The Wall Street Journal Weekly Quiz s5

The Wall Street Journal Education Program Weekly Review & Quiz Covering front-page articles from June 9-15, 2007 Professor Guide with Summaries Summer 2007 Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

Economists See Housing Slump Enduring Longer By JAMES R. HAGERTY, JONATHAN KARP and MARK WHITEHOUSE June 9, 2007; Page A1 http://online.wsj.com/article/SB118136019056730007.html

Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless. Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: a glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom. Most forecasters still expect the economy to regain some momentum this year after a slow first quarter. Recent data have shown manufacturing, business investment and trade on track to help offset the negative effects of falling home values on consumer spending. Even so, some economists expect economic growth this year to remain tepid, largely because of the weak housing market. This worry coincides with a surge of inflation anxiety that has roiled stock and bond markets in recent days. Yields on 10-year Treasury bonds, which influence the cost of various forms of borrowing throughout the economy, have risen above the psychologically important 5% level to the highest point in nearly 11 months. That in turn has led to a big drop in stock prices: Both the Dow Jones Industrial Average and the Standard & Poor's 500 fell nearly 2% for the week after hitting all-time highs early on. The rise in interest rates is only adding to the gloom. The average rate for 30-year fixed- rate mortgages stood at about 6.65% Friday, up from 6.35% in early May, according to HSH Associates, a financial-publishing firm in Pompton Plains, N.J. Though that rate remains far below the 8.2% average of the 1990s, the recent jump makes it harder for many Americans to afford new homes. "That's putting more pressure on housing and delays its ultimate recovery," says Andrew Tilton, a senior economist at Goldman Sachs in New York. Federal Reserve Chairman Ben Bernanke acknowledged in a speech Tuesday that the housing market remains weak, and warned that residential construction "will likely remain subdued for a time, until further progress can be made in working down the backlog of unsold new homes." The market started to cool in mid-2005 after a buying frenzy that drove up the average U.S. home price nearly 60% in the first half of the decade and more than doubled prices in many areas near the East and West coasts.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 1 of 27 Late last year, some economists were saying the market would start bouncing back by the middle of 2007. That hasn't happened, partly because inventories of unsold houses have continued to grow and a surge in mortgage defaults has made lenders much more reluctant to grant credit to people with spotty payment histories. David Resler, chief economist at Nomura Securities International Inc. in New York, says he is surprised by the degree to which speculation caused builders to overestimate demand, leaving a glut of houses and condominiums. That means single-family housing starts, which have declined 33% since early 2006 to a seasonally adjusted annual rate of about 1.2 million in April, will remain low, around the current level, through the first quarter of 2008 before starting to recover gradually, Mr. Resler predicts. Goldman's Mr. Tilton thinks single-family starts will drop to an annual rate of one million or so before bottoming out in the second half of this year.

1. Economists are concluding that the US housing slump will last at least through: a. June of 2008 b. July of 2007 c. the end of 2007 Correct d. the end of 2008

2. The average rate for 30-year fixed-rate mortgages stood at about 6.65% Friday, up from 6.35% in early May, according to HSH Associates, a financial-publishing firm in Pompton Plains, N.J. Though that rate remains far below the _____ average of the 1990s. a. 7.2% b. 8.2% Correct c. 9.2% d. 14.2%

Disney Rewrites Script To Win Fans in India By MERISSA MARR June 11, 2007; Page A1 http://online.wsj.com/article/SB118151608951430635.html

MUMBAI, India -- On a dusty movie lot known as Film City here, a soft-spoken director counsels two actors on a love scene for the latest movie from Yash Raj Films. In typical Bollywood style, the closest the on-screen lovers get to intimacy is a longing gaze and a brush of the hand. Enter Walt Disney Co., lured by Yash Raj's tradition of family-friendly entertainment. Disney has struggled to make big money in India with its classic American fare. Now it has persuaded Yash Raj to make Disney-branded animated films, with the voices of Bollywood stars. The joint effort, to be announced tomorrow, is part of the U.S. entertainment icon's strategy to remake itself in high-growth foreign markets such as India. In many cases, that means discarding Disney's historic obsession with going it alone -- and instead joining with local experts to produce culturally customized fare. In China, for instance, Disney is teaming up with the state-run China Film Group to release "The Secret of the Magic Gourd," a movie about a talking vegetable that grants wishes. In India, it also is

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 2 of 27 tapping local filmmakers to make a Hindi feature film of its TV hit "High School Musical," which may be set against a backdrop of cricket rather than the original's basketball. When Robert Iger became Disney's chief executive in 2005, he said publicly he wanted half of Disney's profit to come from overseas within five years. Only a quarter of the company's revenue last year came from overseas, however, and Mr. Iger says he "still likes" his goal but it could be "difficult" to reach. Instead, he says, the company is "planting seeds today for growth tomorrow." For the better part of a decade, Disney has made a priority of building its foreign business in television, movies, retail and theme parks -- a task initially assigned to Mr. Iger himself, when he was made head of Disney's international operations. But it turned out to be a bigger job than anyone expected. Mr. Iger says of those initial hopes: "We were heady and those were heady days." In reality, Disney was "years away from having a global business that rivaled the domestic business." Disney's traditional approach was largely to force-feed its U.S. products from its Burbank, Calif., headquarters. The company ultimately concluded the cookie-cutter approach wouldn't work, and now it is going country by country, with a particular focus on five hot markets: India, China, Russia, Latin America and South Korea. "We're building Disney from scratch," in countries such as India, said Mr. Iger, citing the company's founder and namesake: Just "as Walt did in the U.S. over 50 years ago." The company has given more power to local managers and is tailoring its strategies for the local markets. In China, for instance, where state regulation of television and movies is aggressive, Disney is leading its charge in retail, selling its plush toys and Mickey Mouse clothing to consumers on a nationwide buying binge. In Latin America, where Disney is well-known but historically considered an elite brand, the company is attempting to move into the broader mass market. Disney's new approach follows the route of other U.S. institutions' efforts at foreign acceptance. Yum Brands Inc.'s KFC menus are tweaked country by country, for instance, to include rice porridge and bamboo shoots in China. Disney's biggest children's- television competitor in India, New York-based Time Warner Inc., in 2004 launched what's now the second-rated children's channel, Pogo, with generous helpings of homegrown fare to complement its top-rated Cartoon Network there. Huge Stakes In India, the stakes for Disney are huge: The Indian population under 14 years old is bigger than the entire U.S. population, and household incomes are rising fast. But for years, Disney simply sold its U.S. movies and television shows to local distributors and broadcasters. Its movies, in particular, gained little traction in the market -- a problem also faced by other U.S. studios because of the strong Indian film industry. Meanwhile, with India lacking a large-scale retail industry until recently, Disney saw limited opportunity for a consumer-products business. Poor infrastructure discouraged theme- park construction.

