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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) Valuable.
(b) Fair.
(c) Good.
(d) True.

2. What is NOT one of the three excuses often given by an overpaying buyer, according to the book?
(a) The buyer must grow.
(b) Buyer's stock is undervalued.
(c) Will be worth less in the future.
(d) Will be worth more in the future.

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

4. Munger believed the _________ Berkshire paid to be acceptable for the benefits they received.
(a) Taxes.
(b) Treasury funds.
(c) Court costs.
(d) Accounting fees.

5. Buffett and Munger believed that investors should pay attention to business results, not __________.
(a) Their reports.
(b) Market fluctuations.
(c) Market prices.
(d) Other shareholders.

Short Answer Questions

1. ___________ were used to pay salaries and wages, which eliminated payroll with increased employee compensation.

2. In the past, the distinction between economic and accounting goodwill was insignificant when Buffett sought firms with tangible _______, rather than firms relying on economic goodwill.

3. The benefits of __________ were retained by Berkshire since it was a strong franchise.

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

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

Short Essay Questions

1. What was the result of information that is necessary to report to an investor or shareholder?

2. What did Buffett prefer in trading that allowed for more benefits to long-term owners of stock?

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

4. What was the purpose of Buffett and Munger focusing on buying up 100% of a company and the investment must use a lot of capital?

5. What could Berkshire shareholders be assured of, according to Buffett in the book?

6. What threatened the global competitiveness of major American industries, according to the book?

7. Why would a company want to repurchase their own shares, according to Buffett?

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

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

10. What was the difference between the purchase and the pooling transaction?

(see the answer keys)

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