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

Multiple Choice Questions

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

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

3. The partners were interested firms that are adapted to ______ times that could readily increase prices and scale up to a large volume with more capital.
(a) Aggressive.
(b) Bloated.
(c) Recession.
(d) Inflationary.

4. Buffett and Munger recapitalize into Class A and _____ non-voting shares to offer a lower trading price.
(a) E.
(b) B.
(c) C.
(d) D.

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

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

7. Non-transferability of _______ did not make them less costly to an employer, according to the book.
(a) Benefits.
(b) Bonds.
(c) Dividends.
(d) Stock options.

8. Main _______ changes allowed cash-basis accounting for the costs of a corporation.
(a) Requirement.
(b) Reporting.
(c) Valuation.
(d) Tax.

9. Buffett wondered that if _______ were not calculated through earnings, how could they be determined.
(a) Selloffs.
(b) Options.
(c) Mergers.
(d) Offers.

10. Pooling overcame the deficiency of ____________ amortization in a merger, which was really a purchase.
(a) Projected.
(b) Promised.
(c) Goodwill.
(d) Peaceful.

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

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

13. Businesses must recognize present value _______ for post-retirement health benefits, according to Buffett.
(a) Reporting.
(b) Liability.
(c) Concerns.
(d) Charts.

14. The Berkshire dividend share of Coca-Cola in 1990 included operating earnings of ___________.
(a) $125M.
(b) $250M.
(c) $500M.
(d) $100M.

15. The common stock par value was reduced to _________, according to the book.
(a) One cent.
(b) One quarter.
(c) One dime.
(d) One dollar.

Short Answer Questions

1. _______ transactions only allowed stock be paid compared to a purchase in which cash or stock and cash or other valuable consideration may be paid.

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

3. The question of an exchange of stock arose in 1983 during the merger of Berkshire and ____________.

4. Warrants exercised for a penny par add ________ to credit capital surplus, according to the book.

5. The partners were also interested in firms that had extraordinary ________ talent exhibiting skillful executive achievement.

(see the answer keys)

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