The Warren Buffett Way Workbook

Chapter 4

Common Stock Purchases

NINE CASE STUDIES

Multiple-Choice Questions

1. What is Warren Buffett’s thinking regarding the old Wall Street saying, “You can’t go broke taking a profit”?

A. He considers it a golden rule to investing success.

B. He considers it foolish.

C. He believes this as long as the margin of safety has gone away.

D. None of the above.

2. In 1971, Katharine Graham decided to take the Washington Post Company public. What were the primary reasons for this decision?

I. To allow Berkshire Hathaway to purchase shares in the open market

II. To ease the burden of maintaining a market in its own stock

III. To enable the Graham family heirs to plan their estates

A. I and II

B. II and III

C. I and III

D. I, II, and III

3. What is Warren Buffett’s preferred holding period?

A. 5 years

B. 10 years

C. 25 years

D. Forever

4. When Katharine Graham first became aware of Warren Buffett’s interest in the Washington Post, what was her reaction and what did Warren Buffett do in response?

A. She chose to initiate a stock repurchase program; Buffett responded by stepping up his share purchases.

B. She was concerned about a non–family member acquiring so many shares; Buffett responded by naming her son his proxy.

C. She asked that Buffett buy out the whole company; Buffett responded by stating he wanted only a minority interest in the Washington Post.

D. She asked that he merge the Washington Post with the New Yorker; Buffett responded that he did not see any synergies in doing ...