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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. Buffett made distinctions in ________ policy to account or differences in earnings, according to the book.

2. Businesses must recognize present value _______ for post-retirement health benefits, according to Buffett.

3. The different classes of stock allow _______ investors to still have value for the money they can spend.

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

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

Short Essay Questions

1. What was the difference between the purchase and the pooling transaction?

2. What was the purpose of Buffett and Munger focusing on buying up 100% of a company and the investment must use a lot of capital?

3. What did Buffett expect to owners of stock to do when he creates a principle that earnings should be retained to the extent each retained dollar creates at least one dollar of market value for owners?

4. What happened as the result of the fictional accounting actions by US Steel?

5. What did Buffett say should happen to some earnings in dividends?

6. What was the first step in the US Steel fictional accounting process?

7. How did Buffett avoid diluting share value to existing shareholders?

8. What could Berkshire shareholders be assured of, according to Buffett in the book?

9. What was the result of information that is necessary to report to an investor or shareholder?

10. What did Buffett try to do in order to avoid problems with the two contagious diseases in the investment community?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Buffett decided to buy a company when their stock market value was less than their intrinsic value.

Part 1: Do you think Buffett should pay the intrinsic value or the stock market value?

Part 2: Why do you think a company might be worth less in the market than they are intrinsically?

Part 3: How do you think Buffett might approach a conversation about buying a company that has a lower market value?

Essay Topic 2

Buffett and Munger saw the shareholders are partners in the company, not just as those who bought into the company.

Part 1: Do you think all shareholders should be seen as partners in their companies?

Part 2: How can a shareholder influence the way that that a company behaves or reacts in the business market?

Part 3: Why do you think it's necessary for there to be shareholders in modern day companies?

Essay Topic 3

Buffett and Munger wanted fair and accurate reporting from all of their company CEOs at all times.

Part 1: Do you think it's possible to have fair and accurate reporting at all times?

Part 2: Why do you think it's important for CEOs to be accurate in their reporting?

Part 3: How do you think Buffett and Munger handled those CEOs who were not able to report on their company's status?

(see the answer keys)

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