View a FREE sample

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

Multiple Choice Questions

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

2. What was the object of gaining control of a company and sell off many of its divisions?
(a) to avoid reporting where the purchas price was coming from
(b) to bring the bought company down to manageable size
(c) to make money on the sales and then dump the parent company
(d) to be left with the best part of the company almost for free

3. Why did Milken's people say they performed so well?
(a) because they learned from the King
(b) because he would accept nothing less
(c) because they were maing so much money
(d) because they had to get up so early

4. Who are two examples of Milken clients who became quite wealthy?
(a) James Brown and Kevin Bacon
(b) Lawrence Welk and Ray Milland
(c) Marty Ingles and Shirley Jones
(d) Fred Carr and Thomas Spiegle

5. What was the average net worth of members of Milken's core group after being with him five years?
(a) $5 million
(b) $12 million
(c) $20 million
(d) $10 million

6. 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 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 did not tie up cash the way loan repayments did.

7. What do raiders look for in companies to take over?
(a) companies saddled with heavy debt
(b) cash flow, which is one of the most important items in LBOs
(c) public good will, which continues after the takeover
(d) new research and development projects

8. What became the name of bonds that come into being during highly leveraged takeovers?
(a) Tickertape
(b) Paper trails
(c) Chinese paper
(d) Hot paper

9. Why did Drexel remain a privately-held company?
(a) They did not want outsiders to get in on their business.
(b) Joseph refused to allow it to happen.
(c) It was too much of a temptation for a hostile takeover.
(d) Milken could then retain his need for secrecy.

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

11. By 1986, who was the largest stockholder in Drexel Burnham Lambert?
(a) the Milken Family Trust
(b) Michael Milken
(c) Lowell Milken
(d) Grace Milken

12. Who informed the SEC that he was attempting to gain control of Triagle Acquisition Corporation?
(a) Nelson Peltz
(b) Oscar Wyatt
(c) Mike Milken
(d) Gerald Guterman

13. What was Milken's biggest contribution to Drexel in the early years?
(a) a study of the securities delivery system which cut the delivery time from five days to one
(b) engineering the change over to computers
(c) a recruiting system to get the brightest Ivy League graduates
(d) an entry into the social circles of high-yield bond traders

14. Why did Ichan and Kingsley limit themselves to 4.9% of shares in companies?
(a) they wanted to keep a low profile in takeover bids
(b) 4 and 9 were Carl Icahn's lucky numbers
(c) that was all they could afford without getting financing
(d) 4.9% was below the SEC reporting limit on 13d disclosure documents

15. Why did the new Drexel Burnham company give Milken a $2 million position?
(a) Milken would be the token Jew.
(b) Milken was thinking of leaving.
(c) Milken ochestrated the merger of Drexel and Burnham.
(d) Milken hid evidence from the SEC.

Short Answer Questions

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

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

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

4. What did Milken and Joseph devise to keep business flowing during the recession?

5. What is it called when a firm decides to commit its own capital toward a takeover?

(see the answer keys)

This section contains 727 words (approx. 3 pages at 300 words per page) View a FREE sample