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

2. What did Grant think about the junk bond business?
(a) that junk bonds was the perfect vehicle for M&A
(b) that Wall Street had gone too far with junk bonds
(c) that it was too heavily regulated
(d) the Wall Street was too slow in accepting them

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

4. How was Joseph building his diversified team?
(a) by training inexpensive novices to learn the business
(b) by taking his time to get the right people together
(c) by computerizing his entire operation
(d) by hiring people away from other firms for huge salaries

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

Short Answer Questions

1. What did Drexel think about the Japanese acceptance of junk bonds used in takeovers?

2. How did the investigation appear at first?

3. How did Perelman acquire Technicolor?

4. Why was the Technicolor acquisition so successful?

5. What company did Wedvick find with a high investment-grade rating?

Short Essay Questions

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

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

3. Describe the attempts to prevent Perelman's acquisition of Revlon.

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

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

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

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

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

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

10. Why were other investment firms not as successful as Drexel?

(see the answer keys)

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