The Wall Street Journal Weekly Quiz s8

The Wall Street Journal Education Program Weekly Review & Quiz Covering front-page articles from Aug 25-31, 2007 Professor Guide with Summaries Fall 2007 Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

Condo Troubles Further Squeeze Property Lenders By ALEX FRANGOS August 25, 2007; Page A1 http://online.wsj.com/article/SB118799900508008451.html

For the nation's real-estate lenders, the other shoe may be about to drop: condominiums. Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country -- including parts of Florida, California and Washington, D.C. -- are seeing rising foreclosures and bankruptcies of entire condo projects. The problems are emerging as some buyers who signed contracts to buy new condos two to three years ago, when construction was just starting, seek ways to back out as they encounter trouble getting financing in the suddenly dicey mortgage market. Falling prices are forcing appraisals down, so banks aren't willing to lend the full amounts that people committed to in the sales contract. "Closings that are scheduled to take place are not taking place," says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts. The condo market, while tied to the housing market overall, behaves differently under stress. While a single-family home builder generally constructs units as orders come in, a condo developer builds all at once and hopes for the best, adding risk. So while the speculative overhang of newly constructed single-family homes may have peaked in many markets across the country, the full force of the condo glut is starting to hit now. With single-family homes, "you put up a couple of model homes and build the rest as you get sales contracts." says James Haughey, director of research at Reed Construction Data in Norcross, Ga. "But you have to build the entire...building before you can sell a single condo." In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.

1. Condos are different than single-housing developments in that a. condos are always cost less than houses b. builders construct units as orders come in c. the developer builds all at once and hopes for the best Correct

2. In 2006, the number of new condominium units completed ______. a. decreased 45% b. increased 45% c. fell 145% d. jumped 145% Correct

Venezuelans Chase Dollars Amid Worries Over Economy By JOHN LYONS August 27, 2007; Page A1 http://online.wsj.com/article/SB118817255017309334.html

CARACAS, Venezuela—Like many people they know in Caracas these days, Alfred and Norma Muñoz are bracing for what they believe is inevitable: a currency crash brought about by President Hugo Chávez's policies. The middle-class couple plan to borrow as much as they can from a local bank and buy an apartment outside the country. If Venezuela's bolívar plunges against the dollar, they figure, the loan will be cheap to pay off in dollar terms, and the overseas apartment will hold its dollar value. "Plus, it gives you somewhere to flee if things really get bad," says Mr. Muñoz, who runs a small business. At the moment, with oil at near record prices, Venezuela's economy is booming. The fourth-largest oil exporter to the U.S. has averaged 12.6% annual growth since 2004 -- the fastest in Latin America. Three-month waits to buy new cars are standard at Caracas dealerships amid a boom in consumer financing. Unemployment has fallen to single-digit rates for the first time in more than a decade. But there are signs of trouble. Oil production is falling as the state oil company loses top managers and invests less. Inflation is running at 19%, according to the Venezuelan government, though many private economists say the rate is more like 25%, given the increasing role of a black market in hard-to-obtain goods. Partly as a result, the bolívar, officially fixed at 2,150 per dollar, has lost more than half its value on the black market. Many locals fear that official devaluation and runaway inflation is inevitable.

3. Although Venezuela’s economy is booming there are signs of trouble ahead which include: a. an increase in black market goods b. inflation is running at 19% c. food shortages d. all of the above Correct

4. The current president of Venezuela is ______. a. Alfred Muñoz b. Hugo Chávez Correct c. Rafael Caldera d. David Macedo

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 2 of 28 To a United Pilot, The Friendly Skies Are a Point of Pride By SCOTT MCCARTNEY August 28, 2007; Page A1 http://online.wsj.com/article/SB118826634834410559.html

