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

Multiple Choice Questions

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

2. Buffet's view of stock index futures was:
(a) he relied on them.
(b) they would lead to excess speculation.
(c) they would benefit the market.
(d) they should be abandoned.

3. Cap Cities would use the money from Berkshire to:
(a) buy ABC.
(b) diversify.
(c) invest in the satellite business.
(d) modernize.

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

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

6. What did Buffett always look at, especially in insurance?
(a) premiums.
(b) odds.
(c) growth potential.
(d) profit.

7. How long did Buffett go without buying any common stock after the Cap Cities deal in 1985?
(a) one year.
(b) six months.
(c) eighteen months.
(d) three years.

8. The Efficient Market Theory was popular because it:
(a) proved accurate.
(b) extended the theories of Adam Smith to financial markets.
(c) was simple.
(d) was based on technology.

9. Mrs. B built her furniture store into the biggest furniture store in the:
(a) midwest.
(b) city.
(c) state.
(d) country.

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

11. What was Buffett's annual Christmas gift to each of his children?
(a) anything they wanted.
(b) vacations.
(c) ten shares of Berkshire stock.
(d) $10,000 the tax deductible limit on gifts to family members.

12. Why did US Air lose money after Buffett's investment?
(a) their fleet was old.
(b) there was a strike.
(c) the outbreak of the Persian Gulf War.
(d) none of the above.

13. What did Susie unexpectedly do at the age of forty-five?
(a) filed for divorce.
(b) tried to commit suicide.
(c) moved out of Buffett's house and into a San Francisco apartment.
(d) returned to school.

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

15. In Congressional testimony, Buffett makes it clear that:
(a) he would tolerate no wrong doing at Salamon.
(b) he would not cooperate with the government.
(c) he wanted the charges dropped.
(d) he wanted the perpetrators of the crime prosecuted.

Short Answer Questions

1. Warren's philosophy for purchasing stocks included all but:

2. By the end of 1988, the Berkshire share price was approximately?

3. When Buffett is described as a gorilla, it refers to:

4. What information did Jon Gutfruend withhold?

5. Buffett appeared on:

(see the answer keys)

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