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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

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. What were the name of the bonds that Buffett seeks to promote through Berkshire?

3. Buffett did not expand, borrow, or sell unless Berkshire received as much _________ as it gave.

4. Who was the financial mentor that Buffett relied upon for his teachings and lessons about the way to do business?

5. Essays are from __________ that Buffett prepared for and wrote for Berkshire shareholders.

Short Essay Questions

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

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

3. Where did Berkshire directors have most of their net worth invested, according to the book?

4. What did Buffett fear about investing in companies that were located in California?

5. What did Berkshire Hathaway become in the 1990s after its humble beginnings in the years before?

6. What were some of the issues that could come up within an annual meeting, which made Buffet want to avoid these meetings?

7. Who was Mr. Market and where did Mr. Market come from, according to the book?

8. Whose investing principles guided the Buffett purchase of Washington Post Company?

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

10. What would business contraction cause, though Buffett says this was also an opportune time for investment?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Some bonds started out as junk, but ended up being angel bonds, according to one of the essays in this book.

Part 1: Do you think that investing is a guessing game?

Part 2: How do you think a person can make the best possible decision about their investments?

Part 3: Why do you think some junk investments might end up being better investments than they seemed?

Essay Topic 2

Buffett and Munger supported acquiring firms only when the added intrinsic value to their market shares.

Part 1: Why do you think Buffett and Munger only wanted to acquire firms that added value?

Part 2: Do you think modern day companies limit the types of companies they acquire?

Part 3: How do you think Berkshire Hathaway might be been different had they simply bought any company that was up for sale?

Essay Topic 3

There are some companies that Berkshire Hathaway owns that they will not sell no matter what the offered price might be.

Part 1: Why are the permanent companies so important to Berkshire Hathaway?

Part 2: What would you do if you were offered three times the value of a permanent company's price?

Part 3: Do you think it's a good idea to have permanent companies in a portfolio?

(see the answer keys)

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