3. Five international markets being focused on by Disney are: a. India, France, Russia, Latin America and South Korea b. India, England, Russia, Latin America and South Korea c. India, China, Russia, Latin America and South Korea Correct

4. Disney's biggest children's-television competitor in India is: a. PBS b. Time Warner Correct c. Bollywood d. Dollywood

WellPoint Finds Itself Embroiled in Private Drama By VANESSA FUHRMANS and CAROL HYMOWITZ June 12, 2007; Page A1 http://online.wsj.com/article/SB118161718968732211.html

When health-insurance giant WellPoint Inc. ousted its well-regarded finance chief David Colby for undisclosed reasons on May 30, investors were shocked. But a series of tangled romantic relationships involving the 53-year-old Mr. Colby was becoming an embarrassing public matter, undermining his standing as an executive. Mr. Colby, according to several women, was conducting numerous affairs, involving at least one former employee from WellPoint Health Networks, the predecessor company to WellPoint. A spurned California lover who had recently filed a lawsuit against him claimed to have company emails and phone records to bolster her case, and had sold the rights to her story about their liaison. WellPoint later received a subpoena seeking additional records. Another woman who has lived with Mr. Colby in Indianapolis has claimed she was engaged to him. Meanwhile, two sisters, who both live in California, say they discovered after Mr. Colby's firing that he had been romantically involved with both of them, supporting them financially and promising to marry each of them. Mr. Colby is separated from his second wife; their divorce has been pending since 2004. Repeated calls and text messages to Mr. Colby's cellphone weren't returned. A lawyer representing him, John Gaims, of Gaims Weil West & Epstein in Los Angeles, declined to comment. WellPoint has refused to specify why it terminated Mr. Colby, saying only that a probe by outside legal counsel found that Mr. Colby had violated the company's code of conduct, but that his activities didn't affect WellPoint's business or finances and weren't illegal. "This is a personnel matter," WellPoint spokeswoman Shannon Troughton said of Mr. Colby's ouster. WellPoint, the country's largest health insurer, was created by the 2004 merger of WellPoint Health Networks of Thousand Oaks, Calif., and Anthem Inc. of Indianapolis. The combined company, which is based in Indianapolis, offers Blue Cross and Blue Shield health plans across 14 states, as well as Medicare, Medicaid and other health- insurance products. It has 35 million health-plan members and generated $57 billion in revenue last year.

5. On May 30 WellPoint ______its well-regarded finance chief David Colby. a. retired

6. WellPoint was created by the 2004 merger of WellPoint of Thousand Oaks, Calif and Anthem of Indianapolis. The combined company, which is based in Indianapolis, offers ____ across 14 states. a. banking services b. bond trading c. health plans Correct d. management consulting

How Blackstone's Chief Became $7 Billion Man By HENNY SENDER and MONICA LANGLEY June 13, 2007; Page A1 http://online.wsj.com/article/SB118169817142333414.html

Stephen Schwarzman, who stands 5-foot-6, describes himself as a scrappy "little man" who finds ways to win. When he pursues deals as the chief executive of Blackstone Group, he says, he wants to "inflict pain" on and "kill off" his rivals. Later this month, the giant buyout firm intends to go public, offering many investors their first opportunity to share the kill. If there was ever a doubt about what investors will be buying, a Securities and Exchange Commission filing Monday cleared that up: Mr. Schwarzman utterly dominates the firm. He stands to pocket as much as $677.2 million, and will retain a 23% stake in Blackstone, likely to be worth more than $7.5 billion. Investing in Blackstone, in large measure, means buying a piece of Mr. Schwarzman -- his profitable track record at taking companies private and wringing money out of them, his enormous ambition, and his healthy ego. Unlike most public companies, buyout firms live and die on the backs of their skippers, and the 60-year-old Mr. Schwarzman has always made it clear that he's the one in charge. Over the course of several conversations earlier this year, Mr. Schwarzman said he views each deal as a contest to the death. His intended message to the market: Blackstone will get what it wants at the price it wants to pay. Mr. Schwarzman likes battles to play out quickly. "I want war -- not a series of skirmishes," he said of his philosophy. "I always think about what will kill off the other bidder." "I didn't get to be successful by letting people hurt Blackstone or me," he said. "I have no first-strike capability. I never choose to go into battle first. But I won't back down." Mr. Schwarzman declined to talk specifically about Blackstone's business. SEC rules impose a "quiet period" before a public offering. Mr. Schwarzman is exacting in his personal life too. Once, while sunning by the pool at his 11,000-square-foot home in Palm Beach, Fla., he complained to Jean-Pierre Zeugin, his executive chef and estate manager, that an employee wasn't wearing the proper black shoes with his uniform, according to Mr. Zeugin, who says he has great admiration for his boss. Mr. Schwarzman explains that he found the squeak of the rubber soles distracting.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 5 of 27 He expects lunches consisting of cold soup, a cold entrée such as lobster salad or fresh grilled tuna on salad, followed by dessert, Mr. Zeugin says. He eats the three-course meal within 15 minutes, the chef says. Mr. Zeugin says he often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw. (Mr. Schwarzman says he had no idea how much the crabs cost.) Recently, Mr. Zeugin has been ill and is no longer working, although he is still on Mr. Schwarzman's payroll. Mr. Schwarzman is one of the pioneers of the private-equity industry, which is booming. Firms such as Blackstone and Kohlberg Kravis Roberts & Co. raise money from big investors, borrow more, then buy big companies, often public ones. They aim to rehabilitate or reshape them, and eventually to sell them at a profit.

7. Mr. Schwarzman chief executive of Blackstone Group said he views each deal as a: a. way to help the poor b. way to save the stone crabs c. way to stop the squeak of rubber soles d. contest to the death Correct

8. Mr. Schwarzman is one of the pioneers of the ______industry. a. public-equity b. private-equity Correct c. cruise d. golf equipment

Detroit Pursues Sweeping Cuts In Union Talks By JEFFREY MCCRACKEN June 14, 2007; Page A1 http://online.wsj.com/article/SB118178643572134789.html

Detroit's Big Three, facing their worst crisis in decades, are seeking unprecedented concessions from the United Auto Workers union in a bid to narrow what they say is a $30-an-hour labor-cost disadvantage against Asian rivals like Toyota Motor Corp. and Honda Motor Co., auto executives say. The unusually tough stance by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group marks their latest attempt to stanch heavy losses in their North American auto operations. It also sets up a potential showdown with the UAW -- which has a 70-year history of winning progressively richer contracts for its members -- as the two sides prepare for contract talks that start this summer. In recent years, the union has agreed to work-rule changes and benefit cuts for its retirees designed to save the auto makers billions of dollars a year. However, UAW President Ron Gettelfinger, who declined to comment on the coming negotiations, has argued his workers shouldn't bear the entire cost of Detroit's restructuring. The Big Three have talked tough before ahead of contract talks, only to agree in the end to a costly labor deal. This time around, however, people familiar with their plans say all three are united in believing they have no choice but to close the $10 billion-a-year labor- cost gap between them and their leaner Asian competitors on cars and trucks built in the

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 6 of 27 U.S. The three are also resolved to move jobs abroad if they can't bring down U.S. wage- and-benefit costs, one industry executive says. GM, Ford and Chrysler have eliminated about 70,000 UAW jobs over the past two years through buyouts and other means. The three, which currently employ about 210,000 of the UAW's 520,000 active members, say they pay union workers $70 to $75 an hour, when wage, health-care and pension expenses are factored in. By comparison, according to Big Three estimates, Toyota and other Asian auto makers, pay $40 to $45 an hour at their U.S. plants, which together employ about 62,300 nonunion workers. "We need to eliminate most, if not all...like 80%" of the gap, says a senior automotive executive involved in labor planning. "It has to be gone by the end of the contract, or doing business in the United States is unsustainable." All three domestic auto makers "will move investment in plants and people outside the country" if they don't bring U.S. labor costs in line with those of Toyota and the other foreign auto makers, the executive said. Detroit's auto makers are in a more precarious position than at any time since the early 1980s. Ford and GM are bleeding cash in North America and their debt ratings have sunk to junk status. Control of Chrysler is about to be passed from German industrial giant Daimler to private-equity firm Cerberus Capital Management LLC, which has profited by aggressively restructuring distressed companies. The Big Three's competitive problems extend far beyond labor costs, a point UAW bargainers have made in the past and will likely make again. Union leaders have said the auto makers should invest more in improving the quality and design of their vehicles.