Capt. Denny Flanagan is a rare bird in today's frustration-filled air-travel world -- a pilot who goes out of his way to make flying fun for passengers. When pets travel in cargo compartments, the United Airlines veteran snaps pictures of them with his cellphone camera, then shows owners that their animals are on board. In the air, he has flight attendants raffle off 10% discount coupons and unopened bottles of wine. He writes notes to first-class passengers and elite-level frequent fliers on the back of his business cards, addressing them by name and thanking them for their business. If flights are delayed or diverted to other cities because of storms, Capt. Flanagan tries to find a McDonald's where he can order 200 hamburgers, or a snack shop that has apples or bananas he can hand out. And when unaccompanied children are on his flights, he personally calls parents with reassuring updates. "I picked up the phone and he said, 'This is the captain from your son's flight,' " said Kenneth Klein, whose 12-year-old son was delayed by thunderstorms in Chicago last month on a trip from Los Angeles to see his grandfather in Toronto. "It was unbelievable. One of the big problems is kids sit on planes and no one tells you what's happening, and this was the exact opposite." So unusual is the service that Capt. Flanagan has been a subject of discussion on FlyerTalk.com1, an online community for road warriors. Mark B. Lasser, a Denver advertising-sales executive, came off a Capt. Flanagan flight and posted a question on FlyerTalk.com about why the pilot had been so friendly. "I don't trust UA at all but can't figure out what the ulterior motive is," he wrote. Others quickly came to Capt. Flanagan's defense. "I've had this pilot before -- what a great guy. He does the same thing on every flight," said a FlyerTalk regular. Mr. Lasser says he just wishes Capt. Flanagan weren't such a rarity among United employees. "Every flight before and most flights since have been so poor in customer service that this guy really came across as representing his own standards more than the company's. He's an outlier within United," Mr. Lasser said in an interview. UAL Corp.'s United, which ranked in the middle of the airline pack in on-time arrivals and mishandled baggage in the first half of this year and next-to-worst in consumer complaints, has supported Capt. Flanagan's efforts. The airline supplies the airplane trading-cards he hands out as passengers board, plus books, wine and discount coupons he has flight attendants give away. He goes through about 700 business cards a month, and the company reimburses him for the food he buys during prolonged delays. "He's a great ambassador for the company," says Graham Atkinson, United's executive vice president and "Chief Customer Officer," who is leading an effort to boost customer service. He hopes more pilots and airport workers will adopt some of Capt. Flanagan's techniques such as the frequent, detailed updates he gives to customers. Air travel isn't easy for anybody, given problems ranging from storms to mechanical breakdowns to computer snafus and lost luggage. Airline workers have endured pay cuts and fights with management; travelers have suffered poor service and unreliable flights. Capt. Flanagan tries to deal with the cheerfulness challenge -- at least on the flights he

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 3 of 28 works. "I just treat everyone like it's the first flight they've ever flown," said the 56-year- old Navy veteran who lives on an Ohio farm and cuts the figure of a classic airline captain: trim and gray-haired. "The customer deserves a good travel experience," he said. Last Tuesday morning, Capt. Flanagan was at gate C19 at Chicago's O'Hare International Airport an hour before the scheduled departure of Flight 831 to San Francisco and made his first announcement about the delay before the gate agent had shown up. The time posted for departure was 8:20, but that was optimistic, Capt. Flanagan told passengers, because the Boeing 767 they would fly wouldn't land from São Paulo, Brazil, until 7:02 and then had to be emptied, cleaned, inspected and towed from the international terminal. He tried to lighten the mood, using a joke he tells before every flight. "I almost forgot to tell you, this is my first flight," Capt. Flanagan said. Wary eyes looked up from newspapers and BlackBerrys through a long pause, before he added, "today." Capt. Flanagan mingled in the lounge answering questions and using his cellphone to call United operations officials to ask about connections to Asia and to cities on the West Coast. Ajoke Odumosu, a track star at the University of South Alabama who was on her way to Osaka, Japan, for a world-championship competition, realized that when she began her trip with US Airways Group Inc., her luggage had been checked only as far as San Francisco. With the delay, there wouldn't be time to retrieve it and recheck it for Japan. Capt. Flanagan called Chicago and learned that the luggage was already in metal containers ready for loading on the 767, and couldn't be retagged. He called San Francisco and found a manager who agreed to pull Ms. Odumosu's bags aside and retag them for Osaka. In all, he spent 15 minutes on the problem. "I was glad he went out of his way, which he didn't have to do," Ms. Odumosu said. Once the plane was ready for boarding, Capt. Flanagan passed out cards with information about the Boeing 767. On every flight, he signs two of the cards on the back and, if there is wine left over from first class, he announces that passengers with his signature have won bottles of wine. When the movie ended, flight attendants passed out napkins and passengers were invited to write notes about experiences on United -- good or bad. Fifteen were selected to receive a coupon for a 10% discount on a future United flight, and Capt. Flanagan posts the passengers' notes in crew rooms or sends them on to airport managers when they raise specific issues. Randall Levelle of Morgantown, W.Va., and his family were flying to San Francisco because his father-in-law had just died. Capt. Flanagan invited Mr. Levelle's three children into the cockpit during boarding. "If other folks in the airline industry had the same attitude, it would go a long way to mitigating some of the negative stuff that has come about in the last four or five years," Mr. Levelle said.

