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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. When Gutfreund resigned:
(a) he was indicted.
(b) the company went out of business.
(c) Warren Buffett stepped in as CEO.
(d) a massive fraud was uncovered.

2. Why is finance the opposite of investing?
(a) finance is based on Graham and Dodds theory.
(b) finance describes the corporate view of fund raising.
(c) finance is based on Efficient Market Theory.
(d) finance is the same as investing.

3. How much did Buffett pay for Nebraska Furniture Mart?
(a) $25 million.
(b) $60 million.
(c) $10 million.
(d) $5 million.

4. Which investment banking firm did Buffett invest in?
(a) Salomon.
(b) Smith Barney.
(c) Merrill Lynch.
(d) J.P. Morgan.

5. Buffett appeared on:
(a) Johnny Carson.
(b) This is our Life.
(c) Lifestyles of the Rich and Famous.
(d) What's My Line.

Short Answer Questions

1. When is a squeeze considered illegal?

2. At the end of 1986, the approximate share price of Berkshire was?

3. What stock did Buffett begin to buy in the fall of 1988?

4. Buffett's annual shareholders meetings differed from those of other companies because:

5. Buffett's theory of trading is based on:

Short Essay Questions

1. What was the effect of irregularities in the bond trading by Salomon on traders?

2. How did Buffett learn about the Nebraska Furniture Mart?

3. What was one of Buffett's biggest fears in 1980?

4. Why wasn't Buffett adversely affected by the insurance market problems in 1985?

5. Salomon became the object of an SEC and Justice Department investigation because of their bond trading. What did they do?

6. Buffett's career was based on the Graham and Dodds theory of investing. What are the basis of Buffet's beliefs based on the teachings of Graham and Dodds?

7. How many people are employed at Buffett's world headquarters?

8. What was the newer Efficient Market Theory?

9. Buffett was interested in buying media companies in the 1980s. Why did he invest in Cap Cities through Berkshire?

10. What were Buffett's views on hostile takeovers?

(see the answer keys)

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