9. Detroit's Big Three, facing their worst crisis in decades, are seeking unprecedented concessions from the ____ union. a. Teamsters b. AFL-CIO c. United Auto Workers Correct d. Global Auto Workers

10. GM, Ford and Chrysler say they pay union workers _____ an hour, when wage, health-care and pension expenses are factored in. a. $40 to $45 b. $50 to $55 c. $70 to $75 Correct d. $90 to $95

As Boomers Retire, Insurers Aim to Cash In By IAN MCDONALD June 15, 2007; Page A1 http://online.wsj.com/article/SB118187429554336353.html

When baby boomers were in midcareer and eager to build nest eggs, the mutual-fund, banking and brokerage industries swooped in and took advantage. Now the insurance industry is eyeing that huge pile of money, hoping to build a global business soothing anxiety over whether those nest eggs will last as boomers retire and live long.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 7 of 27 The result is a world-wide race to sell variable annuities, a product with risks for insurers and a checkered past for U.S. consumers, thanks to unscrupulous sales practices by some brokers and third-party agents. They typically offer regular payments for life -- no matter how long a customer lives. "Insurance companies have historically been kind of sleepy," says Christopher "Kip" Condron, the U.S. chief of the giant French insurer AXA SA. "But banks and mutual funds can't offer these kinds of guarantees. So we looked at the situation and said, this is our era." AXA is making one of the biggest pushes around the globe into variable annuities, highlighting the promises and pitfalls of the market. It has "risk labs" in New York and Paris trying to predict what the future holds for longevity and financial markets. Could a surprise medical breakthrough -- a cure for cancer, for instance -- wreak havoc on the company's longevity models? Average life spans have been rising for years in the U.S. and Europe. In Japan, more than 28,000 people are now older than 100. "Longevity is a difficult risk to price," says Simon Harris, who heads a group of European insurance analysts for Moody's Investors Service in London. "Unlike pricing a motor-insurance policy, where the risks are pretty well understood and you can reprice each year, with longevity, you have to put a price today on risks that will emerge many years into the future." The pool of potential assets and customers is enormous. In the U.S. alone, more than $12 trillion sits in investment and insurance accounts earmarked for retirement, according to Swiss Reinsurance Co. In other countries, there are trillions of dollars more.

11. Variable annuities, a product with risks for insurers typically offer regular payments for: a. 20 years b. 30 years c. 40 years d. life Correct

12. In Japan, more than _____ people are now older than 100. a. 280 b. 2800 c. 28,000 Correct d. 280,000

Questions 13 – 17 from Marketplace

CEO Guides a New Age of Discovery By BROOKS BARNES June 11, 2007; Page B1 http://online.wsj.com/article/SB118152651551130814.html

Like a well-fed lion in one of its nature shows, Discovery Communications Inc. meandered along for a decade in a sleepy haze. The company's 15 cable networks churned out profits without much effort. A half-public, half-private ownership structure

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 8 of 27 muffled investor fireworks. Even its quiet location in Maryland contributed to the slumbering reputation. Then David Zaslav arrived. In January, he left a top post at General Electric Co.'s NBC Universal to run the $3 billion company, home to the Discovery Channel, TLC and Animal Planet. Within weeks, he had ousted a cadre of veteran executives. A first-time chief executive, Mr. Zaslav has also shuttered Discovery's chain of retail stores, sold the Travel Channel and slashed the work force by more than 20%. Most significantly, Mr. Zaslav orchestrated a $2.5 billion deal in March to buy out Cox Communications Inc.'s 25% stake in Discovery. It is now 75%-owned by the publicly traded Discovery Holding Co., with the balance owned by Advance/Newhouse Communications Inc. Discovery couldn't afford to stay on autopilot. The Internet, with its many microniches, is proving a bigger challenge to cable channels than to broadcast networks. And growth in fees from cable providers is slowing. But Mr. Zaslav, 47 years old, is in a unique position. Discovery's nonfiction shows are evergreens and wholly owned -- content that could have immense value.

13. David Zaslav is the CEO of ______. a. General Electric b. Discovery Communications Correct c. Advance/Newhouse Communications d. NBC Universal

When Your Cellphone Goes Behind Your Back To Redial Your Office By JARED SANDBERG June 12, 2007; Page B1 http://online.wsj.com/article/SB118158784704831515.html

If someone accidentally dials Jack McCullough because, say, a cellphone has been bumped and dialed in a pocket or purse, the chief financial officer typically contends with an epic voice-mail recording of the unwitting caller's conversations. The messages aren't gripping: "You get an insight into nothing," he says. But accidental dialing can have some interpersonal fallout. After Mr. McCullough once argued with a top salesman, the salesman then inadvertently conferenced Mr. McCullough into a call in which he was labeled with some uncharitable epithets. Awkward. And there was the time Mr. McCullough accidentally left a message for that same salesman when he meant to complain about him to someone else. Panicked, Mr. McCullough asked a technician to reset the salesman's voice-mail password so he could log in and delete the message himself. "All it takes is one really stupid accidental call to really get you into trouble," he says. It's all part of the cautionary tales of communications technologies, their overabundance of buttons and the side effects of one-touch convenience. Hopefully, all you've recorded is a low-drama soundtrack of your walking and breathing. In that case, you'd only get a little attitude: What does my wife's handbag want with me now?

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 9 of 27 But at their worst, accidental phone calls or emails are snitches, bringing along the prying ears of your entire address book. They invite undetected eavesdropping. "There's a sense that because you didn't initiate it, it's OK [to listen]," says Basil Karampelas, a finance director. Adds Les Hyman, a retired professor who has gotten all kinds of unintentional calls, it's another "ghost in the machine getting a good laugh at our expense." The FCC has had to warn the public that accidental calls are problematic for 911 operators. To check for real problems, operators have to "sit there listening to someone driving down the road or shopping," says a director for an emergency-number association. Some have coined a verb meaning to delete a lengthy, unwanted message -- to "33-7" the message, signifying the digits often used to fast-forward through a message and delete it. Verizon Wireless's spokesman, Tom Pica, once inadvertently left his boss a 10-minute voice mail of Mr. Pica giving his cab driver directions to his hotel. He was in Greece at the time; his boss was in Philadelphia. "It was 11 in the morning for me, so it was about 5 a.m. his time," he recalls. His former boss left his own voice mail: "Dude, learn to use the key guard!" Candy-bar style phones, with their keypads exposed, historically have been the culprits. Manufacturers have taken measures to prevent accidental calls. New phones, for example, no longer dial 911 after holding down one digit and often include automatic keypad-lock functions that require the push of a button to unlock. But that doesn't mean newer technologies don't rat you out. Cosmetic surgeon Robert Kotler was using his Bluetooth headset a few months ago to talk to his daughter while driving. His headset redialed her when he was later talking to his wife, who was expressing some parental dissatisfaction. Now, Dr. Kotler leaves his Bluetooth headset caged in the car. Says Dr. Kotler, with an evident sense of luck: "I only had good things to say about her." Communications consultant Tim O'Brien and his wife get his father-in-law's accidental calls and 15-minute voice mails. They tend to happen when he's driving (and humming) or walking his Pomeranian mix, Ginger, ("Good dog!"). The phone is supposed to be for emergency purposes only. "He gets more use out of it speed dialing by accident than he does by actually using it," says Mr. O'Brien. Even the best marriages suffer communications breakdowns from accidental calls. "Why did you call?" is the first question, followed by a did-not/did-too exchange. For Jerry Butler, a chief financial officer whose wife's purse used to call him all the time, a phantom call "inevitably leads to a conversation about why she had forgotten what she called about," he says. People seem to be getting used to accidental contact. Steve Collins, an account director, has a so-called smart phone that recently sent a few hundred colleagues an email of gibberish. He expected to be inundated with queries and complaints. Didn't happen. Only three or four people, he says, asked what "Zxame Upai" meant.

