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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. Why was the partner Groupe Bruxelles Lambert S.A. not happy with Drexel and trying to take it over?
(a) the Drexel continued support of Mike Milken
(b) Drexel's secret bookkeeping
(c) the falling stock price of drexel
(d) the Drexel practice of not paying dividends

2. Why did Drexel become the target of both an SEC and federal grand jury investigations?
(a) Milken and Drexel refused to cooperate with the investigation.
(b) Milken and Drexel had underwritten quite a bit of Boesky debt.
(c) Milken and Drexel began making off-shore deposits.
(d) Milken and Drexel immediately hired high powered lawyers.

3. What are two other notable takeovers done by Perelman after Revlon?
(a) Hearst Corporation and Ford Motor Company
(b) NBC-TV and Hertz Rent a Car
(c) Warner Brothers Studios and Coca Cola
(d) CPC International and Transworld Corporation

4. What became the craze on Wall Street in 1986?
(a) something called merchant banking
(b) something called investment underwriting
(c) something called equity sharing
(d) something called collective bargaining

5. What did the Revlon takeover prove?
(a) that Perelman knew nothing about hostile takeovers
(b) that women will buy Revlon no matter who owns the company
(c) the power of Milken and junk bond financing
(d) that Revlon stock was way overvalued

Short Answer Questions

1. What concept did Milken continue to support?

2. Why did people like Lawrence Coss of Green Tee Acceptance feel they were targets of hostile takeovers?

3. Why did Atlantic Capital have to stop selling Wedvick's contracts?

4. When did Drexel begin dealing based on insider information?

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

Short Essay Questions

1. What were some of Perelman's activities after acquiring Revlon?

2. How did political connections aid Drexel?

3. How was fear affecting Drexel during the investigations?

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

5. How widespread was Milken's competition by the fall of 1986?

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

7. How was favoritism shown at Drexel?

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

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

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

(see the answer keys)

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