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

Multiple Choice Questions

1. Buffett and Munger believed that marketability and __________ were two terms that increased the likelihood of turnover.
(a) Liquidity.
(b) Fluidity.
(c) Stability.
(d) Possibility.

2. Buffett and Munger described the acquisition process as being akin to finding a ________.
(a) Promised land.
(b) Spouse.
(c) New toy.
(d) Gold mine.

3. The question of an exchange of stock arose in 1983 during the merger of Berkshire and ____________.
(a) Coca-Cola.
(b) Blue Note.
(c) Blue Chip.
(d) Wal-Mart.

4. Buffett admitted that issuing ________ in mergers cost shareholders money, according to the book.
(a) Announcements.
(b) Bills.
(c) Stock.
(d) Bonds.

5. Pooling overcame the deficiency of ____________ amortization in a merger, which was really a purchase.
(a) Goodwill.
(b) Projected.
(c) Promised.
(d) Peaceful.

6. The satire talked about charging off ________ value to negative one million dollars so the company could convert depreciation cost to annual appreciation gain.
(a) Promised.
(b) Fixed assets.
(c) Variable assets.
(d) Shareholders.

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

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

9. Buffett realized that it was helpful to be _________ when others were fearful in the market.
(a) Standoffish.
(b) Slow.
(c) Fast.
(d) Greedy.

10. Accounting for the purchase of a business required allocating the ________ first to the fair value of net assets.
(a) Dividends.
(b) Purchase price.
(c) Projected price.
(d) Stock market.

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

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

13. Buffett and Munger run the business so that all ___________ gain proportionately.
(a) Banks.
(b) Companies.
(c) Shareholders.
(d) Lending agencies.

14. Main _______ changes allowed cash-basis accounting for the costs of a corporation.
(a) Requirement.
(b) Reporting.
(c) Tax.
(d) Valuation.

15. A company might consider repurchasing _______ when it has available funds that are above long-term needs.
(a) Shares.
(b) Bonds.
(c) Bills.
(d) Fallen angels.

Short Answer Questions

1. What kind of pro told Buffett the piece of information that helped to guide them on the field?

2. ________ cannot outperform business indefinitely because earnings on stock investments were reduced by the amount of transaction and investment management costs.

3. Berkshire management's goal was to acquire and to retain high quality __________.

4. What was NOT one of the three tax-free gifting tactics that Buffett suggested to shareholders?

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

(see the answer keys)

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