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

Multiple Choice Questions

1. Which of the following was not a reason why Warren didn't move to Southern California?
(a) he didn't want to leave the familiarity of Omaha.
(b) he would have to change his routine.
(c) his anger at Susie.
(d) he would have to leave his long-time secretary.

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

3. At a press conference, Buffet announced that he will:
(a) he resigns from the board.
(b) serve as an interim unsalaried chairman for as long as he is needed.
(c) the government charges will be dropped.
(d) he will financially support the firm.

4. With zero-coupon bond, the borrower:
(a) makes regular interest payments.
(b) pays the interest in less than a year.
(c) defers the interest payments.
(d) has no interest payments.

5. How much did Buffett pay for Nebraska Furniture Mart?
(a) $60 million.
(b) $10 million.
(c) $5 million.
(d) $25 million.

6. When Buffett is described as a gorilla, it refers to:
(a) his gruff manner.
(b) his manner of negotiation.
(c) none of the above.
(d) his protecting CEOs from a takeover.

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

8. Which of the following is not part of Buffett's guide to selecting stocks?
(a) stocks within one's circle of competence.
(b) trading on tips.
(c) doing his own market analysis.
(d) ignoring macroeconomic trends and forecasts.

9. Buffett's theory of trading is based on:
(a) Accurate price forecasts.
(b) Graham and Dodds.
(c) Efficient Market Theory.
(d) Randon Walk.

10. Soon after Buffett arrives in New York, he learns that:
(a) the situation is more serious than he thought.
(b) the government dropped its investigation.
(c) the Treasury has banned Salomon from its auctions.
(d) he is voted off the board.

11. If Buffett made a loan to one of his children:
(a) they were afraid to ask.
(b) he refused to help them.
(c) he would berate them for needing money.
(d) they had to sign a loan agreement.

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

13. Buffett's new worth was approximately:
(a) $1.35 billion.
(b) $2.3 billion.
(c) $3.8 billion.
(d) $900 million.

14. Berkshire was most active in:
(a) promoting auto insurance.
(b) reinsurance.
(c) business insurance.
(d) door to door policy selling.

15. Capital Cities was a:
(a) real estate company.
(b) big cable, broadcasting and publishing company.
(c) clothing company.
(d) heavy equipment company.

Short Answer Questions

1. Buffett's annual shareholders meetings differed from those of other companies because:

2. Susie's absence made life:

3. One thing that Buffett did that resulted in many people leaving the firm was to:

4. Why is finance the opposite of investing?

5. How long did Buffett go without buying any common stock after the Cap Cities deal in 1985?

(see the answer keys)

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