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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Berkshire was a ________ corporation, as it was described in this section of the book.
(a) Shared.
(b) Co-owned.
(c) Private.
(d) Public.

2. Berkshire might evolve into a _______ form of board situation, upon Buffett's death, according to the book.
(a) Dissolved.
(b) Third.
(c) Fourth.
(d) Second.

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

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

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

Short Answer Questions

1. The intrinsic business value goal was reached by ________, preferably 100% ownership of diverse business firms generating cash and above-average returns on capital.

2. Buffett and Munger invested based on company operating results and not on ____________.

3. The permanent holdings at Berkshire were those that Buffett and Munger decided to keep, no matter what the _________ offered.

4. What was the name of the bank that had substantial equity interest in Berkshire?

5. Keynes stated: "The right method of investment is to put fairly large sums of money into enterprises which one thinks one knows something about and in the ________ of which one thoroughly believes."

Short Essay Questions

1. What did Buffett and Munger invest based upon, instead of price quotes?

2. What did Buffett have to say about the idea of annual meetings for shareholders and other business managers?

3. What did Buffett and Charlie Munger do together, which led to the creation of this book?

4. What were the five different categories from which Buffett can select his investments?

5. What is the content of this book often used for, according to the author?

6. What was listed as the difference between a fallen angel and a junk bond?

7. How did Buffett seek to define a corporation as a mechanism? What exactly did this mean?

8. How did Buffett's criteria for buying companies and maintaining holdings help to maximize net worth in the long run?

9. What was the concept of fallen angels, according to Buffett's lessons about investing?

10. What did Buffett and Munger prefer to do when they invested in a company?

(see the answer keys)

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