5. Captain Denny Flanagan is a pilot for: a. United Airlines Correct b. Delta c. US Air d. American Airlines

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 4 of 28 6. Some of the techniques Capt. Flanagan uses to make flying as enjoyable as possible Include: a. free drinks for everyone b. the frequent, detailed updates he gives to customers c. always telling the “this is my first flight” joke d. both b and c Correct

How Wendy's Faltered, Opening Way to Buyout By JANET ADAMY August 29, 2007; Page A1 http://online.wsj.com/article/SB118834529072611580.html

DUBLIN, Ohio -- When Kerrii Anderson won the permanent chief executive post at Wendy's International Inc. last November, she called the 71-year-old widow of Wendy's founder Dave Thomas with the news. "Can you handle this?" Lorraine Thomas recalls asking her. She doubted Ms. Anderson, an accountant by training, was the right person to revive the hamburger chain that has struggled since Mr. Thomas's death five years ago. Ms. Anderson insisted she was up to it. But nine months later, the CEO's turnaround plan is floundering. Franchisees accuse her of mismanaging the chain's menu expansion and launching quirky ad campaigns that have alienated some loyal customers. Big shareholders complain that the Duke University MBA's lack of operating experience should have precluded her from the top job. And now her board is shopping for a buyer. Yesterday, Triarc Cos., parent of the Arby's chain, said it had reached a confidentiality agreement with Wendy's to review financial data in order to prepare a possible bid. Chairman Nelson Peltz has indicated that Triarc is willing to offer as much as $41 a share. Wendy's shares rose 70 cents, or 2.2%, to close at $32.69 on the New York Stock Exchange. Ms. Anderson's turbulent tenure shows how tough it is for today's CEOs to please their many constituents. "We did create $2.2 billion worth of shareholder value last year," she says, referring to stock gains at both Wendy's and its Tim Hortons chain, which the company spun off in 2006. But that hasn't stopped the likes of Mr. Peltz -- who holds Wendy's shares through a hedge fund -- from pushing for major changes, or Mr. Thomas's widow and son from griping that Ms. Anderson is out of tune with customers. Investors "don't have to like me," Ms. Anderson allows. "I just have to perform." Other big companies, such as Apple Inc. and Sony Corp., have strained to sustain their edge after the loss -- or even temporary departure -- of an iconic founder. In addition to crafting strategies and inspiring workers, their leaders each made distinct cultural imprints on the brands they built. Dave's Shadow It hasn't been easy working in the shadow of Mr. Thomas, the high-school dropout who grew his single-location hamburger outlet into the nation's No. 3 fast-food chain and starred in its folksy commercials. After Wendy's went public in 1981 and Mr. Thomas became chairman, he filled his board with acquaintances and local businesspeople. He also handpicked the company's chief

7. Problems facing Wendy’s include a. the new CEO’s lack of operations experience b. mismanagement of the chain's menu expansion c. launching quirky ad campaigns that have alienated some loyal customers d. all of the above Correct

8. The chief executive of Wendy's International Inc that many franchisees accuse of mismanaging the chain is: a. Lorraine Thomas b. Kerrii Anderson Correct c. Tim Horton d. Nelson Peltz

How a Sleepy Oil Giant Became a World Player By MATT MOFFETT August 30, 2007; Page A1 http://online.wsj.com/article/SB118843988849113138.html

