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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. Who were the people Milken was happy to help in the business?
(a) people who left Drexel on friendly terms
(b) people who did not qualify to work at Drexel
(c) people who would spy on the competition
(d) people who would destroy competitors

2. What did Bergerac's associates tell him about Perelman?
(a) that Perelman knew all about hostile takeovers
(b) that Perelman would use illegal means to take Revlon over
(c) that Perelman had never done a hostile takeover
(d) that Perelman was known as a blowhard

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

4. What did Drexel think about the Japanese acceptance of junk bonds used in takeovers?
(a) that it would be a foothold in all of Asia
(b) that they would need to do a lot of educating
(c) much faster there than it had been in the United States
(d) that the Japanese would accept anything made in America

5. What was beginning to happen during this time?
(a) Junk bonds began to disappear from the market.
(b) Unemployment shot up as a results of the mergers and acquisitions.
(c) People were making vast amounts of money trading junk bonds.
(d) Junk bonds were becoming poorer in quality and there were more bankruptcies and defaults

Short Answer Questions

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

2. Who at Drexel became a problem because of a lawsuit by Beverly Hills Savings and Loan?

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

4. How was Drexel being spoken of after the success of so many hostile takeovers?

5. What did the Revlon takeover prove?

Short Essay Questions

1. What evolved after many customers first dealt with Milken?

2. How did Milken disagree with the idea that liquidity was scarce?

3. Describe Milken's goals for the Asian markets.

4. What was Ronald Perelman's purpose for acquiring Pantry Pride?

5. How was favoritism shown at Drexel?

6. How was fear affecting Drexel during the investigations?

7. What was James Grant's position on where things would eventually lead in the credit cycle?

8. Why did Sanford Sigoloff switch from Salomon Brothers to Drexel when he was acquiring Wickes?

9. How did political connections aid Drexel?

10. What were the results of the ongoing investigations of Drexel and Milken?

(see the answer keys)

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