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

Multiple Choice Questions

1. The goal of the partners was to maximize the real economic benefits, not just the number of ___________.
(a) Shares.
(b) Checks.
(c) Properties.
(d) Enterprises.

2. ___________ recognized that statements are not adequate compared to segment data that enabled control of business.
(a) The business students.
(b) Management.
(c) Shareholders.
(d) The public.

3. Information helped investors see the likelihood of a company meeting future __________.
(a) Mergers.
(b) Promises.
(c) Obligations.
(d) Stock prices.

4. _______ transactions only allowed stock be paid compared to a purchase in which cash or stock and cash or other valuable consideration may be paid.
(a) Dripping.
(b) Pooling.
(c) Static.
(d) Moving.

5. Buffett and Munger run the business so that all ___________ gain proportionately.
(a) Banks.
(b) Shareholders.
(c) Companies.
(d) Lending agencies.

6. The question of an exchange of stock arose in 1983 during the merger of Berkshire and ____________.
(a) Blue Chip.
(b) Coca-Cola.
(c) Wal-Mart.
(d) Blue Note.

7. Options were often ______ at exercise which made them more expensive than publicly traded options.
(a) Presented.
(b) Moved.
(c) Re-priced.
(d) Undervalued.

8. In the past, the distinction between economic and accounting goodwill was insignificant when Buffett sought firms with tangible _______, rather than firms relying on economic goodwill.
(a) Outlooks.
(b) Shares.
(c) Assets.
(d) Management.

9. The Berkshire dividend share of Coca-Cola in 1990 included operating earnings of ___________.
(a) $500M.
(b) $125M.
(c) $250M.
(d) $100M.

10. Berkshire shareholders can be assured that the company _______ statements are accurate.
(a) Honor.
(b) Recommended.
(c) Holding.
(d) Financial.

11. Warrants exercised for a penny par add ________ to credit capital surplus, according to the book.
(a) $39.99
(b) $29.99.
(c) $19.99.
(d) $49.99

12. The NYSE listing for Berkshire was thought to reduce _______ for shareholders by ensuring a narrow market maker spread.
(a) Instability.
(b) Variance.
(c) Transaction costs.
(d) Price of stock.

13. Buffett and Munger believed that investors should pay attention to business results, not __________.
(a) Their reports.
(b) Other shareholders.
(c) Market fluctuations.
(d) Market prices.

14. Buffett and Munger were often asked to ________ under the assumption it would benefit shareholders, but they disagree.
(a) Sell stock.
(b) Buy more holdings.
(c) Keep stock.
(d) Split stock.

15. While Munger and Buffett were excited when they are in the process of acquiring a new business, they were also _________.
(a) Complacent.
(b) Bored.
(c) Unhurried.
(d) Rational.

Short Answer Questions

1. What did GAAP stand for, according to the text in the book?

2. What is NOT one of the three excuses often given by an overpaying buyer, according to the book?

3. Buffett stated that his position with any stock repurchase does not imply acceptance of _______, which he calls extortion.

4. Buffett and Munger promise to never ________ unless they are selling at a market price well below intrinsic business value.

5. Businesses must recognize present value _______ for post-retirement health benefits, according to Buffett.

(see the answer keys)

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