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

Multiple Choice Questions

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

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. Buffett believed that _______ data was important to his and Munger's decision making.
(a) Business.
(b) Accounting.
(c) Stock.
(d) Investor.

4. Berkshire management's goal was to acquire and to retain high quality __________.
(a) marketability.
(b) Workers.
(c) Shareholders.
(d) Management.

5. Buffett made distinctions in ________ policy to account or differences in earnings, according to the book.
(a) Ownership.
(b) Market.
(c) Dividend.
(d) Share.

6. Two super contagious diseases in the investment world included _______ and greed, according to the book.
(a) Fear.
(b) Rationality.
(c) Pain.
(d) Ignorance.

7. 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) Bloated.
(b) Inflationary.
(c) Recession.
(d) Aggressive.

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

9. How many shareholders did a business that wanted to be on the NYSE have to have?
(a) 100.
(b) 5000.
(c) 10,000.
(d) 2000.

10. 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) Losses.
(b) Values.
(c) Earnings.
(d) Shares.

11. Many ended up taking Buffett and Munger ________ on faith because of the way that they reported.
(a) Presentations.
(b) Rumors.
(c) Past values.
(d) Promises.

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

13. _______ transactions only allowed stock be paid compared to a purchase in which cash or stock and cash or other valuable consideration may be paid.
(a) Static.
(b) Moving.
(c) Dripping.
(d) Pooling.

14. Any new investment must use a lot of large amounts of _________, according to the book.
(a) Meetings.
(b) Management.
(c) Energy.
(d) Capital.

15. Buffett followed the simple rule that the same amount of intrinsic business value must be exchanged with each ________ transaction.
(a) Stock.
(b) Legal.
(c) Dividend.
(d) Movement.

Short Answer Questions

1. Buffett proposed that earnings should be retained to the extent each retained dollar creates at least ________ of market value for owners.

2. Buffett stated that his position with any stock repurchase does not imply acceptance of _______, which he calls extortion.

3. Berkshire's consolidated statements met outside __________, according to the book.

4. If the buyer's stock was sold at less than intrinsic value, he bought with undervalued _________ and would suffer an unequal exchange.

5. ___________ recognized that statements are not adequate compared to segment data that enabled control of business.

(see the answer keys)

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