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

Multiple Choice Questions

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

2. What happened in April of 1987 while the investigation of Milken and Drexel was proceeding?
(a) Milken fled the country.
(b) Milken tried to bribe an FBI undercover agent.
(c) The Predators' Ball was cancelled.
(d) The 1987 Predators' Ball was held.

3. 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

4. What did the Revlon takeover prove?
(a) that Revlon stock was way overvalued
(b) the power of Milken and junk bond financing
(c) that Perelman knew nothing about hostile takeovers
(d) that women will buy Revlon no matter who owns the company

5. Where was most of Drexel's money made through investment partnerships?
(a) in Paris
(b) in Tokyo
(c) in New York
(d) in Beverly Hills

6. Before Sigoloff switched to Drexel, who was handling his takeover bid for Wickes?
(a) Morgan Stanley
(b) Salomon Brothers
(c) Lehman Brothers
(d) Merrill Lynch

7. Who were some customers who received better deals from Milken?
(a) Murdock and Turner
(b) Carl Icahn and Samuel Heyman
(c) Perelman and Rocho
(d) Oscar Wyatt and Coastal Corporation

8. What are two other notable takeovers done by Perelman after Revlon?
(a) Warner Brothers Studios and Coca Cola
(b) CPC International and Transworld Corporation
(c) Hearst Corporation and Ford Motor Company
(d) NBC-TV and Hertz Rent a Car

9. How did Milken's unit function within the larger firm?
(a) as a front for other Drexel activities
(b) as an integrated member of the firm
(c) as the firm's banker
(d) as a separate firm within Drexel

10. What was the largest bankruptcy in 1986?
(a) TWA
(b) LTV Corporation
(c) Revlon
(d) Metromedia

11. 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 began making off-shore deposits.
(c) Milken and Drexel refused to cooperate with the investigation.
(d) Milken and Drexel immediately hired high powered lawyers.

12. What was Samuel Heyman able to get from Milken?
(a) names of Drexel's best investors
(b) an investment-grade rate when he purchased GAF
(c) 100% capital from drexel
(d) an office suite in the drexel building

13. What did Grant continue to predict?
(a) a gradual shift from vigilance to recklessness in lending and borrowing
(b) a major acquisition that would stagger the mind
(c) that M&As would revitalize the national economy
(d) the end of leveraged buyouts when everything good was taken over

14. How was Joseph building his diversified team?
(a) by training inexpensive novices to learn the business
(b) by computerizing his entire operation
(c) by taking his time to get the right people together
(d) by hiring people away from other firms for huge salaries

15. Why was the Technicolor acquisition so successful?
(a) adding R&D to come up with new products
(b) acquiring it at a time when movies were reviving
(c) selling off parts and putting the profits into the main company
(d) selling it to Kodak at a great profit

Short Answer Questions

1. What did Grant say the public was competing for at that point?

2. What was the subject of debate in the mid 1980s during the M&A onslaught?

3. What was Perelman planning to do when he took over Pantry Pride in 1985?

4. What were many of the money managers who started with Milken in the late 1970s doing in the 1980s?

5. To Drexel, what did certain concessions to clients mean?

(see the answer keys)

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