14. The FCC has had to warn the public that _____ are problematic for 911 operators. a. accidental cell phone calls Correct b. crank calls c. power outages

With Gambling Ads Banned, Attracting Casino Customers Can Be a Roll of the Dice By GEOFFREY A. FOWLER June 13, 2007; Page B1 http://online.wsj.com/article/SB118169791347833396.html

MACAU -- How does a company market a product it can't mention? That's the challenge for the flurry of new casinos opening here. Macau is the only place in China where casinos are legal; advertising gambling, however, is still forbidden. The solution, so far: wink at consumers and roll the dice in the hope censors aren't offended. The Grand Lisboa, the newest casino from local tycoon Stanley Ho, uses TV ads featuring a troupe of Chinese martial artists to tout the company's local roots. The troupe isn't shown in or even near a casino. The Wynn Macau doesn't advertise on TV, but did hoist a giant neon sign on Hong Kong harbor that looks like Wynn Resorts Ltd. Chairman Steve Wynn is writing his signature in lights all night long. And Las Vegas Sands Corp.'s Sands Macau blasts a text message to all Macau visitors who use their cellphones with certain local carriers, inviting them to check out its latest promotions. The regulations on ad content in China aren't codified, and even the indirect approach can go awry with China's sometimes prudish censors. In April, Melco PBL Entertainment's Crown Macau launched an expensive TV "mini-movie" featuring the actor Chow Yun- fat. While never explicitly mentioning gambling, the ad suggests it by showing Mr. Chow in a series of mysterious encounters at the Crown's high-end facilities. During one scene, Mr. Chow throws a pair of dice -- which turn into ice cubes. In another scene, he flips a poker chip while talking with a butler about his unusual evening. The ad lasted only a few days before it was pulled from many stations by officials in China's Guangdong province, an important source of Macau's mainland Chinese visitors. "Everybody is getting much more conscious about keeping within the boundary," says Felix Ling, the general manager for marketing at Macau newcomer Galaxy Entertainment Group. Ads for Galaxy's StarWorld resort, which opened last fall, employed champagne- sipping Chinese movie star Tony Leung to promise StarWorld is the "most exciting place to be in Macau," without explaining exactly why. Once, Las Vegas resorts were also forbidden to advertise gambling. "We learned to differentiate ourselves with attitude or the environment where the games are played," says Randy Snow, the executive vice president of R&R partners, the U.S. agency behind the "What happens in Vegas stays in Vegas" campaign. After the laws changed, about 15 years ago, some Vegas casinos started running ads linked to specific gambling promotions. Most still keep their messages focused on their other offerings. But the U.S. approach isn't an exact fit for Macau. Although the general entertainment and convention market might develop over time, most tourists today visit Macau for day trips filled with a lot of gambling and relatively little else. The Wynn Macau had tried to sell its exclusive night club Tryst by employing a model to sit behind a velvet rope in the resort's lobby. Tryst closed a few months ago. Las Vegas resorts tend to assume that their gambling facilities aren't a point of distinction, because tables and slot machines are all carefully regulated for consistency.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 11 of 27 While they're regulated in Macau, too, serious Chinese gamblers still think there are important differences. For the gambler conscious of feng shui, an ancient art of maximizing good fortune through design, the luck of a casino can vary depending on its orientation, lighting, decorations, even the day it opened. So Chinese credentials have become a point of differentiation for Macau casinos. Mr. Ho's company, which has operated casinos in Macau for decades, opened its newest resort touting the company's history and knowledge of Chinese culture. The ad features martial artists to imply that kung fu, like running a casino, takes experience. "Real success grows in step with time," says a voiceover. Macau's most important marketing tool may be the members of the Chinese and Hong Kong press, many of whom are hungry for lifestyle and celebrity stories. Even before the concrete dried in its new stadium, the Venetian had announced it would be hosting two NBA tournament games with the Cleveland Cavaliers, the Orlando Magic, and the Chinese Men's National Team. John Catt, vice president of the Grand Lisboa, which opened a casino and six restaurants in February, says avoiding pitching the main attraction "is a constant challenge, but not one that's insuperable." He adds: "The people who visit the Grand Lisboa come for the gaming experience. If they can enjoy the food while they're here, that's great. But it would be disingenuous to say they come here for the noodle bar."

15. _____ is the only place in China where casinos are legal. a. Grand Lisboa b. Macau Correct c. Hong Kong d. Beijing

Cows, Climate Change and Carbon Credits By JEFFREY BALL June 14, 2007; Page B1 http://online.wsj.com/article/SB118178859139934868.html

The biggest coal burner in the U.S. thinks it has come up with a cheap way to start fixing its global-warming problem: cow dung. American Electric Power Co., a utility based in Columbus, Ohio, burns so much coal that it coughs out 145 million metric tons of carbon dioxide each year -- more than any other company in the U.S. That puts AEP squarely in Congress's crosshairs as lawmakers push to slap a cap on U.S. emissions of CO2, a gas contributing to global warming. AEP is investigating various ways to curb its global-warming emissions, from boosting the efficiency of its generators to burying its CO2 output underground. But the search will be expensive and will take years. Meantime, AEP has high hopes for manure. In a deal to be announced today, the utility has agreed to pay a middleman to put plastic tarps over lagoons holding rotting livestock waste on farms. Decomposing manure produces methane -- a greenhouse gas that, ton for ton, is 21 times more damaging to the atmosphere than carbon dioxide, scientists say. With some sort of federal global-warming constraint looking increasingly likely, AEP's move shows how industry is on the hunt for the least-expensive alternatives. But

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 12 of 27 ultimately these early moves will merely buy time for heavy emitters like AEP as they search for an affordable way to solve their real challenge: cleaning up fossil-fuel combustion. Methane accounts for 16% of global greenhouse-gas emissions, according to the International Energy Agency. That is far less than the most prevalent greenhouse gas, CO2, which accounts for 75% of the global total. But methane is an attractive early target because it generates a big environmental bang for the buck. The methane produced by the manure of a typical 1,330-pound cow translates into about five tons of CO2 per year. That is about the same amount generated annually by a typical U.S. car, one getting 20 miles per gallon and traveling 12,000 miles per year. Normally, methane from manure wafts up into the clouds, thickening the gaseous blanket that is contributing to global warming. The AEP-funded tarps will capture that methane and send it to flares, where the methane will be burned, emitting less-harmful carbon dioxide. In the new math of the "carbon market," that emission reduction will translate into a wad of currency called carbon "credits." AEP is banking on using those credits to offset its obligation to clean up its power plants if, as AEP and much of industry expects, Congress imposes a carbon cap in the next few years. The notion of carbon credits is rooted in the Kyoto Protocol, which allows industrialized countries that agree to carbon caps to meet their quotas in part by bankrolling emission- reducing projects at sites where the task will be less expensive. Several methane-capture projects that spin off carbon credits are up and running, particularly in developing countries in Latin America. The projects are funded by companies in industrialized countries that face emission-reduction quotas under the Kyoto treaty. Even in the U.S., which has declined to ratify Kyoto or impose a carbon cap, methane-capture projects are generating unofficial carbon credits on a handful of farms. The AEP project, which is set to include about 200 farms, would be far bigger than any other effort to turn cow dung to carbon credits in the U.S. Letting companies like coal-burning utilities buy up cheap carbon credits is "very legitimate," says William Hohenstein, director of the global-change program at the U.S. Department of Agriculture. "The atmosphere doesn't care what the source of greenhouse- gas emissions" is, he says, so starting with the cheapest ones "means that you can do more with the same amount of resources."

