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

2. What did Kansa and Clarendon both have that Wedvick needed?
(a) AA rating
(b) excess capital
(c) no supervision
(d) corrupt employees

3. Why were Milken's imitators not as successful as he was?
(a) They could not raise the money Milken could or with the same speed.
(b) They were bound by deeper government regulations.
(c) They had no idea how he was doing his business.
(d) They could not invest as much firm money.

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

5. What was coming to an end?
(a) Drexel's plans for selling the firm
(b) Drexel's presence on Wall Street
(c) Milken's anonymity
(d) Milken's ability to raise millions of dollars in a few days

Short Answer Questions

1. On May 12, 1986, who was charged with insider trading and agreed to cooperate with the government?

2. What was Peer Wedvick devising?

3. Why did the LTV situation not affect Drexel?

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

5. What was beginning to happen during this time?

Short Essay Questions

1. Why did Milken play the role of enforcer?

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

3. How did Milken's power in the industry benefit Drexel?

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

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

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

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

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

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

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

(see the answer keys)

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