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

Multiple Choice Questions

1. Who handled Berkshire's investments:
(a) Charlie Munger.
(b) Buffett and Bill Scott.
(c) his staff of fourteen traders.
(d) Buffett alone.

2. What information did Jon Gutfruend withhold?
(a) the level of Salomon bonuses.
(b) that a Salomon trader made a false bid.
(c) Salomon bond revenues.
(d) Salomon trading strategy.

3. Why did Buffett buy into Cap Cities?
(a) he was looking to diversify.
(b) it was a good deal.
(c) to infuse it with capital and to provide stability for its merger with ABC.
(d) the price was cheap.

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

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

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

7. What term is used to denote risk?
(a) gamma.
(b) beta.
(c) alpha.
(d) theta.

8. By the 1990s, Buffett was worth:
(a) $500 million.
(b) $1 billion.
(c) $250 million.
(d) $620 million.

9. Which of the following companies was the object of a hostile takeover in the 1980s?
(a) Time.
(b) General Goods.
(c) Revlon.
(d) Berkshire.

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

11. How many people worked at Berkshire's world headquarters:
(a) twenty seven.
(b) eleven.
(c) two hundred fifty.
(d) fifty.

12. Who does Buffett select to run Salomon?
(a) Nicholas Brady.
(b) Deryck Maughan.
(c) JM Meriwether.
(d) Paul Mozer.

13. The Efficient Market Theory says that:
(a) stock prices will fall.
(b) stock prices will rise.
(c) prices reflect information.
(d) prices can be influenced.

14. Warren's philosophy for purchasing stocks included all but:
(a) anticipation of short-term price movements.
(b) decent stock price.
(c) favorable long-term prospects.
(d) honest and competent management.

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

Short Answer Questions

1. Which of the following was not one of the permanent three in Berkshire's portfolio?

2. The Treasure sells bonds to:

3. What does Buffett say about the hostile takeover of Time?

4. If Buffett made a loan to one of his children:

5. Which was not one of Buffett's big deals in the second half of 1989?

(see the answer keys)

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