RIO DE JANEIRO -- A decade ago, state-controlled oil company Petrobras was such an industry laggard that it earned a nickname: Petrosaurus. Workers were 25% less productive than the industry average, and Brazil depended on imports for nearly half its oil. Petrobras's board consisted solely of company insiders. Today, Petrobras boasts more crude reserves than Chevron Corp., lower costs of finding oil than Exxon Mobil Corp., and a listing on the New York Stock Exchange -- with a market value of around $130 billion. It's a rare success story among state-owned oil companies as they play a growing role in an energy-hungry world. Three-quarters of the world's reserves are now in the hands of national oil companies, according to the International Energy Agency. ConocoPhillips Chairman James Mulva recently said that the top publicly owned international oil companies now have direct access to only about 5% of the world's oil reserves, with an additional 30% theoretically open through joint ventures. Most national companies are far less efficient at developing their reserves than Petrobras, whose full name is Petróleo Brasileiro SA. Production at giant Petróleos de Venezuela SA has fallen by one-quarter since President Hugo Chávez took office in 1999 and started milking the company's coffers to fund social programs. Indonesia, whose state energy company has had a history of graft and cronyism, recently turned into a net oil importer from an exporter. "If only our friends in OPEC were more like Petrobras we'd all be a lot happier because there would be a lot more oil," says Leo Drollas, chief economist of the London-based Center for Global Energy Studies. One key to Petrobras's success is technology. Seventy miles out on the Atlantic Ocean, a 10-story-size floating production platform, P-37, is a showcase for the deep-water prowess of the company. About one in three pioneer wells Petrobras drilled in this area,

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 6 of 28 known as the Campos Basin, hit pay dirt, an extraordinary percentage by industry standards. Since its founding in the 1950s, Petrobras has been a magnet for talented Brazilians, many motivated by patriotism to work for a company that symbolizes Brazilian nationalism. What has changed since the 1990s is its corporate structure. To prod Petrobras to be more open and accountable, the government set up an independent board of directors and floated shares in New York. It also abolished Petrobras's monopoly on drilling for oil in Brazilian territory.

9. ______of the world's oil reserves are now in the hands of national oil companies, according to the International Energy Agency. a. 25% b. 30% c. 50% d. 75% Correct

10. One key to Petróleo Brasileiro SA success is _____. a. good accountants b. presidential leadership c. technology Correct d. cash reserves

Finale for Fidel? Castro Gets Buried In Rumors -- Again By JOSÉ DE CÓRDOBA August 31, 2007; Page A1 http://online.wsj.com/article/SB118852196391614173.html

If it's Friday, Fidel Castro must be dead. Again. For the past two Fridays, Miami's Cuban American community has been swept up by waves of rumors that Mr. Castro is either dead or on his deathbed. Last week, some parents -- anticipating huge celebrations -- pulled their children out of school early. Calls from anxious Cuban-Americans seeking confirmation of Fidel's death flooded the Miami police, the mayor's office, the Coast Guard and the State Department. As the fake intelligence spread, reporters around the country tried to confirm the story, while some bloggers printed premature death notices. Celebrity blogger Perez Hilton -- a Cuban-American whose popular blog usually deals with the changing fortunes of Britney Spears and the like -- ran pictures on his Web site suggesting Mr. Castro was a goner. One had the word "dead" written across his forehead; another had a big X over his face. Mr. Hilton also announced online that Miami police had mobilized to deal with the crowds of people expected to flood the streets -- a report which proved to be false. Mr. Hilton, whose real name is Mario Lavandeira, could not be reached for comment. Almost five decades after Mr. Castro took power in Havana, and a little over a year after he underwent emergency abdominal surgery, the recurrent rumors of the Communist dictator's demise are proof of the enormous hold he retains on the psyche and imagination

