Warren Buffet

In Buffett's philosophy, what does 'margin of safety' refer to?

• A government bailout for insurers

• Maintaining high dividend yields

• Buying undervalued companies below intrinsic value

• Reducing exposure to foreign currencies

Warren Buffett invested in Apple despite its reputation as a high-tech company. Which factor most likely contributed to his decision to make this investment?

• Its frequent product launches

• Its wide moat, strong brand, and consistent cash flow-Apple can also be viewed as a consumer-oriented business with loyal customers

• Its short-term EPS growth

• Its strong short-term revenue growth driven by product innovation and global market expansion

What principle does Buffett emphasize regarding corporate governance?

• Board members should not have any financial stake in the company

• Governance structures should be elaborate and complex

• Managers should be compensated based on short-term earnings

• Directors should have significant ownership stakes to align interests with shareholders

Which of the following would LEAST likely trigger Warren Buffett to sell a company?

• The company's competitive advantage weakens

• Management integrity comes into question

• The stock price temporarily declines due to market volatility

Buffett has stated that Berkshire Hathaway will not issue shares unless:

• The target company is trading at a premium to intrinsic value

• The acquirer receives as much intrinsic business value as they give

• The transaction leads to immediate short-term EPS accretion

• The acquisition target generates more revenue than Berkshire's existing businesses

Warren Buffett often emphasizes the importance of staying within one's "circle of competence" when making investment decisions. Which of the following statements best reflects his philosophy?

• Investors should prioritize fast-growing industries, even if they fall outside their expertise, as long as returns are high

• A broad, diversified portfolio across all sectors is the best way to reduce risk and outperform consistently the market according to Buffett

• Investing outside your circle of competence is acceptable if the market consensus is overwhelmingly positive

• Investors should focus on businesses they understand well and buy them only at prices below fair intrinsic value

Which of the following statements is FALSE according to Warren Buffett's investment philosophy?

• Buffett favors EBITDA because it includes depreciation, making it a complete measure of

  profitability.

• Buffett values companies with durable competitive advantages, also known as "moats."

• Buffett avoids timing the market and focuses on buying great businesses at fair intrinsic value.

• Management should think of shareholders as owners, not just clients or analysts.

Following Benjamin Graham, Buffett describes "Mr. Market" as:

• The best-performing stock in a given year

• A rational investor who values stocks accurately

• An emotional and unpredictable force that may present buying opportunities

• A government regulator overseeing financial markets

Buffett has described his investment in Dexter Shoe Company as one of his worst mistakes. The main (top) reason why he considered it a mistake is because:

• The upfront cash payment was too high

• He overpaid and used Berkshire Hathaway stock, compounding the loss

• It was a highly cyclical business with unpredictable cash flows

• The company failed to innovate in the footwear industry

Buffett describes a company's moat as:

• A company's financial leverage strategy to maximize shareholder returns

• The ability to expand through aggressive acquisitions

• A sustainable competitive advantage that protects its market share and profitability from competitors over the long term.

• A high-growth industry that attracts intense competition