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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 made distinctions in ________ policy to account or differences in earnings, according to the book.
(a) Market.
(b) Share.
(c) Dividend.
(d) Ownership.

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

3. Information helped investors see the likelihood of a company meeting future __________.
(a) Stock prices.
(b) Obligations.
(c) Promises.
(d) Mergers.

4. Businesses must recognize present value _______ for post-retirement health benefits, according to Buffett.
(a) Reporting.
(b) Concerns.
(c) Liability.
(d) Charts.

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

Short Answer Questions

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

2. Buffett and Munger now believed that the substantial economic _________ far exceeded the book value of Berkshire.

3. Buffett admitted that issuing ________ in mergers cost shareholders money, according to the book.

4. What is NOT one of the features that Buffett and Munger looked for in acquisition opportunities?

5. Buffett avoids _________ share value to existing shareholders by true value for value merger, using stock as inflated currency.

Short Essay Questions

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

2. What question emerged during the merger between Berkshire and Blue Chip in 1983?

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

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

5. What did Buffett say should happen to some earnings in dividends?

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

7. What did Buffett expect to owners of stock to do when he creates a principle that earnings should be retained to the extent each retained dollar creates at least one dollar of market value for owners?

8. What was the simple rule that Buffett followed when it came to exchange of stock during a merger?

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

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

(see the answer keys)

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