Choose wisely. There is only one correct answer to each question.
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1.
Warren Buffett, the world's most well-known investor, believes that one must have a high IQ to succeed at investing.
False. Buffett believes that one needs the right temperament and a successful framework, but not a high IQ.
2.
To Warren Buffett, a stock is a candidate for purchase if its market price is _______.
Below the discounted cash-flow calculation of fair value. The ones to buy are those that are in this range.
3.
Companies with sustainable competitive advantages are highly likely to generate _______ with the passage of time.
Higher cash flows. Strength and predictability help.
4.
To Warren Buffett, anytime a stock is selling for less than its fair value, it therefore has an acceptable margin of safety.
False. Not just any discount is acceptable. It must be substantial and satisfactory to him.
5.
Warren Buffett rejects the idea that diversification is helpful to informed investors.
True. He actually thinks it is likely to lower your returns and increase risk.
6.
All of the following statements about Warren Buffett are false except _______.
Buffett believes that he has never made a good deal with bad people. Though the economics of a business is the most important factor, Buffett believes it's important to work with competent, honest managers. He believes that he has never made a good deal with a bad person.
7.
Warren Buffett prefers to invest in companies that _______.
He understands. He sticks to those companies that are within his circle of competence.