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 7 of 28 of Cuban exiles. The death reports also reflect the paucity of information surrounding his health, which remains a state secret in Cuba. The information void has given rise to outlandish claims. A caller to Miami's Spanish- language Radio Mambí said a relative on the island had reported there had not been any flowers available anywhere in Havana for two weeks -- proof positive that the Cuban government was hoarding blossoms for a massive state funeral. Another caller said that two Egyptian embalmers were en route to Havana, charged with the mission of preserving Mr. Castro's body. A third caller said the embalmers were Russians. "I said, why Russians? They did such a bad job on Lenin, who looks green," says Ninoska Pérez Castellón, popular host of the talk show "Ninoska en Mambí." "It was nonstop. It was nuts. My telephone battery died." One of Ms. Pérez Castellón's listeners phoned in to say he had confidential information from Swiss banking sources that Mr. Castro's death had already sparked a family fight for control of various bank accounts he is alleged to hold. Mr. Castro, 81 years old, may well be headed for the great beyond. Although rambling articles on everything from sports to U.S. politics are still published under his signature -- he has declared that a presidential ticket of Sen. Hillary Clinton and Sen. Barack Obama would be "seemingly invincible" -- the bearded dictator hasn't been seen in public in more than a year. His last "appearance" on Cuban television was June 5, part of a prerecorded program. Earlier this month, Mr. Castro's niece, Mariela, a Havana sex therapist, said that Cubans' collective anxiety about living without Mr. Castro "was drawing closer." On Aug. 13, Mr. Castro's birthday, the well-respected Mexican newspaper Reforma cited Castro family confidants as saying that he had suffered a medical setback requiring more operations and that he was no longer receiving visitors. And on Saturday, Venezuelan President Hugo Chávez, a close ally, said Fidel was alive -- but in terms that seemed more like a eulogy than any reassurance of his health. "Fidel Castro will never die," Mr. Chávez said during a speech. "He will always live among people who fight for a better destiny." Then again, Mr. Castro could be getting ready to outfox those who have counted him out before. Last year, U.S. government officials said Mr. Castro appeared to have terminal cancer. This time around, the State Department has hinted that Cuba may have rigged its own propaganda campaign in hopes of whipping up emotional Cuban refugees.

11. For the past two Fridays, Miami's Cuban American community has been swept up by waves of rumors that ____ is either dead or on his deathbed. a. Fred Smith b. Fidel Castro Correct c. Pérez Hilton d. Pérez Castellón

12. Last week in Florida, some anticipating huge celebrations _____. a. quit their jobs b. pulled their children out of school early Correct c. purchased boats d. purchased airline tickets to Cuba

Recent News Events Should Have Executives Reviewing Priorities By CAROL HYMOWITZ August 27, 2007; Page B1 http://online.wsj.com/article/SB118816604822709168.html

As executives send their children back to school and return to their own desks after summer vacations, it's a good time to focus on management lessons gleaned from recent events. • Make supply-chain management a top priority. Mattel's recent recall of millions of lead- tainted toys from China -- which followed fears about hazardous materials in toothpaste and pet food, and a recall of thousands of tires made in that country -- has executives at every global company quaking. • Don't wait for a crisis. Scrutinize manufacturing suppliers and improve quality-control systems at your company. You can start by making sure you recruit and reward talented supply-chain managers. Otherwise, you risk moves that damage your company's brand and can trigger lawsuits.

"Supply-chain management has moved from the back room to the board room and become an ethical issue," says Adam J. Fein, president of Pembroke consulting in Philadelphia. Mattel's problem occurred because the Hong Kong supplier it has relied on for years subcontracted work to another company that didn't use Mattel-approved paint. The longer and more far-flung supply chains become, the more top executives must make certain that quality and safety standards are being met by employing on-site project managers and quality-assurance inspectors at overseas suppliers. In addition, they must demonstrate heightened oversight of their products from manufacture to retail. Johnson & Johnson recently discovered that counterfeit China- made diabetes tests bearing its name were being sold in retail stores in the U.S. In the global economy, "executives can take nothing for granted" about either suppliers or distributors, says Mr. Fein. • Hunt for Bargains. Executives who wisely avoided accumulating a lot of debt in recent years can acquire new businesses at bargain prices now that hedge-fund managers and lenders are hosting fire sales and many private-equity deals may fall through. Warren Buffett, who sat out much of the private-equity buying frenzy of recent years that drove prices sky high, is sitting on nearly $50 billion in cash. He's likely to be approached by a myriad of beleaguered sellers.