16. The most prevalent greenhouse gas which accounts for 75% of the global total is ___. a. methane b. hydrogen c. oxygen d. CO2 Correct

Report Details Lenders' Largess To College Officials By JOHN HECHINGER and ANNE MARIE CHAKER June 15, 2007; Page B1 http://online.wsj.com/article/SB118187227087136321.html

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 13 of 27 In 2004, a Bank of America Corp. employee seeking student-loan business said he got some frank advice at a meeting with Don Davis, associate financial-aid director at the University of Texas at Austin. Mr. Davis counseled the bank to meet 10 times a year with Lawrence W. Burt, the school's aid director, and other officials. He said "top lenders" provided Mr. Burt and his staff with happy hours, parties for Mr. Burt's family, invitations to golf tournaments and free tickets to sporting events, according to an email from an unnamed Bank of America employee recounting the meeting. "Larry loves tequila and wine -- since becoming director at UT Austin, he has not had to buy any tequila or wine -- lenders provide this to him on a regular basis," the email says Mr. Davis told Bank of America. The email is part of evidence uncovered by investigators from Sen. Edward Kennedy's office, which yesterday released a report on the marketing practices of companies that make government-backed student loans. In more than 500 pages of documents, the Senate Health, Education, Labor and Pensions Committee, chaired by Sen. Kennedy, provided fresh details about the lavish perks lenders gave to financial-aid officials, such as spa visits at luxury hotels, tickets to baseball games, travel to Disney World and expensive dinners. The disclosures come at a time when Congress is cracking down on such practices and many lenders have agreed to stop making payments to financial-aid officials under settlements with New York Attorney General Andrew Cuomo. Mr. Kennedy says the documents show that school officials traded perks for favored treatment that may have resulted in students getting worse deals on loans. Mr. Kennedy's report also shines a spotlight on the activities of lenders, including Royal Bank of Scotland Group PLC's Citizens Bank unit and Northstar Education Finance Inc., and financial-aid directors at the University of Notre Dame in South Bend, Ind., and Boston's Emerson College whose names haven't surfaced in a significant way so far in previous investigations. His report reveals new details about the University of Texas and Baltimore's Johns Hopkins University, some of whose practices had already been exposed in the scandal. After doing its own investigation, the University of Texas fired Mr. Burt. In an interview, Mr. Burt denied any impropriety and said he disagreed with "virtually everything" in the email. Charles A. Sorber, the University of Texas at Austin's interim financial-aid director, says Mr. Davis is currently employed as the office's associate director, but plans on retiring at the end of the month. He added that Mr. Davis, who couldn't be reached, is on vacation. "The university has taken all the corrective action it needs to take," he said. Bank of America spokesman Lawrence Di Rita notes that the employee in the email was "doing the right thing" by explaining "I do not golf, I do not have happy hours. I do not provide sports tickets." Mr. Kennedy's report also cites an email from an official at Collegiate Funding Services Inc., now owned by J.P. Morgan Chase & Co., about hiring the Johns Hopkins financial- aid director, Ellen Frishberg, as a consultant. "Let's confirm if there is a correlation between 'hourly consultant' and $$$ loan volume," the email says. A J.P. Morgan spokesman said the arrangement predated its ownership of the unit. Yesterday, Johns Hopkins settled deceptive practices allegations leveled by Mr. Cuomo, who had earlier uncovered Ms. Frishberg's consulting for another lender. The school

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 14 of 27 agreed to pay $1.13 million to financial-aid education funds overseen by Mr. Cuomo and the Maryland attorney general and to sign a "code of conduct" forbidding the acceptance of payments from lenders. Under the settlement, Johns Hopkins denied it had broken New York law. Its president, William R. Brody, said that Ms. Frishberg had violated university policy but that the school "has always stood for a financial aid program that meets the highest ethical standards." Ms. Frishberg, who declined to comment, has since resigned.

17. Many lenders have agreed to stop making payments to: a. financial-aid officials Correct b. the federal reserve c. savings banks d. auto finance companies

Questions 18 – 23 from Money & Investing

Did Greenspan Add to Subprime Woes? By GREG IP June 9, 2007; Page B1 http://online.wsj.com/article/SB118134111823129555.html

Alan Greenspan was arguably the country's most powerful financial cop in his 18 years as chairman of the Federal Reserve. But Mr. Greenspan's regulatory record has received far less scrutiny than his management of the economy. That may be changing. A former colleague says Mr. Greenspan blocked a proposal to increase scrutiny of subprime lenders under the Fed's broad authority. That added scrutiny might have helped curtail questionable lending practices now blamed for soaring defaults by mostly low-income borrowers. Democrats in Congress are now turning up the heat on regulators, especially the Fed, for failing to do more to stamp out those practices, and the Fed appears increasingly likely to overhaul its approach. Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies. "I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

18. A former colleague says Mr. Greenspan blocked a proposal to increase scrutiny of _____. a. prime lenders b. subprime lenders Correct c. Auto lenders d. School loan lenders

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 15 of 27 Utopia Lost? Dow's Run-Up May Be in Peril By E.S. BROWNING June 11, 2007; Page C1 http://online.wsj.com/article/SB118151215289530562.html

As investors pushed the Dow Jones Industrial Average up 27% during the past year, they came to believe in a "perfect world" scenario of steady growth, low inflation and falling interest rates. Suddenly, as interest rates have surged, the world has begun to appear less perfect. Last week, investors took back some of the 27% run-up, and they are worrying: How much more can the market decline? Richard Steinberg, president of Steinberg Global Asset Management in Boca Raton, Fla., isn't waiting to find out. He started taking money off the table about a month ago. In his personal account, he said, he has liquidated stock holdings and gone entirely to cash for the first time in more than 20 years. He also has invested in an exchange-traded fund that rises when the Standard & Poor's 500-stock index falls. For clients, he has avoided selling stock and paying capital-gains taxes, and instead has tried to offset the risk of losses by buying shares in the fund that rises when the S&P falls. In fact, he uses a fund that moves twice as much as the S&P -- rising two points for every point that the S&P falls (and vice versa). So while his clients' holdings still fall in a down market, the damage is mitigated. "You bleed to death, but you bleed a little slower," Mr. Steinberg said. He doesn't think the selling is over, although he thinks that, sooner or later, it will be time to get back in. "There is going to be some kind of dislocation to the market, which will be a buying opportunity," he said. The immediate problem facing stocks is that market interest rates have stopped falling and started rising. The U.S. benchmark that investors watch, the yield of the 10-year Treasury note, soared to 5.12% Friday from 4.64% just one month ago. The turnaround in interest rates began as an annoyance and has become a serious headache, because falling rates were such a big support for the stock gains. Rising rates remove several pillars of the bull market. Rising rates make it harder for buyout firms to finance takeovers with borrowed money, and buyouts were one of the main supports for stock prices. Higher rates make bonds more attractive alternatives for big institutions such as pension funds. They make it more expensive for businesses and consumers to invest and to buy things, which hurts corporate profits. And higher rates make dividend-paying stocks less attractive compared with bonds. While stocks rose Friday, major indexes failed to recoup three days of losses and remain below records set Monday. For stocks to recover and push higher, investors will need to see bond yields stabilize, or see some sign the economy is strong enough to shrug off higher market interest rates. Money managers are bracing for more ups and downs this summer. Market rates are being pushed higher by inflation fears, both in the U.S. and abroad, and strong economic growth overseas that is prompting foreign central banks to raise their base interest rates. Hopes have evaporated that the Federal Reserve will cut rates anytime

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 16 of 27 soon. Interest-rate-futures contracts recently have signaled growing fears that the Fed could be forced to raise rates. Home buyers are among the hardest hit by higher rates because many fixed-rate mortgages are linked to the 10-year-bond yield. Earlier this year, when market rates were falling, mortgage demand began to recover, which helped ease the housing market's pain. Lately, mortgage demand has been falling again. Last week, the Mortgage Bankers Association reported that weekly mortgage-application volume had fallen 1.7% from the previous week. A lot of investors thought the yield of the 10-year Treasury note would top out around 5%. Last week's swing above 5% shocked people out of that complacency and contributed to the stock declines. The yield's highest level in the past five years was 5.25%, hit about a year ago when the stock market also was swooning. As long as the yield stays below that level, a lot of people will remain calm. But some investors have warned that they could pull back from stocks if it gets much beyond 5.25%. As hopes for Fed interest-rate cuts have dissipated, fears have grown that some of the market's other underpinnings, such as corporate profits, also could be affected. If so, some people's high hopes for this year's stock performance could be dashed. "We are growing increasingly concerned that expectations are starting to get too high, and investors could soon be disappointed at some point during the second half of this year," said research director Nick Raich of the private-client group at Cleveland's National City Corp., in a report to clients.

