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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Mrs. B began in the furniture business by:
(a) working in her father's store in Minsk.
(b) selling furniture out of her basement.
(c) buying a small furniture store and selling it.
(d) working as a clerk in a furniture store in Omaha.

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

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

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

5. 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.

Short Answer Questions

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

2. Which investment banking firm did Buffett invest in?

3. Buffett's role in protecting certain CEOs from takeovers was referred to as:

4. Buffett's theory of trading is based on:

5. When Gutfreund resigned:

Short Essay Questions

1. How many people are employed at Buffett's world headquarters?

2. Buffett's career was based on the Graham and Dodds theory of investing. What are the basis of Buffet's beliefs based on the teachings of Graham and Dodds?

3. Salomon became the object of an SEC and Justice Department investigation because of their bond trading. What did they do?

4. What did Buffett do with his textile mills?

5. What are zero coupon bonds that were being used to finance LBO?

6. What was one of the first things Buffett did at Salomon?

7. How did Buffett learn about the Nebraska Furniture Mart?

8. Why wasn't Buffett adversely affected by the insurance market problems in 1985?

9. What was the effect of irregularities in the bond trading by Salomon on traders?

10. What was one of Buffett's biggest fears in 1980?

(see the answer keys)

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