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

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

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

4. Buffett's views on hostile takeovers included all but:
(a) they greatly benefited society.
(b) they involved transfers of assets.
(c) they were no value creating.
(d) they resulted in a loss of tax dollars to society.

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

Short Answer Questions

1. Warren's attitude toward leaving some money to his children changed when:

2. What term is used to denote risk?

3. Why did Buffett refuse to financially support his adult children?

4. As a result of the stock market crash in October 1985, Berkshire:

5. Berkshire was most active in:

Short Essay Questions

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

2. What are referred to as Buffett's sweetheart deals?

3. What was the newer Efficient Market Theory?

4. How does Buffett describe the difference between his public and private lives?

5. What was Buffett's attitude about sharing his wealth with his children?

6. What did Buffett plan to do with his wealth when he died?

7. 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?

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

9. What were Buffett's views on hostile takeovers?

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

(see the answer keys)

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