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

Multiple Choice Questions

1. Buffett and Munger both opposed any selective ________ and predictive growth rates from the CEOs who reported them.
(a) Truth.
(b) Strategies.
(c) Purchases.
(d) Disclosure.

2. Buffett and Munger saw themselves as general _______ responsible to other shareholders.
(a) Managers.
(b) Guides.
(c) Partners.
(d) Professors.

3. What was the initial book value of the company that Buffett and his partner acquired in 1964?
(a) $35.00
(b) $10.67.
(c) $47.01.
(d) $19.46.

4. Popular theory at the time said that the market was totally efficient at _________ investment.
(a) Purchasing.
(b) Pricing.
(c) Value.
(d) Scattered.

5. What company did Buffett acquire in 1964, which he eventually grew into a large holding company?
(a) Textile.
(b) Microsoft.
(c) Wal-Mart.
(d) Berkshire.

6. Preferred firms must pay returns above ______ investments and be compatible with management.
(a) Future.
(b) Mr. Market.
(c) Past.
(d) Fixed-income.

7. The partners considered a lesser interest if the ________ price was less than what it would be for 100%.
(a) Pro-biotic.
(b) Pro-rata.
(c) Pro-management.
(d) Pro-rate.

8. What were the name of the bonds that Buffett seeks to promote through Berkshire?
(a) Zero-coupon.
(b) Junk.
(c) None.
(d) Angel.

9. Ben Graham personified the market with the name ___________, to give it a more human side.
(a) Mr. Market.
(b) Sir Market.
(c) Mr. Big.
(d) The Market Man.

10. The intrinsic business value goal was reached by ________, preferably 100% ownership of diverse business firms generating cash and above-average returns on capital.
(a) Direct.
(b) Passive.
(c) Prominent.
(d) Indirect.

11. The current value of the company Buffett and his partner bought showed that they understated its current ________ value.
(a) World.
(b) Intrinsic.
(c) Business.
(d) Market.

12. How much was the company worth that Buffett and his partner created at the time of this book?
(a) $5M.
(b) $70B.
(c) $10M.
(d) $30M.

13. What did a bondholder have to do with their bond if they decided to cash it in early?
(a) Pay interest.
(b) Nothing.
(c) Earn more.
(d) Transfer it back to the owner.

14. What were the name of the bonds that were issued during WWI?
(a) Series II.
(b) IRA.
(c) Series E.
(d) Series B.

15. What was the value of the shares of the company that Buffett and his partner purchased thirty years after its purchase?
(a) $10,000 per share.
(b) $15,000 per share.
(c) $25,000 per share.
(d) $40,000 per share.

Short Answer Questions

1. What was coined as the term for the amount of undiscovered embezzlement?

2. Buffett did not expand, borrow, or sell unless Berkshire received as much _________ as it gave.

3. _________ can be foolish, according to the lessons in this chapter, foolhardy even, or just be fooling buyers and sellers.

4. Buffett and Munger invested based on company operating results and not on ____________.

5. Berkshire's long-term investment strategy to buy and to hold _______ for the long term was something that was comfortable to them.

(see the answer keys)

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