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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 NYSE listing for Berkshire was thought to reduce _______ for shareholders by ensuring a narrow market maker spread.

2. ________ cannot outperform business indefinitely because earnings on stock investments were reduced by the amount of transaction and investment management costs.

3. The partners were committed to providing and presenting a _______ business and ownership philosophy.

4. What was the total look through earnings of Berkshire in 1990, plus non-dividend operating earnings?

5. Buffett stated that his position with any stock repurchase does not imply acceptance of _______, which he calls extortion.

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 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?

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

4. What were the two categories of most interest for Munger and Buffett when they wanted to add to their holdings?

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

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

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

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Buffett pointed out that just because the market was often efficient does not mean that it is always efficient.

Part 1: Why do you think the idea of an efficient market is something to consider?

Part 2: How do you think an efficient market can impact the outcome of a financial transaction?

Part 3: Do you believe that the market is designed to be efficient?

Essay Topic 2

Buffett decided to buy a company when their stock market value was less than their intrinsic value.

Part 1: Do you think Buffett should pay the intrinsic value or the stock market value?

Part 2: Why do you think a company might be worth less in the market than they are intrinsically?

Part 3: How do you think Buffett might approach a conversation about buying a company that has a lower market value?

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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