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

Multiple Choice Questions

1. Buffett avoids _________ share value to existing shareholders by true value for value merger, using stock as inflated currency.
(a) Increasing.
(b) Stabilizing.
(c) Dispersing.
(d) Diluting.

2. ___________ were used to pay salaries and wages, which eliminated payroll with increased employee compensation.
(a) Valued shares.
(b) Increased notes.
(c) Option warrants.
(d) Common stocks.

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

4. During what year were the Berkshire shares to be traded on the New York Stock Exchange?
(a) 1986.
(b) 1975.
(c) 1999.
(d) 1988.

5. The different classes of stock allow _______ investors to still have value for the money they can spend.
(a) Large.
(b) Small.
(c) Long-term.
(d) Short-term.

6. Buffett proposed that earnings should be retained to the extent each retained dollar creates at least ________ of market value for owners.
(a) Twenty dollars.
(b) One dollar.
(c) Ten dollars.
(d) Five dollars.

7. Buffett followed the simple rule that the same amount of intrinsic business value must be exchanged with each ________ transaction.
(a) Dividend.
(b) Movement.
(c) Stock.
(d) Legal.

8. What was the total look through earnings of Berkshire in 1990, plus non-dividend operating earnings?
(a) $200B.
(b) $590M.
(c) $400M.
(d) $100B.

9. Pooling overcame the deficiency of ____________ amortization in a merger, which was really a purchase.
(a) Peaceful.
(b) Promised.
(c) Projected.
(d) Goodwill.

10. Owners were expected to conclude that retained _______ were better left in the corporation for reinvestment at a higher rate than paid out as dividends.
(a) Losses.
(b) Values.
(c) Shares.
(d) Earnings.

11. Buffett started to buy _____ businesses at good prices instead of buying good businesses at fair prices.
(a) Fair.
(b) Good.
(c) Valuable.
(d) True.

12. What is NOT one of the features that Buffett and Munger looked for in acquisition opportunities?
(a) Consistent earnings power.
(b) Management in place.
(c) Simple business.
(d) Good reputation.

13. Many ended up taking Buffett and Munger ________ on faith because of the way that they reported.
(a) Past values.
(b) Presentations.
(c) Promises.
(d) Rumors.

14. Berkshire is too well developed and managed to add intrinsic business value with new ___________ paid for with common stock.
(a) Notes.
(b) Acquisitions.
(c) Selloffs.
(d) Bonds.

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

Short Answer Questions

1. Any new investment must use a lot of large amounts of _________, according to the book.

2. The partners were committed to providing and presenting a _______ business and ownership philosophy.

3. How many shareholders did a business that wanted to be on the NYSE have to have?

4. If the buyer's stock was sold at less than intrinsic value, he bought with undervalued _________ and would suffer an unequal exchange.

5. Buffett and Munger were often asked to ________ under the assumption it would benefit shareholders, but they disagree.

(see the answer keys)

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