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

Multiple Choice Questions

1. How many shares each did the shareholders of the company have to have in order to be listed on the exchange?
(a) 200.
(b) 100.
(c) 1000.
(d) 500.

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

3. ________ cannot outperform business indefinitely because earnings on stock investments were reduced by the amount of transaction and investment management costs.
(a) Holdings.
(b) Bonds.
(c) Stocks.
(d) Treasury bills.

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

5. What did GAAP stand for, according to the text in the book?
(a) Generally accepted accounting principles.
(b) Generally agreed accounting principles.
(c) Generally accepted available principles.
(d) Generally argued accounting principles.

6. ________ took fictional accounting actions that showed absurd accounting manipulations to let it undersell all competition to dominate the industry.
(a) Coca-Cola.
(b) US Steel.
(c) Pepsi.
(d) GEICO.

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

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

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

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

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

12. LBO operators benefitted from the use of ________ to reshuffle business, risk little of their own money to gain high fees, etc.
(a) Downsizing.
(b) Reports.
(c) Meetings.
(d) Debt.

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

14. Berkshire's consolidated statements met outside __________, according to the book.
(a) Values.
(b) Movements.
(c) Requirements.
(d) Standards.

15. The common stock par value was reduced to _________, according to the book.
(a) One cent.
(b) One dollar.
(c) One quarter.
(d) One dime.

Short Answer Questions

1. What was NOT one of the three tax-free gifting tactics that Buffett suggested to shareholders?

2. A company might consider repurchasing _______ when it has available funds that are above long-term needs.

3. ________ earnings were the reporting of income of one company that owns another.

4. The partners were also interested in firms that had extraordinary ________ talent exhibiting skillful executive achievement.

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

(see the answer keys)

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