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

Multiple Choice Questions

1. 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) Drexel's secret bookkeeping
(c) the Drexel practice of not paying dividends
(d) the falling stock price of drexel

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

3. What is it called when one investor holds stock for another investor and thus conceals the identity of the owner?
(a) shielding stock
(b) covering stock
(c) disguising stock
(d) parking stock

4. What happened to the plan for moving to the Seven World Trade Center?
(a) It decreased the number of floors.
(b) It went ahead.
(c) It was abandoned.
(d) It was held up by the FBI.

5. What indicated the level of fear at Drexel during the investigations?
(a) Many employees were leaving the firm.
(b) Joseph resigned as CEO.
(c) Drexel began firing employees.
(d) All bonuses were cancelled.

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

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

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

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

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

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

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

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

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

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

Short Answer Questions

1. Why did the LTV situation not affect Drexel?

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

3. What did the 1985 President's Council of Economic Advisers report on the issue of M&A conclude?

4. Why were Milken's imitators not as successful as he was?

5. What was the result when many Drexel employees were not allowed into Milken's investment groups?

(see the answer keys)

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