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

Multiple Choice Questions

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

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

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

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

5. In many ways, what became the role of Milken?
(a) the role of enquirer
(b) the role of adviser
(c) the rold of peacemaker
(d) the role of enforcer

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

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

8. What was the result when rules on M&A were finally adopted by the Congress?
(a) They made it impossible to sell parts of a company to pay for the acquisition.
(b) They were easy for the investment banking firms to get around.
(c) They put everyone out of business.
(d) They made it almost impossible for raiders to operate.

9. How was Drexel being spoken of after the success of so many hostile takeovers?
(a) as near criminals skirting the law
(b) as the investment firm of the future
(c) as the devil in disguise
(d) a god that could do whatever it wanted in the niche it was in

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

11. What did Grant say the public was competing for at that point?
(a) for securities of high and higher yield - and poorer quality
(b) for invitations to the Preditors' Ball
(c) for more and more media attention
(d) for ownership in television stations and newspapers

12. On May 12, 1986, who was charged with insider trading and agreed to cooperate with the government?
(a) Car Icahn
(b) Lowell Milken
(c) Dennis Levine
(d) Fred Joseph

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

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

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

Short Answer Questions

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

2. Who were the people Milken was happy to help in the business?

3. What was Peer Wedvick devising?

4. How did Perelman acquire Technicolor?

5. Why did people like Lawrence Coss of Green Tee Acceptance feel they were targets of hostile takeovers?

(see the answer keys)

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