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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. Buffett proposed that earnings should be retained to the extent each retained dollar creates at least ________ of market value for owners.

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

3. Munger believed the _________ Berkshire paid to be acceptable for the benefits they received.

4. Buffett and Munger did not operate a strategic plan for __________ but compare opportunities against passive investments.

5. ___________ recognized that statements are not adequate compared to segment data that enabled control of business.

Short Essay Questions

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

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

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

4. What was the expected benefit for the Berkshire NYSE listing, according to the book?

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

6. What was the strategy that Buffett employed in order to acquire businesses, after learning the lesson from the golf pro?

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Buffett and Munger thought it was better to monitor management as an investment strategy.

Part 1: How does management impact the way that a company works?

Part 2: Do you think management can be something that predicts financial stability?

Part 3: Why do you think Munger and Buffett looked at management to determine their investments?

Essay Topic 2

Buffett and Munger didn't like to split their stock, even though they were asked to do so many times.

Part 1: Why do Buffett and Munger decide not to split their stock?

Part 2: Do you think Buffett and Munger made the right decision to keep their stock?

Part 3: Do you think Munger and Buffett are fair to their shareholders?

Essay Topic 3

Buffett and Munger didn't use a strategic plan of acquisition, but rather compared opportunities against passive investments.

Part 1: Why do you think Buffett and Munger didn't have a plan for acquisitions?

Part 2: Do you think it's a better idea to have a plan when dealing with more extensive acquisition deals?

Part 3: How do you think Buffett and Munger's approach benefits them?

(see the answer keys)

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