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This quiz consists of 5 multiple choice and 5 short answer questions through Part 3: Chapter 17, The Humbling.

Multiple Choice Questions

1. How did bondholders often operate in noncompliance with SEC rules?
(a) selling bonds before they were registered
(b) overstating the values of bonds
(c) secrecy in the bond market
(d) not declaring income from bond sales

2. Who dominated the market in junk bond funds from 1978 on?
(a) Lehman Brothers
(b) Morgan Investments
(c) Drexel
(d) Fidelity

3. What was one of the most important factors in the leveraged buyout deals?
(a) the zero coupon bond
(b) support of key Congressmen
(c) knowing Michael Milken
(d) loopholes in the banking laws

4. What does FIFI stand for?
(a) Fund Income from Favored Investors
(b) Five Investment Features Initiative
(c) Field Investment File Information
(d) First Investors Fund for Income

5. What was Fred Joseph's strategy for hiring employees for Drexel?
(a) hiring from the smaller firms so that they saw it as a step up
(b) overhiring to learn which are the ones to keep
(c) getting recommendations from bigger firms
(d) paying higher commissions than anyone else

Short Answer Questions

1. Why did the new Drexel Burnham company give Milken a $2 million position?

2. Where did Grant point out most of the junk bonds were held?

3. What is a proxy fight?

4. Who were some customers who received better deals from Milken?

5. Where was much of the money coming from for takeovers in the 1980s?

(see the answer key)

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