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

Multiple Choice Questions

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

2. A stock _______ might attractive investors unlike their current investor group which might downgrade the quality of the shares.
(a) Sale.
(b) Selloff.
(c) Split.
(d) Option.

3. Options were often ______ at exercise which made them more expensive than publicly traded options.
(a) Undervalued.
(b) Moved.
(c) Presented.
(d) Re-priced.

4. Berkshire's consolidated statements met outside __________, according to the book.
(a) Standards.
(b) Values.
(c) Requirements.
(d) Movements.

5. The benefits of __________ were retained by Berkshire since it was a strong franchise.
(a) Fair market value.
(b) Reporting.
(c) Shareholder meetings.
(d) Tax reduction.

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

7. The goal of the partners was to maximize the real economic benefits, not just the number of ___________.
(a) Checks.
(b) Properties.
(c) Enterprises.
(d) Shares.

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

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

10. Buffett and Munger now believed that the substantial economic _________ far exceeded the book value of Berkshire.
(a) Goodwill.
(b) Movement.
(c) Promise.
(d) Passion.

11. Berkshire shareholders can be assured that the company _______ statements are accurate.
(a) Honor.
(b) Recommended.
(c) Holding.
(d) Financial.

12. Buffett stated that his position with any stock repurchase does not imply acceptance of _______, which he calls extortion.
(a) Greenmail.
(b) Redmail.
(c) Blackmail.
(d) Blue chip mail.

13. ________ cannot outperform business indefinitely because earnings on stock investments were reduced by the amount of transaction and investment management costs.
(a) Treasury bills.
(b) Stocks.
(c) Holdings.
(d) Bonds.

14. Owners were expected to conclude that retained _______ were better left in the corporation for reinvestment at a higher rate than paid out as dividends.
(a) Values.
(b) Earnings.
(c) Losses.
(d) Shares.

15. In the past, the distinction between economic and accounting goodwill was insignificant when Buffett sought firms with tangible _______, rather than firms relying on economic goodwill.
(a) Assets.
(b) Shares.
(c) Outlooks.
(d) Management.

Short Answer Questions

1. Munger believed the _________ Berkshire paid to be acceptable for the benefits they received.

2. Buffett and Munger run the business so that all ___________ gain proportionately.

3. Two super contagious diseases in the investment world included _______ and greed, according to the book.

4. Buffett and Munger recapitalize into Class A and _____ non-voting shares to offer a lower trading price.

5. ________ took fictional accounting actions that showed absurd accounting manipulations to let it undersell all competition to dominate the industry.

(see the answer keys)

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