Buffett: The Making of an American Capitalist Test | Final Test - Easy

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

Multiple Choice Questions

1. Salomon grew from 1955 on when they announced:
(a) partners would leave their capital in the firm.
(b) they went public.
(c) they were purchased by J.P. Morgan.
(d) they would ac cept no new partners.

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

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

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

5. What stock did Buffett begin to buy in the fall of 1988?
(a) Pepsi-Cola.
(b) NBC.
(c) ABC.
(d) Coca-Cola.

6. In the 1980-84 period, insurance companies:
(a) stopped paying claims.
(b) cut premiums trying to maintain market share.
(c) stopped accepting new business.
(d) none of the above.

7. Daughter Susie moved back to Omaha when:
(a) she divorced her husband.
(b) her husband became the manager of the Buffet Foundation.
(c) Warren offered her money.
(d) she became ill.

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

9. What does Buffett say about the hostile takeover of Time?
(a) it was an example of the destructive tactics of the merger era.
(b) it was a good merger.
(c) it could have been handled better.
(d) it showed how smoothly the market worked.

10. How many people worked at Berkshire's world headquarters:
(a) fifty.
(b) two hundred fifty.
(c) twenty seven.
(d) eleven.

11. When Buffett is described as a gorilla, it refers to:
(a) his protecting CEOs from a takeover.
(b) none of the above.
(c) his manner of negotiation.
(d) his gruff manner.

12. What information did Jon Gutfruend withhold?
(a) Salomon trading strategy.
(b) Salomon bond revenues.
(c) the level of Salomon bonuses.
(d) that a Salomon trader made a false bid.

13. Why did Buffett refuse to financially support his adult children?
(a) he was angry with them.
(b) he wanted them to lead normal, independent lives.
(c) he had other uses for his money.
(d) he was too cheap.

14. In Warren's view, the managers of other people's money:
(a) could act as they want.
(b) bore a heavy burden.
(c) had to have approval for any of their actions.
(d) had to responsibility to others.

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

Short Answer Questions

1. Soon after Buffett arrives in New York, he learns that:

2. Cap Cities would use the money from Berkshire to:

3. Which of the following companies was the object of a hostile takeover in the 1980s?

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

5. Which of the following is not part of Buffett's guide to selecting stocks?

(see the answer keys)

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