Chapter 8

The World’s Greatest Investor

Multiple-Choice Questions

1. Which of the following factors would be used to determine the world’s greatest investor?

I. Relative outperformance

II. Ability to pick market bottoms

III. Long-term duration of returns

A. I and II

B. II and III

C. I and III

D. I, II, and III

2. How can one distinguish whether good investment results should be attributed to luck or to actual investing skill?

A. By examining the process behind investment selection

B. By examining the results over a long period of time

C. By examining the type of market (bull or bear) during the achievement of the results

D. A combination of A, B, and C

3. When Warren Buffett started his partnership, what was his personal goal for returns?

A. Consistently beat the S&P 500 index

B. Consistently beat the Dow Jones Industrial Average

C. Consistently beat the S&P 500 index by 10 percent

D. Consistently beat the Dow Jones Industrial Average by 10 percent

4. The Buffett Investment Partnership was in operation from 1956 to 1969. Over that period of time, the Dow Jones Industrial Average had five losing years; how many years did the Buffett partnership lose money?

A. Zero

B. One

C. Two

D. Three

5. Between 1965 and 2012, what has the relative outperformance of Berkshire Hathaway been relative to the total return of the S&P 500?

A. 5.7 percent

B. 9.4 percent

C. 10.3 percent

D. 19.4 percent

6. Between 1965 and 2012, the S&P 500 has lost value in 11 years. How many years has the book value ...

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