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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Where was much of the money coming from for takeovers in the 1980s?
(a) fake junk bonds imitating Milken's bonds
(b) big blind pools that Milken would raise for his customers
(c) foreign investors with extra capital
(d) the break up and sale of raided company divisions

2. Why was Milken so interested in low grade bonds?
(a) they were the only ones he really understood
(b) he liked to gamble big time
(c) that was all he could afford
(d) equity offerings were not an option for the Drexel Burnham market

3. Why did Ichan and Kingsley limit themselves to 4.9% of shares in companies?
(a) that was all they could afford without getting financing
(b) 4 and 9 were Carl Icahn's lucky numbers
(c) they wanted to keep a low profile in takeover bids
(d) 4.9% was below the SEC reporting limit on 13d disclosure documents

4. Why was Milken nervous about the large deals?
(a) because of the people running the companies
(b) because of the economy
(c) because of the size
(d) because of the drain on Drexel finances

5. What did the Milken brothers do probably without notifying Drexel?
(a) buy into a number of smaller investment firms
(b) investment partnerships that were to be registered with Bear Stearns
(c) underwrite bond issues in excess for $1 trillion
(d) set up their own investment banking business

Short Answer Questions

1. What was the result of changes in the investment banking industry in the 1970s?

2. How much money and how fast did Drexel raise for the Phillips Petroleum proxy fight?

3. What two large companies did Drexel underwrite bond issues for in a ten-day period?

4. What is it called when a firm decides to commit its own capital toward a takeover?

5. When were the tax laws changed to minimize the benefits of stripping?

Short Essay Questions

1. Describe Drexel's part in the National Can hostile takeover.

2. How did Marshall Field attempt to fight Carl Icahn?

3. Why was Milken not employed by some of the biggest Wall Street firms?

4. What were some complications of the move to Century city for Drexel?

5. Write about the relationship between Milken and Steve Wynn of the gambling industry.

6. Tell something about Milken's first house in California.

7. How did they get around the SEC bond registration rules?

8. Describe the National Can Company takeover.

9. What happened that started the Merger & Acquisition craze in the late 1970s and early 1980s?

10. How did Milken begin building his fortune?

(see the answer keys)

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