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

Multiple Choice Questions

1. Why did Drexel become the target of both an SEC and federal grand jury investigations?
(a) Milken and Drexel had underwritten quite a bit of Boesky debt.
(b) Milken and Drexel refused to cooperate with the investigation.
(c) Milken and Drexel began making off-shore deposits.
(d) Milken and Drexel immediately hired high powered lawyers.

2. How did the investigation appear at first?
(a) It seemed flimsy and not much to worry about.
(b) It seemed impossible to find all the needed evidence.
(c) It seemed to be only aimed at Milken.
(d) It seemed to involve Wall Street figures other than Milken and Drexel.

3. How were some people able to beat Milken on deals?
(a) by offering better prices
(b) by hiring better salesmen
(c) by using illlegal means
(d) by attacking Milken

4. When did the trading of Milken, Icahn, Posner and Boyd Jeffries, as well as others come under investigation?
(a) Within minutes of the announcement of Boesky's plea bargain
(b) Right after the Preditors' Ball in 1987
(c) Long before the SEC began investigating Boesky
(d) In late December 1986

5. When did Drexel begin dealing based on insider information?
(a) When Milken financed Ivan Boesky.
(b) When Milken hooked up with Carl Ichan.
(c) When the Phillips Petroleum deal got underway.
(d) When they began backing OLTs.

6. What often benefited Drexel in dealing with its clients?
(a) positive publicity
(b) inside information
(c) equity from the deals they took part in
(d) leads for new clients

7. What concept did Milken continue to support?
(a) the owner-manager of businesses
(b) the cautions of using junk bonds
(c) the legality of takeovers
(d) the switch to high-yield securities

8. Why was the partner Groupe Bruxelles Lambert S.A. not happy with Drexel and trying to take it over?
(a) the Drexel practice of not paying dividends
(b) the falling stock price of drexel
(c) the Drexel continued support of Mike Milken
(d) Drexel's secret bookkeeping

9. What did Bergerac's associates tell him about Perelman?
(a) that Perelman was known as a blowhard
(b) that Perelman would use illegal means to take Revlon over
(c) that Perelman knew all about hostile takeovers
(d) that Perelman had never done a hostile takeover

10. Why did Atlantic Capital have to stop selling Wedvick's contracts?
(a) It became over-extended and faced bankruptcy.
(b) Wedvick's contracts became worthless.
(c) Drexel bought them out.
(d) Pressure on Kansa came from Standard and Poor's and a downgrade to an A-rating.

11. Who made the contact for Wedvick with Kansa?
(a) Michael Milken
(b) Fred Joseph
(c) Carl Icahn
(d) Rodrigo Rocha

12. What was another company Wedvick used in his investment scheme?
(a) Caribbean Investment Corporation
(b) Barzil International Insurance
(c) Banco de Mexico
(d) Kansa General Insurance Company in Helsinki, Finland

13. Why did the LTV situation not affect Drexel?
(a) Drexel engineered a second buyout of LTV.
(b) The thrifts that collapsed and the defaults that occurred were not among Milken's customers
(c) Drexel used its own money to secure the LTV bonds.
(d) Drexel pointed out the way LTV misused junk bonds.

14. What became the craze on Wall Street in 1986?
(a) something called equity sharing
(b) something called collective bargaining
(c) something called investment underwriting
(d) something called merchant banking

15. What made Drexel's troubles even worse after Boesky Day?
(a) The firm was hated by many on Wall Street.
(b) The firm defaulted on its building mortgage.
(c) Both New York and California started independent investigations.
(d) The FBI wiretapped Milken's and Drexel's offices.

Short Answer Questions

1. Who told Perelman that Revlon was not for sale?

2. What did Kansa and Clarendon both have that Wedvick needed?

3. What did Milken want at work?

4. What happened to the blue-chip investors Drexel was trying to attack?

5. What made a Wickes takeover so attractive to Sanford Sigoloff?

(see the answer keys)

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