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

Multiple Choice Questions

1. Buffett's new worth was approximately:
(a) $3.8 billion.
(b) $900 million.
(c) $1.35 billion.
(d) $2.3 billion.

2. The Efficient Market Theory says that:
(a) prices reflect information.
(b) prices can be influenced.
(c) stock prices will fall.
(d) stock prices will rise.

3. Why did Buffett buy into Cap Cities?
(a) the price was cheap.
(b) it was a good deal.
(c) to infuse it with capital and to provide stability for its merger with ABC.
(d) he was looking to diversify.

4. Regarding his textile mills, in the early 1980s, Buffett:
(a) sold them.
(b) closed them.
(c) continued to operate at a loss.
(d) made large capital investments.

5. Mrs. B built her furniture store into the biggest furniture store in the:
(a) country.
(b) state.
(c) city.
(d) midwest.

6. With zero-coupon bond, the borrower:
(a) pays the interest in less than a year.
(b) makes regular interest payments.
(c) defers the interest payments.
(d) has no interest payments.

7. The settlement of the public and private cases cost Salomon:
(a) $45 million.
(b) $490 million.
(c) $125 million.
(d) $400 million.

8. Which of the following companies was the object of a hostile takeover in the 1980s?
(a) General Goods.
(b) Revlon.
(c) Time.
(d) Berkshire.

9. Which of the following was not one of the permanent three in Berkshire's portfolio?
(a) IBM.
(b) Cap Cities.
(c) Washington Post.
(d) GEICO.

10. Buffett looked for stocks:
(a) that had a product he believed in.
(b) whose value was greater than its price.
(c) that was owned by people he knew.
(d) that had an attractive annual report.

11. Which of the following is not part of Buffett's guide to selecting stocks?
(a) ignoring macroeconomic trends and forecasts.
(b) stocks within one's circle of competence.
(c) doing his own market analysis.
(d) trading on tips.

12. Susie's absence made life:
(a) made Warren more self-sufficient.
(b) difficult for Warren.
(c) made Warren happier.
(d) game Warren more freedom.

13. The Nebraska Furniture Mart was owned by:
(a) Isadore Blumkin.
(b) Seabury Stanton.
(c) Katherine Graham.
(d) Rose Blumkin.

14. What did Buffett always look at, especially in insurance?
(a) profit.
(b) growth potential.
(c) odds.
(d) premiums.

15. At the end of 1986, the approximate share price of Berkshire was?
(a) $1,500.
(b) $3,000.
(c) $275.
(d) $950.

Short Answer Questions

1. What was Buffett's annual Christmas gift to each of his children?

2. One thing that Buffett did that resulted in many people leaving the firm was to:

3. Why is finance the opposite of investing?

4. When Gutfreund resigned:

5. Buffett appeared on:

(see the answer keys)

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