Last week Bank of America acquired a $2 billion equity stake in Countrywide Financial, a strong brand name with lots of traditional mortgage assets whose stock has nevertheless been hit hard by subprime worries. For companies that have been prudent, now is the time to go shopping, • Protect your reputation. Your good name is your most vital credential and once damaged can't be easily repaired -- even if your business prospers and you devote

13. Which of the following is a management lesson gleaned from recent events: a. Make supply-chain management a top priority b. Don't wait for a crisis c. Protect your reputation d. All of the Above Correct

Career Mentors Today Seem Short on Advice But Give a Mean Tour By ELIZABETH HOLMES August 28, 2007; Page B1 http://online.wsj.com/article/SB118824330431710110.html

On the second day of his first job, Miguel Valdovinos was shown to his cubicle and introduced to his mentor. The electrical engineer was optimistic: The senior person assigned to guide him through his career at the international electronics company had been on the job since before he was born. Sure enough, the mentor's first words to the then 22-year-old offered direction. "He told me he would show me where the pens and paper were," Mr. Valdovinos recalled. True to his word, the mentor pointed him to the supply cabinet. And that was about it for the next four years. The only time his mentor took an interest in him, Mr. Valdovinos says, was when he messed up. From before Thanksgiving until after Christmas one year, he chose the wrong-size capacitors for circuits he was working on. His supervisor told his manager who told his mentor -- who then told him he was doing it wrong. "They allowed it to go on for weeks," says Mr. Valdovinos. "I was shocked." The mentor-mentee relationship used to be a partnership between a manager and a new hire. The experienced boss coached his rookie. When the newbie looked good, the boss looked better. Now, with managers stuck volleying emails, tackling expense-account systems and dodging high-velocity blame, time for teaching has evaporated. The HR answer to this void: the assigned-mentor program. These on-paper matches, often based on alma mater or shared skill set, can be awkward. The pairing can become little more than a corporate version of the buddy system. When it works, it's a learning love fest. But sometimes the mentor just doesn't like the kid, and the rookie is sent into a tailspin of angst and self-doubt. "When you're a mentee, you're thrown back into kindergarten," says Callie Blyze. "You're trying to cling to this person." Ms. Blyze, 21 years old, was assigned a mentor her first day as an intern this summer. She sat in a boardroom with 11 other interns, all in suits, waiting nervously as the advisers filed in one-by-one to claim their playmates. "We looked like we were in our parents' clothes," says Ms. Blyze. Her heart leapt when she heard her name called and anxiously met who she hoped would be her new office BFF. That day, after a pizza lunch and a quick office tour, Ms. Blyze was hopeful. But as the internship progressed, she got the feeling her mentor wasn't that interested in her. She was included in talks about an employee jaunt outside the office for a project. But when it

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 10 of 28 was time to go, she was left behind. "You say 'What's wrong with me?' when maybe it's not you, it's the situation," says Ms. Blyze. The assigned-mentor system is the corporate answer to cutbacks, explains Peter Cappelli, professor of management at the Wharton School at the University of Pennsylvania. It's a way of development he calls "quick and dirty and cheap." It makes fiscal sense to have everybody grab a buddy and help one another out. But the solution is flawed. Bosses, with increasingly more people to manage, don't have time to give the kind of guidance a new hire requires, so they assign it to someone else. These people have no attachments to their mentee and no stake in the person's future. "You're just leaning on people's citizenship," he says. When left to their own devices, new hires often do no better. After college, Noah Brodsky moved to Maui and took a job at a company with a chose-your-own-mentor program. At 22 and alone in an unfamiliar place, he picked a mentor he hoped would be an adviser and a friend. She was slightly ahead of him on his planned career track and, as a bonus, his next-door neighbor. For the first six months, Mr. Brodsky says, it went swimmingly. Then one day, his mentor became his tormentor. She ordered him to her office and accused him of cutting down the bushes between their houses so he could have a better view of the ocean. He denies her claim, but the clash ended the mentorship on the spot. "She wouldn't even make eye contact with me in the halls," says Mr. Brodsky. Pettiness aside, even if a mentor once held the same position as the mentee, the job duties have likely morphed into something different, resulting in irrelevant advice. The hurdles multiply when the two are in different departments. Darlene Litam had a trio of supporters at her summer internship: a "buddy," a manager and a mentor. Her buddy was her guide and her manager evaluated her work. Her mentor? Not as clear. He was in another division and "wasn't familiar at all" with what she did, Ms. Litam says. She sought his advice only "as a formality." The best advice she got was from somebody else's buddy. He had been there longer than her buddy and worked on her team. She felt comfortable asking him "day-to-day stupid things," and having him look over her project before showing it to her manager. He made helpful suggestions. "He was kind of like all three," she says. "But," she adds quickly, "that was very unofficial."

