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

Multiple Choice Questions

1. The purchase of the company listed in #49 was influenced by whose investing principles?
(a) No one's.
(b) Charlie Munger.
(c) Warren Buffett.
(d) Ben Graham.

2. The long-term economic goal was to maximize per-share average annual rate of gain at ______% of the intrinsic business value.
(a) 20.
(b) 12.
(c) 50.
(d) 15.

3. Berkshire's board included a controlling ________, in which other board members could persuade others to make changes.
(a) Competitor.
(b) Shareholder.
(c) Outsider.
(d) Owner.

4. The partners considered a lesser interest if the ________ price was less than what it would be for 100%.
(a) Pro-rate.
(b) Pro-rata.
(c) Pro-biotic.
(d) Pro-management.

5. Essays are from __________ that Buffett prepared for and wrote for Berkshire shareholders.
(a) Trainings.
(b) Annual reports.
(c) Personal notes.
(d) Seminars.

6. The current value of the company Buffett and his partner bought showed that they understated its current ________ value.
(a) Market.
(b) Business.
(c) World.
(d) Intrinsic.

7. Below investment grade bonds are generally called ________, since they are able to be transformed.
(a) Fallen angels.
(b) Demons.
(c) Junky bonds.
(d) Caterpillars.

8. Buffett did not expand, borrow, or sell unless Berkshire received as much _________ as it gave.
(a) Value.
(b) Dividends.
(c) Promise.
(d) Power.

9. Buffett and Munger also followed the idea of minimal use of _______ and leverage, helping to create solid investments.
(a) Consolidation.
(b) Debt.
(c) Recovery.
(d) Divestment.

10. Buffett managed by ________-related business principles, according to the book.
(a) Owner.
(b) Business.
(c) Math.
(d) Stock.

11. What is NOT one of the companies listed as having the management requirements that Buffett and Munger want to see?
(a) Salomon.
(b) Wal-Mart.
(c) USAir.
(d) Champion.

12. What did the zero-coupon bonds not pay to the investor in the end?
(a) Current interest.
(b) Taxes.
(c) Profit.
(d) Locked in interest.

13. _________ were often unwilling to discuss the business issues during meetings.
(a) Managers.
(b) Shareholders.
(c) The salespeople.
(d) The board members.

14. The market was considered a business partner with incurable _______ problems, according to the book.
(a) Spiritual.
(b) Banking.
(c) Investment.
(d) Emotional.

15. Buffett's long term economic goal was to maximize per share _________ value of Berkshire stock by owning a diversified group of businesses.
(a) Economic.
(b) Market.
(c) Intrinsic.
(d) True.

Short Answer Questions

1. _________ percentage ownership was acquired when the market presented opportunities, according to the book.

2. Buffett noted that a CEO had no direct ______ or clear standards of performance, making even under performing ones able to continue working.

3. How many owner-related business principles were listed in this section of the book by Buffett?

4. Berkshire was a ________ corporation, as it was described in this section of the book.

5. Buffett disliked _________ because of its leverage, according to the book.

(see the answer keys)

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