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

Multiple Choice Questions

1. Non-transferability of _______ did not make them less costly to an employer, according to the book.
(a) Stock options.
(b) Benefits.
(c) Bonds.
(d) Dividends.

2. Buffett realized that it was helpful to be _________ when others were fearful in the market.
(a) Standoffish.
(b) Greedy.
(c) Fast.
(d) Slow.

3. A company might consider repurchasing _______ when it has available funds that are above long-term needs.
(a) Shares.
(b) Fallen angels.
(c) Bills.
(d) Bonds.

4. Any new investment must use a lot of large amounts of _________, according to the book.
(a) Meetings.
(b) Energy.
(c) Capital.
(d) Management.

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

6. ________ earnings were the reporting of income of one company that owns another.
(a) Variant.
(b) Look through.
(c) Fixed.
(d) Truthful.

7. Buffett and Munger described the acquisition process as being akin to finding a ________.
(a) Spouse.
(b) New toy.
(c) Promised land.
(d) Gold mine.

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

9. Buffett stated that his position with any stock repurchase does not imply acceptance of _______, which he calls extortion.
(a) Greenmail.
(b) Blackmail.
(c) Blue chip mail.
(d) Redmail.

10. _______ 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) Pooling.
(b) Static.
(c) Dripping.
(d) Moving.

11. Buffett and Munger now believed that the substantial economic _________ far exceeded the book value of Berkshire.
(a) Goodwill.
(b) Promise.
(c) Movement.
(d) Passion.

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

13. Accounting for the purchase of a business required allocating the ________ first to the fair value of net assets.
(a) Dividends.
(b) Stock market.
(c) Projected price.
(d) Purchase price.

14. Buffett and Munger did not operate a strategic plan for __________ but compare opportunities against passive investments.
(a) Buyouts.
(b) Reports.
(c) Acquisitions.
(d) Stockholders.

15. Buffett and Munger recapitalize into Class A and _____ non-voting shares to offer a lower trading price.
(a) D.
(b) B.
(c) C.
(d) E.

Short Answer Questions

1. While Munger and Buffett were excited when they are in the process of acquiring a new business, they were also _________.

2. The question of an exchange of stock arose in 1983 during the merger of Berkshire and ____________.

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

4. Some CEOs think that manipulating __________ could encourage the highest stock price available.

5. ________ cannot outperform business indefinitely because earnings on stock investments were reduced by the amount of transaction and investment management costs.

(see the answer keys)

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