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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What is NOT one of the three excuses often given by an overpaying buyer, according to the book?
(a) Will be worth more in the future.
(b) The buyer must grow.
(c) Will be worth less in the future.
(d) Buyer's stock is undervalued.

2. If the buyer's stock was sold at less than intrinsic value, he bought with undervalued _________ and would suffer an unequal exchange.
(a) Markets.
(b) Currency.
(c) Dividends.
(d) Companies.

3. Buffett avoids _________ share value to existing shareholders by true value for value merger, using stock as inflated currency.
(a) Dispersing.
(b) Increasing.
(c) Stabilizing.
(d) Diluting.

4. What did GAAP stand for, according to the text in the book?
(a) Generally accepted accounting principles.
(b) Generally argued accounting principles.
(c) Generally accepted available principles.
(d) Generally agreed accounting principles.

5. In 1992, what did the Berkshire per share stock price increase past?
(a) $25,000.
(b) $10,000.
(c) $20,000.
(d) $30,000.

6. Buffett realized that it was helpful to be _________ when others were fearful in the market.
(a) Slow.
(b) Fast.
(c) Greedy.
(d) Standoffish.

7. Warrants exercised for a penny par add ________ to credit capital surplus, according to the book.
(a) $19.99.
(b) $49.99
(c) $29.99.
(d) $39.99

8. ________ took fictional accounting actions that showed absurd accounting manipulations to let it undersell all competition to dominate the industry.
(a) US Steel.
(b) Coca-Cola.
(c) Pepsi.
(d) GEICO.

9. Buffett and Munger promise to never ________ unless they are selling at a market price well below intrinsic business value.
(a) Liquidate assets.
(b) Lower dividends.
(c) Repurchase shares.
(d) Exchange shares.

10. What was the piece of advice that Buffett took to heart from the athlete?
(a) Perfect makes practice.
(b) Practice makes permitted.
(c) Practice makes perfect.
(d) Practice makes permanent.

11. ___________ recognized that statements are not adequate compared to segment data that enabled control of business.
(a) Management.
(b) The public.
(c) Shareholders.
(d) The business students.

12. The partners were also interested in firms that had extraordinary ________ talent exhibiting skillful executive achievement.
(a) Management.
(b) Prices.
(c) Reports.
(d) Jumps.

13. The partners were committed to providing and presenting a _______ business and ownership philosophy.
(a) Consistent.
(b) Powerful.
(c) Long-term.
(d) Active.

14. What was the total look through earnings of Berkshire in 1990, plus non-dividend operating earnings?
(a) $400M.
(b) $590M.
(c) $200B.
(d) $100B.

15. Buffett and Munger did not operate a strategic plan for __________ but compare opportunities against passive investments.
(a) Reports.
(b) Stockholders.
(c) Buyouts.
(d) Acquisitions.

Short Answer Questions

1. Any new investment must use a lot of large amounts of _________, according to the book.

2. Buffett proposed that earnings should be retained to the extent each retained dollar creates at least ________ of market value for owners.

3. Buffett believed that _______ data was important to his and Munger's decision making.

4. The goal of the partners was to maximize the real economic benefits, not just the number of ___________.

5. Buffett and Munger believed that marketability and __________ were two terms that increased the likelihood of turnover.

(see the answer keys)

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