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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 at Drexel became a problem because of a lawsuit by Beverly Hills Savings and Loan?
(a) Jim Dahl
(b) Carl Ichan
(c) Fred Joseph
(d) Martin Siegel

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

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

4. 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.

5. What was the largest bankruptcy in 1986?
(a) Revlon
(b) TWA
(c) Metromedia
(d) LTV Corporation

Short Answer Questions

1. In many ways, what became the role of Milken?

2. Why was the partner Groupe Bruxelles Lambert S.A. not happy with Drexel and trying to take it over?

3. Why did none of the thirty bills introduced covering takeovers in 1984-85 pass?

4. Why was Revlon attracting raiders?

5. What made Drexel's troubles even worse after Boesky Day?

Short Essay Questions

1. What were some of the detractors of LTOs saying about the practice in the 1980s?

2. Describe the reason for Wedvick's problems with Atlantic Capital.

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

4. Tell something of the anticipation associated with SEC and FBI investigations into Drexel and Milken.

5. How did Drexel achieve god-like status with investors?

6. What role did LTV play in identifying a weakness in the junk market?

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

8. How did Peer Wedvick satisfy his need for an institution with a high investment-grade rating?

9. Before Revlon, what had been Perelman's biggest success?

10. State some of the details about Milken's being investigated for insider trading.

(see the answer keys)

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