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

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

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

4. Many executives argued that the costs of _________ should be ignored because they were hard to value or may harm smaller firms.
(a) Charges.
(b) Stock options.
(c) Dividends.
(d) Reinvestment promises.

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

Short Answer Questions

1. Buffett and Munger believed that investors should pay attention to business results, not __________.

2. Main _______ changes allowed cash-basis accounting for the costs of a corporation.

3. Buffett and Munger continue to offer _______ for value trade in the acquisition process, as it seems fair to all parties.

4. What was the piece of advice that Buffett took to heart from the athlete?

5. All acquisition considerations were paid for in ________, according to the book's information.

Short Essay Questions

1. What did Buffett admit that he used to do when seeking out new investments thirty-five years ago?

2. What did Buffett try to do in order to avoid problems with the two contagious diseases in the investment community?

3. What were the two super contagious diseases that could spread in the investment community?

4. What was the first step in the US Steel fictional accounting process?

5. How did Buffett avoid diluting share value to existing shareholders?

6. To what other experience did Buffett compare the process of acquiring a business?

7. What were the three main thing that shareholders always knew about Munger and Buffett?

8. What did Buffett want to do with the Berkshire stock on the NYSE?

9. Why did many executives argue about the costs of stock options and why they should be ignored?

10. What was done in order to minimize any loss from accounting adjustments during the US Steel transactions?

(see the answer keys)

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