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

Multiple Choice Questions

1. To find more ways for their clients to make money, to what did Milken and Joseph turn their attention?
(a) mergers and acquisitions
(b) offshore banking
(c) financial planning
(d) entertainment properties

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

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

4. How much money and how fast did Drexel raise for the Phillips Petroleum proxy fight?
(a) 2 billion in one month
(b) a half billion in three days
(c) $1.5 billion in forty-eight hours
(d) $10 million in a week

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

6. What did Milken's involvement in this business do for him personally?
(a) He married a movie star.
(b) He was finally able to take the train.
(c) He became very wealthy.
(d) He finally gained respect from Burnham.

7. What is it called when someone holds a financial advantage over a company to force a sale?
(a) proxy fighting
(b) hijacking
(c) investment banking
(d) greenmail

8. By 1983, what was the worth of Drexel's junk bond business?
(a) $4.690 billion
(b) $40 billion
(c) $2 billion
(d) $460 billion

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

10. By 1981, what was Drexel responsible for?
(a) moving Wall Street to Los Angeles
(b) almost all of the junk bonds in the market
(c) leading the field in high interest bonds
(d) engineering most of the hostile takeovers

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

12. Who was Dr. Feelgood of Drexel?
(a) Tubby Burnham
(b) Fred Joseph
(c) Lowell Milken
(d) Michael Milken

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

14. What did Milken offer this market segment?
(a) a new kind of debt instrument
(b) a hope for recovery
(c) a protection from takeover
(d) ten cents on the dollar

15. 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 done under the table so the banks did not know about it.
(d) It was easier to use than getting a bank loan.

Short Answer Questions

1. What did the Milken Group do in 1983?

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

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

4. What was the advantage FIFI and other like funds offer?

5. Who was another player involved in the National Can takeover attempt?

(see the answer keys)

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