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

Multiple Choice Questions

1. What was one of the most important factors in the leveraged buyout deals?
(a) support of key Congressmen
(b) loopholes in the banking laws
(c) knowing Michael Milken
(d) the zero coupon bond

2. What company did Wedvick find with a high investment-grade rating?
(a) Standard and Poors
(b) Drexel
(c) Clarendon, a Bermuda based reinsurance company
(d) Mutual of Omaha

3. What did Milken want at work?
(a) his photo in the annual report
(b) fancy titles and gold letterhead
(c) distance between him and the powers that be at Drexel
(d) to run the Drexel firm

4. What made a Wickes takeover so attractive to Sanford Sigoloff?
(a) It was losing stock value and had few debts.
(b) Wickes was his mother's maiden name.
(c) It was over valued on the Wall Street Stock Exchange.
(d) It was emerging from Chapter 11 bankruptcy with a large tax-loss carryforward

5. Who was James Grant?
(a) the chief of the SEC
(b) the editor of Grant's Interest Rate Observer
(c) the author of the Grant Bill in Congress
(d) the head of Grant Investment Bank

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

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

8. Why was the Revlon takeover a landmark case for Perelman and Drexel?
(a) If Perelman won, it would set the precedent for other such takeovers.
(b) The most impassioned corporate defenders were united against Milken's onslaught.
(c) Because of its base of female customers, Revlon was vulnerable to bad publicity.
(d) This one was almost as large as the Phillips Petroleum takeover.

9. How did Drexel get around the law and continue the takeovers?
(a) by using preferred stock instead of bonds as a means of financing
(b) by using offshore banks to finance their deals
(c) by lobbying to get the rules overturned
(d) by creating dummy companies to made the acquisitions

10. 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

11. Why did none of the thirty bills introduced covering takeovers in 1984-85 pass?
(a) Congress was waiting for a supreme court decision.
(b) Many politicians who received large contributions attended the Predators' Ball in 1986.
(c) Drexel took leading politicians on a vacation to the Bahamas.
(d) The Congress did not think it was an important matter.

12. How did Perelman acquire Technicolor?
(a) paying full price
(b) directing a hostile takeover
(c) selling junk bonds
(d) buying on credit

13. What did Milken do for people who had worked with him?
(a) got rid of all of them
(b) gave them no competition contracts
(c) contributed to their children's education
(d) helped people find jobs

14. 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) The FBI wiretapped Milken's and Drexel's offices.
(d) Both New York and California started independent investigations.

15. 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.

Short Answer Questions

1. Where did Grant point out most of the junk bonds were held?

2. What often benefited Drexel in dealing with its clients?

3. Who made the contact for Wedvick with Kansa?

4. Before Sigoloff switched to Drexel, who was handling his takeover bid for Wickes?

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

(see the answer keys)

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