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

Multiple Choice Questions

1. For what did Boesky claim a $5.3 million payment was made to Drexel?
(a) consulting
(b) buying back bonds
(c) investing in Drexel
(d) a loan to Drexel

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

3. In what was Atlantic Capital involved?
(a) forging bond documents
(b) ponzi schemes
(c) selling bond coupons
(d) unmonitored investments

4. Who told Perelman that Revlon was not for sale?
(a) Tubby Burnham
(b) Michael Bergerac
(c) Carl Icahn
(d) Michael Milken

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

6. What was Peer Wedvick devising?
(a) a scheme to sell contracts involving housing funds
(b) buying commercial paper
(c) flipping houses and commercial buildings
(d) money laundering

7. Why did people like Lawrence Coss of Green Tee Acceptance feel they were targets of hostile takeovers?
(a) because they wanted more money for their companies
(b) because they wouldn't give in to Milken
(c) because they were not Jewish
(d) because Milken did not like them

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

9. What was Perelman planning to do when he took over Pantry Pride in 1985?
(a) to create positions for his sons and other family members.
(b) to use Pantry Pride and its income sheltering tax loss to acquire Revlon
(c) to make Pantry Pride attractive to other supermarkets
(d) to run the business and get out of doing takeovers

10. What was the subject of debate in the mid 1980s during the M&A onslaught?
(a) the dangers of over growth
(b) the economic advantages of takeovers
(c) the legality of hostile takeovers
(d) the cash flow of takeovers

11. Who at Drexel became a problem because of a lawsuit by Beverly Hills Savings and Loan?
(a) Martin Siegel
(b) Jim Dahl
(c) Carl Ichan
(d) Fred Joseph

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

13. What was the result when many Drexel employees were not allowed into Milken's investment groups?
(a) Milken made sure they did not know they were excluded.
(b) Many were relieved that they would not have to invest.
(c) Most people did not care.
(d) There was some degree of hostility.

14. What could happen to Drexel with so much power vested in one man?
(a) possible loss if anything happened to him
(b) possible abuse of power
(c) possible collapse of the company
(d) possible take over of the company

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

Short Answer Questions

1. What had been Perelman's greatest acquisition before Revlon?

2. How did Drexel get around the law and continue the takeovers?

3. What did the Revlon takeover prove?

4. What did Grant think about the junk bond business?

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

(see the answer keys)

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