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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. For whom did Milken do trading?
(a) only for family and friends to keep attention away from himself
(b) not only for customers, but also his own account and his group's account
(c) just for Drexel Burnham Lambert because of the volume of work
(d) only for himself now because he was making so much money

2. With whom was the firm of Drexel Burnham Lambert identified by the late 1970s?
(a) Tubby Burnham
(b) Fred Joseph
(c) Michael Milken
(d) Ronald Reagan

3. What was a cause of the market crash of 1974?
(a) economic inflation in Asia
(b) low prices and a lot of bargains among companies
(c) stock prices soaring
(d) a slow down of foreign business

4. What commission did Drexel make on these funds?
(a) three quarters of a percent
(b) one percent
(c) five eighths of a percent
(d) seven eighths of a percent

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

6. Who was another player involved in the National Can takeover attempt?
(a) Victor Posner
(b) Gerald Guteman
(c) Lowell Milken
(d) Oscar Wyatt

7. What was it about Milken that impressed his clients?
(a) his connections with politicians and movie stars
(b) his inside information about the junk bond companies
(c) his knowledge and memory for details about every bond there was.
(d) his willingness to bargain when he sold them junk bonds

8. How did Milken decide to help Peltz?
(a) by making him a partner in his bond business
(b) by advision him how to avoid bankruptcy
(c) by loaning him $10 million from his personal fortune
(d) by underwriting $100 million in junk bonds for Triangle

9. What was a major factor in the failure of Beverly Hills Savings?
(a) huge losses in junk purchased from Drexel
(b) too many hostile takeover attempts
(c) rumors that Milken was taking it over
(d) large withdrawals by depositors

10. Where did Milken and his wife buy a house?
(a) Encino
(b) Beverley Hills
(c) San Clemente
(d) Santa Monica

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

12. What is a proxy fight?
(a) stockholder meetings where some are locked out
(b) two blondes fighting
(c) stockholder meetings where the management team is voted out
(d) having someone else fight a duel for you

13. Where did Milken want to move his bond operation unit in 1978?
(a) Los Alamos
(b) Las Vegas
(c) Los Angeles
(d) Las Cruces

14. What was the purpose of Fred Joseph's meeting at the Barbizon Plaza in New York?
(a) gathering inside information to take back to Los Angeles
(b) to undermine Milken and take over control of the Department
(c) consideration of all ideas, even the far-out and the flamboyant, instead of the conservative
(d) pirating talent from some of the biggest firms on Wall Street

15. How did Milken and his wife travel to Los Angeles?
(a) by private jet
(b) by car
(c) by train
(d) by bus

Short Answer Questions

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

2. When he heard on the radio about a change in options to buy stocks, what did Milken do that saved Drexel Burnham Lambert?

3. Why did Drexel have to separate from J. P. Morgan?

4. What was the estate they bought?

5. Where did most of the money come from when Icahn actually acquired ACF, a railroad car leasing company?

(see the answer keys)

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