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

Multiple Choice Questions

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

2. Buffett discussed the popularity of _________ buyouts as they had a number of different benefits to them.
(a) Leveraged.
(b) Averaged.
(c) Bored.
(d) Discussed.

3. Berkshire kept the business operating after the acquisition, since it would already have successful ___________.
(a) Debts.
(b) Management.
(c) Practices.
(d) Movement.

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

5. ___________ were used to pay salaries and wages, which eliminated payroll with increased employee compensation.
(a) Option warrants.
(b) Valued shares.
(c) Increased notes.
(d) Common stocks.

6. _______ 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) Pooling.
(b) Static.
(c) Dripping.
(d) Moving.

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

8. Buffett preferred to trade a narrow range around _________ business value to favor long-term owners.
(a) Guesstimated.
(b) Promised.
(c) Market.
(d) Intrinsic.

9. Generally, earnings were reported when classified by a company as more than _______ owned.
(a) 25%.
(b) 99%.
(c) 50%.
(d) 10%.

10. Berkshire shareholders can be assured that the company _______ statements are accurate.
(a) Honor.
(b) Holding.
(c) Recommended.
(d) Financial.

11. Many executives argued that the costs of _________ should be ignored because they were hard to value or may harm smaller firms.
(a) Dividends.
(b) Charges.
(c) Stock options.
(d) Reinvestment promises.

12. Berkshire's consolidated statements met outside __________, according to the book.
(a) Standards.
(b) Movements.
(c) Values.
(d) Requirements.

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

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

15. Information helped investors see the likelihood of a company meeting future __________.
(a) Mergers.
(b) Promises.
(c) Stock prices.
(d) Obligations.

Short Answer Questions

1. Buffett started to buy _____ businesses at good prices instead of buying good businesses at fair prices.

2. A company might consider repurchasing _______ when it has available funds that are above long-term needs.

3. LBO operators benefitted from the use of ________ to reshuffle business, risk little of their own money to gain high fees, etc.

4. Major business activities grouped together aided _____ by providing data in a more useful form.

5. Accounting for the purchase of a business required allocating the ________ first to the fair value of net assets.

(see the answer keys)

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