19. The immediate problem facing stocks is: a. global trade b. market interest rates have stopped falling and started rising Correct c. falling interest rates d. falling Treasury notes

Pop Goes Out Of Earnings For Brokerages By SCOTT PATTERSON June 12, 2007; Page C1 http://online.wsj.com/article/SB118160579056831879.html

Investment-bank earnings reports won't provide the pop investors have come to expect during the past few years. For the quarter that just ended in May, earnings for the investment-bank and stock- brokerage sector are expected to be reported up 11% from a year earlier. That's much slower than the 53% gains registered in the previous two quarters, according to Thomson Financial. Analysts expect Bear Stearns, which reports Thursday, to post fiscal second-quarter earnings excluding one-time items of $3.50 a share, down 6% from last year. Goldman Sachs Group, which has made a habit of posting double-digit earnings growth, adds to the slack. Goldman's per-share profits are forecast to grow by just a penny from last year. Earnings at Lehman Brothers Holdings, which reports today, are expected to be up 11%. Bear's housing woes are well-known. It's highly exposed to the troubled U.S. subprime- mortgage business. The bank's other problem has received less attention. Bear gets far

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 17 of 27 less revenue than its rivals from booming overseas markets. In 2006, 87% of Bear's revenue came from the U.S., compared with about 60% for most other brokerages, according to Bespoke Investment Group. That has caused it to largely miss out on explosive growth in international initial public offerings, which surged 74% in dollar terms in 2006 from the previous year, according to Wachovia Capital Markets, compared with a 1% decline in the U.S. Bear is pushing hard to grow overseas. Richard Bove, an analyst at Punk Ziegel, notes Bear's headcount in London is up 50% in the past two years and Asia has doubled. But it might be coming too late to the international party after being fixated on the hot market at home. 'Purchasing-Power Parity' Sees Dollar Undervalued After falling for much of the year, the dollar has gained ground the past few trading sessions. There are plenty of reasons to believe the blip is temporary, and the dollar will head down again soon. With much of the world growing faster than the U.S., investments here are a tougher sell to foreigners. Interest rates are also rising outside the U.S., meaning investors can make decent returns parking their money in foreign bonds or money-market instruments. But by one measure, called purchasing-power parity, the dollar looks undervalued in some places. Economic theory holds a currency ought to buy at home what it can buy abroad. When its purchasing power is out of whack, the currency should adjust. In other words, if Europeans or Canadians can get more for their money here, they'll find ways to spend more of it here until the disparity is fixed. According to measures by the Organization of Economic Cooperation and Development, the dollar isn't buying much in places like Canada, Australia, Japan, the euro area and the United Kingdom these days. In France and Germany, for instance, it buys only about 82 cents of stuff. Of course, textbook economics often doesn't work in the real world. At the least, you might expect to see lots of tourists from Canada and Europe at the local mall this summer.

20. For the quarter that just ended in May, earnings for the investment-bank and stock- brokerage sector are expected to be reported ____ from a year earlier. a. up 11% Correct b. down 11% c. up 53% d. down 53%

Do Georgia's Small Builders Signal a Dangerous Trend? By KAREN RICHARDSON June 13, 2007; Page C1 http://online.wsj.com/article/SB118170094822833502.html

The state of home building in Georgia is anything but peachy. When most people think of the slowing housing market, Florida and California typically come to mind. And while those two places continue to lead the national pace in rising

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 18 of 27 construction-loan delinquencies, the pain is starting to spread. New bank-loan data and a number of defaults by smaller players show that the trend is starting to take hold in Georgia. And in what is surely bad news for banks, foreclosure rates in Georgia were among the nation's 10 highest in May, according to data released yesterday by real-estate data firm RealtyTrac Inc. Foreclosure rates, or filings per household, in Georgia ranked seventh in May, according to RealtyTrac. With 8,294 foreclosure filings last month, Georgia recorded the nation's sixth highest state total -- the aggregate number of filings -- after California, Florida, Ohio, Texas and Michigan. Last week, a small, private builder named Meyer-Sutton Homes Inc. filed for bankruptcy- court protection, citing a "sudden and dramatic" decline in its business. In the case of Meyer-Sutton, based in Fayetteville, Ga., its debt amounted to less than $30 million, a loss that shouldn't be material to its bigger lenders, including Atlanta's SunTrust Banks Inc., Wachovia Corp. of Charlotte, N.C., and Colonial BancGroup Inc. of Montgomery, Ala. But Georgia's home-building market, as in most states, is dominated by small local operators financed by construction loans from larger regional banks as well as small local lenders. Stock-market-listed home builders, such as Hovnanian Enterprises Inc. and KB Home -- represent only about a third of the U.S. home-building industry, according to the Public Home Builders Council of America. So the trend of private local operators running into trouble could affect more lenders, making a recovery in regional banking further off than some expect. "Meyer-Sutton is a small bankruptcy, but it isn't the only one out there," says Keith Long, head of Otter Creek Management, a $125 million hedge fund in Palm Beach, Fla. "It's a sign that we're right at the tip of what's beginning to unfold." Indeed, Bank of America Corp. in recent months foreclosed on five property developments used to back loans it made to another failed Georgia developer, closely held Laurel River Properties Inc. In a May 3 filing in federal court in Atlanta, Bank of America said it had sold the five properties -- mainly plots of land to be developed -- for slightly more than $15 million, short of the $19 million in the original principal amount. Laurel Properties and its founders, Jeffrey Brice and Sheila Brice, couldn't be reached. Georgia's housing market hasn't fallen as steeply as markets such as Florida and Washington, D.C., but sales in many parts of the state have slowed, leaving a number of small builders with unsold inventory and high carrying costs. It's a little like popcorn," says Sam Haskell, who works in institutional equity sales at Birmingham, Ala.-based brokerage Sterne, Agee & Leach Inc., referring to Georgia's struggling home builders. "You hear of one here, one there and then another one there." In the metropolitan Atlanta area, where there are more than 3,000 builders, new-home sales fell 20% in the first quarter compared with a year ago, says Steve Palm, president of SmartNumbers, a real-estate information and analysis firm in Marietta, Ga. He said some small builders put up only a handful of homes a year, and "if you have three or four of those homes just sitting there, that is too much inventory to carry. It just kills them." Unlike the larger regional lenders whose loan portfolios are more diversified geographically and by type, smaller lenders' loans are more concentrated in residential and commercial construction. For most Georgia lenders, the loans are largely in Atlanta.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 19 of 27 Along with Meyer-Sutton's bigger regional creditors are several small publicly traded lenders from the Southeast including Southern Community Financial Corp. of Winston- Salem, N.C., and Heritage Bankshares Inc. of Norfolk, Va., and several private Georgia banks. "For a smaller institution that is more reliant on a few large customers, if one of those customers catches a cold, so does the institution," says Gary Townsend, a bank analyst at brokerage Friedman, Billings, Ramsey Group Inc. in Arlington, Va. He doesn't rate the smaller banks but has the equivalent of a "sell" rating on SunTrust, which had 11% of its total loans in the construction sector at the end of 2006. According to latest data from the Federal Deposit Insurance Corp., some small Georgia banks saw sharply higher delinquencies in their construction-loan portfolios in the first quarter compared with the fourth quarter of 2006. Over all, Georgia banks with construction loans valued at more than $200 million saw the amount of loans that no longer accrue interest, or non-accruals, nudge up to 0.5% in the first quarter from 0.3% at the end of December. While that is lower than California's jump to 0.9% from 0.5%, it contrasts with a trend in Texas, where non-accruals slipped, on average, to 0.2% from 0.3%, according to the FDIC data compiled by Foresight Analytics. Analysts note, however, that the rise in construction-loan delinquencies in Georgia and elsewhere won't necessarily lead to the collapse of banks and thrifts on the scale of the late 1980s and early 1990s, particularly if unemployment stays low and the economy doesn't slow significantly. Still, it is too early for some investors to call a turnaround. "Out in the hinterlands, people have made mistakes in terms of underwriting and collateralizing loans," says David Ellison, chief investment officer for FBR Funds, which has about $2.3 billion in assets. "These things are starting to come home to roost, and we don't know how long they're going to last."

