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

Multiple Choice Questions

1. What was the purpose of Fred Joseph's meeting at the Barbizon Plaza in New York?
(a) pirating talent from some of the biggest firms on Wall Street
(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) to undermine Milken and take over control of the Department

2. What kind of business did Milken's Belvedere Securities do?
(a) traded business secrets learned in hostile takeovers
(b) traded new lamps for old in a manner of speaking
(c) traded bonds anonymously for clients of Drexel
(d) traded the body of the bond separate from its coupons

3. What was Drexel's only real competition by the 1980s?
(a) Barnes and Noble
(b) Lehman Brothers
(c) Morgan Stanley
(d) Merrill Lynch

4. What was the estate they bought?
(a) the Clark Gable-Carole Lombard estate
(b) the Judy Garland estate
(c) the Jackie Coogan estate
(d) the Pickford estate

5. What did the Federal Home Loan Bank Board discover about what Spiegle at Columbia Savings and Loan was doing?
(a) manipulating his competitors out of business
(b) using Columbia Savings and Loan money to finance his own investments
(c) financing his junk bond purchases with federally insured funds
(d) making fictitious home loans

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

7. What was Milken's problem with back office people at Drexel?
(a) He did not work well with Jewish people.
(b) He could not communicate with them.
(c) He was less educated than they were.
(d) He did not understand their work.

8. Why did Posner back out of the National Can deal?
(a) Drexel worked against him.
(b) He was diagnosed with cancer.
(c) He decided on another acquisition.
(d) One of his companies went bankrupt.

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

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

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

12. What two large companies did Drexel underwrite bond issues for in a ten-day period?
(a) Disney Studios and the LA Dodgers
(b) Boeing Aricraft and United Supermarkets
(c) MGM/UA Entertainment Company and MCI Communications
(d) Paramount Pictures and General Motors

13. What was the advantage FIFI and other like funds offer?
(a) a higher yield than Treasury bonds
(b) simplicity of buying
(c) better availability
(d) more security than Treasury bonds

14. What company was a proxy fight that Carl Ichan lost?
(a) the Times, Inc.
(b) Tappan
(c) AB Electrolux
(d) Hammermill

15. Eventually, what did First Federal and Columbia Savings become?
(a) enormous appendages of Milken
(b) regular commercial banks
(c) big players in the construction industry
(d) part of the Drexel company

Short Answer Questions

1. What was the goal of Nelson Peltz?

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

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

4. Why did the stripped bonds result in large tax benefits?

5. What was Ichan able to do after he got a seat on the board of Tappan?

(see the answer keys)

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