The Rise and Fall of Michael Milken

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FINK-403 Case Studies in Finance The Rise and Fall of Michael Milken 4/9/2014 The Rise and Fall of Michael Milken Michael Milken is known for many things. He is known to many as the “junk-bond king”, the “leveraged-buyout king” an innovator who changed the face of financial securities, to others he is seen as a crook who allowed his greed to beat out his integrity in order to make himself and those around him wealthier. The truth, as in most cases, is more than likely to fall somewhere in the middle. Michael Milken’s story is one with many highs and very few lows, while those lows would be considered catastrophic for some, Michael Milken conducted himself with a grace that very few people possess. He weathered the storms he was confronted with throughout his life and continued to remain on top. The Rise Michael Milken was born and raised in Encino, California. He attended the University of California-Berkley, where he received the highest honors upon his graduation in 1968. He then went on to attend the Wharton School, where he obtained his MBA. While working on his MBA, Milken began to work for the investment company Drexel Harriman Ripley. While working part-time for Drexel while still attending school, Milken made his very first deal with Boeing that would later turn into an overwhelming success. After completing his schooling at Wharton, Milken went to work for Drexel full time and in the early 1970s began to trade junk bonds. During this time Drexel Harriman Ripley merged with Burnham and Company, making t Drexel Burnham Lambert. As Milken continued to deal in junk bonds he found them to be a better investment. He felt that investment grade bonds would see their quality fall, but that junk bonds returns were worth the risk that was involved. In 1977, Drexel began to underwrite junk bonds. In order to offer liquidity and security to this other new

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