21. Foreclosure rates, or filings per household, in Georgia ranked ____ in May, according to RealtyTrac. a. 5th b. 7th Correct c. 9th d. 10th

Rising Yields May Not Mean Inflation Angst By JUSTIN LAHART June 14, 2007; Page C1 http://online.wsj.com/article/SB118177829264934622.html

The rise in long-term interest rates has less to do with inflation than one might think. Investors have been selling bonds the world over, pushing yields higher. In the U.S., the yield on the 10-year Treasury note has gone to 5.20% from 4.50% over the past three months. Bond yields have risen by similar amounts in Germany, Japan and the United Kingdom.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 20 of 27 Over the same period, the yield on the 10-year Treasury inflation-protected securities has risen nearly as much. TIPS, as these bonds are called, give investors a payment that rises and falls with the inflation rate. Treasurys, by contrast, offer a set payment so higher inflation hurts their value.

22. In the US, the yield on the 10-year Treasury note has gone to ___ over the past three months. a. 4.50% b. 5.20% Correct c. 6.20% d. 7.50%

Dawning: New Reality For Real Estate By ALEX FRANGOS June 15, 2007; Page C1 http://online.wsj.com/article/SB118187100194336268.html

Real-estate prices are feeling the heat from higher interest rates. In the latest sign that the jump in borrowing costs is damping deal-making, Tishman Speyer Properties and Lehman Brothers Holdings Inc. lowered their $15.2 billion bid for Archstone-Smith Trust before the deal was announced May 29, according to an Archstone-Smith regulatory filing. Tishman Speyer and Lehman had offered as much as $64 a share for the Englewood, Colo., apartment real-estate investment trust on May 2. The sides eventually struck a deal for $60.75 a share, plus the assumption of $6.5 billion in debt. That is a small premium to Archstone-Smith's net asset value, a key measure of a REIT's properties, according to Craig Leupold, an analyst at Green Street Advisors Inc., a real- estate research firm in Newport Beach, Calif. And that could lead some investors to oppose the transaction. The price drop occurred during the ensuing negotiations even though there was another bidder involved, a situation that usually drives prices up. The filing disclosed that a company described as a "large real estate private equity fund" offered $62.50 a share in early May. That bidder was Blackstone Group, according to people familiar with the matter. By mid-May, both the Tishman-Speyer/Lehman team and Blackstone separately lowered their offers, citing "adverse changes in the debt markets," according to the filing. The bidders also claimed they discovered unforeseen tax liabilities and less value in Archstone-Smith's future construction projects. Blackstone withdrew its bid May 19, a sign that even the private-equity firm that is preparing to go public through a stock offering later this month has blinked in light of nervousness among real-estate lenders. It is also an indication that the kind of megadeal that Blackstone pulled off in February -- when it bought Equity Office Properties Trust, a Chicago-based REIT, for $23 billion -- likely wouldn't be possible in this environment.

23. Real-estate prices are feeling the heat from ______. a. higher consumer demand b. lower consumer supply

Questions 24 – 26 from Personal Journal, Section D

Popular Treatment That Aims To Melt Fat Draws Scrutiny By RHONDA L. RUNDLE June 12, 2007; Page D1 http://online.wsj.com/article/SB118160554567831887.html

The rise of cosmetic fat-busting injections, called lipodissolve, is spurring warnings from doctors who are alarmed about the spread of the pricey procedures, which use concoctions that aren't approved by the Food and Drug Administration. Lipodissolve, sometimes called medical lipolysis, is touted as a nonsurgical alternative to liposuction. It involves a series of tiny shots meant to melt fat deposits in various parts of the body, including bellies and buttocks. The treatment, which originated in Europe decades ago, has been taking off in the U.S. on the wings of local ad campaigns. A number of medical spas -- which offer aesthetic treatments like Botox -- have begun doing lipodissolve. And specialty centers are popping up, such as a chain called fig., which operates 11 clinics in the U.S. and plans to open more this year. Fig. declined to answer questions about its business. But as the popularity of the injections has grown, so have complaints. Last month, the American Society for Aesthetic Plastic Surgery warned that the shots are "scientifically unproven, lacking any objective data on safety and efficacy." The surgeons' group, which is sponsoring human tests to evaluate one such treatment, urged the public "to steer clear" until more data come in. Physicians who offer lipodissolve say the injections can be effective in skilled hands. Diane Duncan, a plastic surgeon in Fort Collins, Colo., cites a 2006 retrospective study that she co-authored in the Aesthetic Surgery Journal, based on data submitted by 75 physicians in 17 countries from 17,376 patients. The study found that roughly 12% of patients expressed disappointment with the aesthetic result. The authors concluded that the treatments have a good safety record; complications included temporary hyperpigmentation, pain and allergic reactions.

24.______, sometimes called medical lipolysis, is touted as a nonsurgical alternative to liposuction. It involves a series of tiny shots meant to melt fat deposits in various parts of the body, including bellies and buttocks. a. Lipozapp b. Lipodissolve Correct c. Lipomelt d. Liporeduce

The Growing Clout Of Online Patient Groups By LAURA LANDRO June 13, 2007; Page D1

When researchers at Harvard University were looking for a gene mutation in a group of rare blood cancers, they turned to Joyce Niblack, who put the word out to an online patient mailing list she manages, spurring more than 300 members to send in mouth swabs and bone-marrow samples. Later, Ms. Niblack mustered 1,179 participants from 30 countries for a Mayo Clinic-led study of how the cancers, known as myeloproliferative disorders, affect quality of life. The Mayo researchers are now running the clinical-trials page on her foundation's Web site, mpdinfo.org1, to keep participants up to date on developments. Online patient groups have become an increasingly powerful force for health-care consumers over the past decade, raising funds for research and offering patient information and support. Now, as the cumulative power of their memberships grows, these groups are becoming invaluable partners to researchers and physicians searching for cures. Patient groups are stepping up their participation in medical and public-health research and entering far-reaching collaborative efforts with researchers, scientists and drug developers. They are raising funds and taking part in studies to evaluate the impact of online patient sites. They are even conducting their own studies on side effects of medications, and working with researchers to recruit clinical-trial participants, provide DNA samples and start tissue banks. In the case of Ms. Niblack's efforts, the results of collaboration are already apparent. The DNA gathered from the group's mouth swabs and bone-marrow samples helped researchers identify a genetic mutation that could be a target for new therapies. The finding could lead to new drugs or other substances that attack specific cancer cells without harming normal cells. "Groups like those led by Joyce immensely serve the needs of patients," says Ayalew Tefferi, a Mayo physician and researcher who works with the group. Her foundation's Web site is "one-stop shopping for clinical trials and breaking news in research." Other online groups are having a similar impact. An online group for patients with a rare cancer known as leiomyosarcoma sent more than 300 tissue samples to researchers at Stanford University for a tissue bank that is being used to study genetic and molecular changes that occur in the disease. The International Myeloma Foundation conducted an online survey of patients that helped identify jaw bone deformities in some patients taking the Novartis drug Zometa, which is used to reduce or delay bone damage that may occur with the disease. Novartis now advises patients to avoid invasive dental procedures while taking Zometa. Spreading the Word To spur more widespread collaboration, a group of experts in patients' use of the Web just launched a new Web site and blog, e-patients.net, originally developed by Tom Ferguson, a physician who received funding from the Robert Wood Johnson Foundation and the Pew Charitable Trusts. Following Dr. Ferguson's death last year after his own 15- year battle with multiple myeloma, his cohorts completed his study, "e-Patients: how they can help us heal health care," which is available free on the site. Co-authors of the blog include Daniel Hoch, a neurologist at Massachusetts General Hospital, and Susannah Fox, a researcher at Pew's Internet and American Life Project.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 23 of 27 Another member of the team, Gilles Frydman, founder of the Association of Cancer Online Resources, recently launched a patient-focused "wiki" -- a collaborative Web site that visitors can add to and edit -- called lo-wiki.acor.org. The site helps consumers build and maintain online discussion groups and aid researchers who want to study such online communities or use the online groups to conduct research. Mr. Frydman, who started ACOR more than a decade ago when his wife was diagnosed with breast cancer, is also developing other sites, including one that will provide links to medical research papers for patients. ACOR, which offers access to 159 mailing lists for cancer and other disorders, including the one managed by Ms. Niblack, had about 110,000 cancer patients and caregivers using the online communities over the past year, according to Mr. Frydman. But there are tens of thousands of such groups on sites such as Yahoo; last year, about 17 million adults, or 12% of Internet users surveyed by Pew, participated in an online discussion or group forum that helps people with personal issues or health problems. Reaching Patients "We can bring information about studies, clinical trials and meetings to any patient world-wide who has computer access," says Ms. Niblack, a retired patent attorney who runs both an ACOR mailing site and the MPD Foundation and has been fighting the disease for almost 20 years. "People have told me the information has saved their lives." The University of North Carolina at Chapel Hill teamed up with ACOR for the first large-scale scientific analysis of medical online communities, publishing its findings last month in the Journal of Medical Internet Research. Using software that analyzes message content to examine the type of support provided by the groups, the researchers found that the most common topics in messages were about treatment information and how to communicate with health-care providers. "One of the real values in the mailing lists is their role in getting patients to seek second opinions and ask questions about clinical trials," says Barbara Rimer, dean of North Carolina's School of Public Health and an author of the study. Patients' Main Concerns The software programs enabled researchers to study messages without identifying who wrote them. But Deborah Bell, an ovarian-cancer survivor who manages the ovarian- cancer list for ACOR and participated in the North Carolina study, says members of the group are already aware that what they are writing is on a public forum, and privacy is not a major issue. With a potentially deadly cancer diagnosis, she notes, their main concern is finding information and coping with doctors who say snide things like "and where did you go to medical school?" when confronted with questions from a patient. Raising New Issues Of course, the rush to link communities and researchers and the move by patient groups to conduct their own research raises some thorny new issues. While the nonprofit, patient-run online groups have no financial interest in research or recruiting for trials, some for-profit health Web sites see their online communities as a way to make money. Such sites, supported by drug-company advertising, may seek to recruit patients for drug- company clinical trials, often without going through physicians who may advise patients about the pros and cons of such trials.

