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

Multiple Choice Questions

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

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

3. What other kind of family-owned business did Buffet buy?
(a) another furniture store.
(b) grocery.
(c) advertising.
(d) jewelry.

4. Regarding his textile mills, in the early 1980s, Buffett:
(a) made large capital investments.
(b) sold them.
(c) closed them.
(d) continued to operate at a loss.

5. Buffett differed from other CEOs in that he:
(a) he did most of his work at home.
(b) did not have a structured appointments schedule.
(c) he did not have an office.
(d) he hired a variety of secretaries.

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

7. Buffett appeared on:
(a) Johnny Carson.
(b) What's My Line.
(c) Lifestyles of the Rich and Famous.
(d) This is our Life.

8. As a result of the stock market crash in October 1985, Berkshire:
(a) lost ten percent of its value.
(b) lost one quarter of its value.
(c) increased in value.
(d) was insolvent.

9. By the end of 1988, the Berkshire share price was approximately?
(a) $1,000.
(b) $8,000.
(c) $2,500.
(d) $5,500.

10. The Nebraska Furniture Mart was owned by:
(a) Isadore Blumkin.
(b) Rose Blumkin.
(c) Seabury Stanton.
(d) Katherine Graham.

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

12. Which investment banking firm did Buffett invest in?
(a) Salomon.
(b) Merrill Lynch.
(c) J.P. Morgan.
(d) Smith Barney.

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

14. One thing that Buffett did that resulted in many people leaving the firm was to:
(a) cancel vacations.
(b) lower the bonuses.
(c) give raises to maintain morale.
(d) move to a smaller building.

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

Short Answer Questions

1. Why is finance the opposite of investing?

2. Which of the following was not a reason why Warren didn't move to Southern California?

3. In Warren's view, the managers of other people's money:

4. Which of the following companies was the object of a hostile takeover in the 1980s?

5. Who handled Berkshire's investments:

(see the answer keys)

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