The Warren Buffett Way Workbook

The Warren Buffett Way Workbook consists of over 500 questions and answers to help readers of The Warren Buffett Way reinforce and cement their knowledge of Buffett?s hugely successful investment approach. The Workbook follows The Warren Buffett Way, 3e, providing a combination of multiple choice and essay questions for each chapter in the core book. Given the depth and range of questions, a reader who masters the material in the Workbook will be equipped with the knowledge to begin to apply Buffett?s methods to his/her own investment portfolio. All answers are provided in the Workbook, including answers to the essay questions. The perfect accompaniment to The Warren Buffett Way, 3e and The Warren Buffett Way VideoCourse, the Workbook will provide readers with a sure path to begin investing just like Warren Buffett.

Preface ix

Part I Questions

Chapter One A Five-Sigma Event: The World’s Greatest Investor 3

Multiple-Choice Questions 3

Essay Questions 8

Chapter Two The Education of Warren Buffett 9

Multiple-Choice Questions 9

Essay Questions 17

Chapter Three Buying a Business: The Twelve Immutable Tenets 19

Multiple-Choice Questions 19

Essay Questions 31

Chapter Four Common Stock Purchases: Nine Case Studies 35

Multiple-Choice Questions 35

Essay Questions 48

Chapter Five Portfolio Management: The Mathematics of Investing 53

Multiple-Choice Questions 53

Essay Questions 64

Chapter Six The Psychology of Investing 67

Multiple-Choice Questions 67

Essay Questions 73

Chapter Seven The Value of Patience 77

Multiple-Choice Questions 77

Essay Questions 82

Chapter Eight The World’s Greatest Investor 85

Multiple-Choice Questions 85

Essay Questions 95

Part II Answers

Chapter One A Five-Sigma Event: The World’s Greatest Investor 99

Answers to Multiple-Choice Questions 99

Essay Answers 102

Chapter Two The Education of Warren Buffett 107

Answers to Multiple-Choice Questions 107

Essay Answers 112

Chapter Three Buying a Business: The Twelve Immutable Tenets 119

Answers to Multiple-Choice Questions 119

Essay Answers 127

Chapter Four Common Stock Purchases: Nine Case Studies 139

Answers to Multiple-Choice Questions 139

Essay Answers 148

Chapter Five Portfolio Management: The Mathematics of Investing 163

Answers to Multiple-Choice Questions 163

Essay Answers 170

Chapter Six The Psychology of Investing 181

Answers to Multiple-Choice Questions 181

Essay Answers 186

Chapter Seven The Value of Patience 193

Answers to Multiple-Choice Questions 193

Essay Answers 196

Chapter Eight The World’s Greatest Investor 201

Answers to Multiple-Choice Questions 201

Essay Answers 207

About the Authors 213

ROBERT G. HAGSTROM is one of the best-known authors of investment books for general audiences. He has written nine books, including the New York Times bestselling The Warren Buffett Way and The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy. He is also the author of The NASCAR Way: The Business That Drives the Sport, The Detective and the Investor: Uncovering Investment Techniques from the Legendary Sleuths, and Investing: The Last Liberal Art. Robert is a graduate of Villanova University with a BA and MA and is a Chartered Financial Analyst. He lives with his family in Villanova, Pennsylvania. Visit Robert's website at www.RobertHagstrom.com.

RUSSELL RHOADS, CFA, is an instructor for the Options Institute at the Chicago Board Options Exchange. He teaches about ninety classes a year and conducts webinars on behalf of the CBOE and a variety of brokerage firms. Rhoads's twenty-year trading career has included positions at a variety of trading firms and hedge funds. His background includes trading and analysis, and he is the author of the Wiley titles Trading VIX Derivatives, Candlestick Charting For Dummies, and Option Spread Trading. Rhoads graduated with an MS in finance from the University of Memphis and a master's certificate in financial engineering from the Illinois Institute of Technology.