d) It was cheaper to buy a company than to start out from scratch.

5. What was the largest bankruptcy in 1986?
(a) LTV Corporation
(b) Metromedia
(c) TWA
(d) Revlon

Short Answer Questions

1. What was beginning to happen during this time?

2. Why was Milken so interested in low grade bonds?

3. What was the average net worth of members of Milken's core group after being with him five years?

4. When were the tax laws changed to minimize the benefits of stripping?

5. Who are two examples of Milken clients who became quite wealthy?

(see the answer key)

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