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 24 of 27 Also, the research organized by online patient communities makes some scientists nervous because such efforts don't use the gold standard of randomized controlled clinical trials. The Life Raft Group, an organization of patients suffering from rare gastrointestinal tumors known as GIST, conducts its own surveys about the side effects of the Novartis drug Gleevec, commonly used to treat GIST. The group recruits participants from among its members and publishes results on its liferaftgroup.org Web site. Norman Scherzer, a retired public-health official who started the group when his wife was diagnosed with GIST, notes that the study turned up different reactions among men and women to the drug, and was the first to report that side effects decrease over time. "At minimum it is a surveillance system," says Mr. Scherzer, who says the group isn't trying to pass off its research as pure science. Mr. Scherzer recently persuaded Novartis CEO Dan Vasella to give the group $2 million for a research program that will recruit experts from major cancer institutions to work together to study patients who become resistant to Gleevec. Working Together George Demetri, head of sarcoma and bone-cancer research at Dana Farber Cancer Institute in Boston, who treats GIST patients and has worked closely with the Life Rraft Group, says that doctors need to work in partnership with patient groups. Doctors should take the self-administered surveys seriously, to understand the impact of side effects, for example. But in cancer research, he cautions, "the challenge is keeping the patient voice in, but also staying as rigorous as possible and not being swayed by inaccurate, premature or misleading data."

25. Online patient groups have become an increasingly powerful force for health-care consumers because they a. work with researchers to recruit clinical-trial participants, b. can bring information about studies, clinical trials and meetings to any patient world- wide who has computer access c. can provide DNA samples and start tissue banks d. all of the above Correct

Life With Father: What Kids Get From Time With Dad By SUE SHELLENBARGER June 14, 2007; Page D1 http://online.wsj.com/article/SB118178455437034753.html

Amid Father's Day celebrations this week, many young dads will be harboring a little secret guilt: They feel they should be more like moms -- traditional ones, that is, who spend a lot of time at home. My email bears evidence: One father, a salesman, writes that he feels guilty for not taking paternity leave but he fears damaging his career. Another says he's "scared about long-term effects" of his heavy business travel on his two small children. If a dad can't be Mr. Mom, what can he be? A growing body of research offers new insight. Fathers can have a distinct impact on children beyond that of mothers, and in

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 25 of 27 many cases without regard to the fact that they often spend less time with their kids, researchers say. Specifically, dads' early play and the way they talk to their toddlers are emerging as special "father functions" that have a particular and lasting effect. The findings aren't just about a parent's gender per se. Mothers and fathers stimulate children through the same psychological processes, researchers say. But mothers can only do so much; fathers have an additional impact, over and above that of mothers. Also, men have a tendency to behave differently with children. After defining good parenting for decades as what warm, nurturing mothers typically do, researchers now are also beginning to see how behaviors characteristic of fathers can shape children too. Fathers tend to engage kids in more rough-and-tumble play, for example. Researchers say this can have a powerful positive impact on children, fostering curiosity and teaching them to regulate emotion and enjoy surprises. Thom Singer, Austin, Texas, says, "I'm much more physical in a playful way" with his two children, 10 and 5. "I'll wrestle, I'll tickle them, and when it's time for bed they get on the Piggyback Express." A 2004 study by Catherine Tamis-LeMonda at New York University and others found a link between fathers' warm, stimulating play with their 2-year-olds and better language and cognitive skills in the children a year later, independent of mothers' behavior. The effect endures into adolescence. Dads who play with toddlers in stimulating and encouraging ways tend to have children with healthier relationships at age 16, surpassing mothers' effect, says a 2002 study in the journal Social Development. As children grow older, focusing playfully on activities your child loves and needs is a path to high-impact fathering, says Roland Warren, president of the National Fatherhood Initiative, a Gaithersburg, Md., nonprofit advocacy group. Washington, D.C., executive Jay Young makes the most of time with his son Jared, 7, an avid sports fan, by targeting activities the child loves. To fuel his interest in math, Mr. Young sometimes calls Jared during the day to play math games, asking such questions as, "If LeBron James plays two games and scores 20 points in each, how many total points did he score?" He believes "kids pick up cues from their fathers" -- and so far, Jared loves math. Fathers also tend to shape language development. Fathers typically don't "talk down to their children as much as mothers," using larger words, says Kyle Pruett, an author and clinical professor of psychiatry at Yale University. A study last year at the University of North Carolina found a link between fathers who used varied vocabulary with their 2-year-olds, and more advanced speech at age 3, even though the fathers spoke less often to the children. Mothers' vocabulary didn't have a significant impact, perhaps because there weren't enough differences in the high verbal skills of mothers in this middle-class sample, researchers found. It was talkative dads who gave the kids an edge. Dads also tend to handle misbehavior differently, stressing real-world consequences. Where moms might say, "If you misbehave you're in trouble with me," dads more typically say, "Knock it off...nobody will like you, you'll never get a job" if you behave that way, Dr. Pruett says. Such fathering may reduce teen delinquency. In a 2006 study led by Jacinta Bronte-Tinkew of Child Trends in Washington, D.C., close, supportive fathering was linked to less teen risk-taking and delinquency.

26. Fathers have a special impact on their children’s development because

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 26 of 27 a. they increase vocabulary by not “talking down” to their kids b. they engage in rougher play than mothers that helps kids learn to regulate emotion and enjoy surprises c. they tend to stress “real-life” consequences for misbehavior d. all of the above Correct