14. Flaws with assigned mentor systems include: a. differing job duties may make advice irrelevant b. it is expensive c. personality conflicts d. both a and c Correct

In Hunt for Zombies, Columnist Finds It's Not So Scary After All By LEE GOMES August 29, 2007; Page B1 http://online.wsj.com/article/SB118834249135111512.html

With the computer world said to be in the middle of a zombie invasion, I thought it would be instructive to trap one inside my PC. It was harder than I might have thought.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 11 of 28 When a computer is turned into a zombie, it sends your personal information back to a hacker or becomes part of a collection of "bots" under the control of remote hackers, who often use them to send out spam. Computers become thus afflicted through various hijacker programs via spam emails, or by visiting hacker Web sites that take advantages of security loopholes in your browser. On the prowl for zombies, I started with the spam folder of one of my email accounts. It contained around 100 emails, the usual promises of physical, financial and pharmaceutical enhancement. I'd open each message, then click on any link it had. I wouldn't, though, click "Yes" to any request for a program to be downloaded. And I wouldn't use any special security software, just a fully patched version of Microsoft's Windows XP and Internet Explorer 7.0, the latter with its default security settings in place. Don't try this at home. Simply opening spam email from strangers with subject lines like "Ladies will love you" is not something beginners should try. Taking the next step -- clicking on the links inside those emails -- is a task only for highly trained columnists. When it was all over, I ran an antivirus program; several, actually. No zombies. There wasn't even evidence of spyware. Just some cookies, the sort used by even reputable sites. I was surprised. But we've all forgotten that this is the way the Web is supposed to work. You should be able to visit Web sites, without downloading any software, and exit without harm. Does this mean there aren't any dangers out there? Hardly. Remember, I ran the test using Internet Explorer with its default security settings. But like many people, I usually do my Web business with less cautious settings, to avoid the inconvenience of having to repeatedly give the browser explicit permission to do something. When I reran the experiment with these more relaxed settings, there was trouble indeed. I ended up infected with a high-risk Trojan, one that could easily have ended up making a zombie of my PC. A bracing bit of news. As a result, what were once my regular browser settings are now my ex-regular settings. I know where the infection was from, too. It's common for the links in spam emails to pretend to be sending you to one site, but to actually send you somewhere else. You might, for example, think you're clicking on a YouTube video, when it fact you're going to a hacker site that will try to exploit a bug to plant some malware on your machine. Even more disturbingly, the most popular hacker scams these days -- like fake greeting cards -- usually prompt you to download a file under the pretense of needing to install a special viewer. Or they might report that you need a Microsoft security patch. In either case, once you've loaded a hacker's program, you're susceptible to anything. Of course, it's not a good idea to go anywhere online without some security software. Had a program been installed during my tests, it would have screamed holy heck before it let me download that Trojan. It's hardly news that one encounters malefactors in the scummiest parts of the Web. Some Web security companies, though, say it's much worse than that. In the course of my research, I called several security companies for help. Symantec called back with a hot tip: Company researchers with a brand-new PC had spent a day visiting only well-known, respectable Web sites but had still managed to attract a number

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 12 of 28 of zombie programs. In other words, trouble also awaits you in the Web's most glamorous neighborhoods. A public-relations person sent along a spreadsheet detailing the research. It showed, for example, the names of five auction sites -- some famous -- where two zombie programs had been encountered, the very sort tracked by one of Symantec's new programs. That innocent shoppers could be so exposed was alarming. You can imagine the headline: "Web More Dangerous Than Your Wildest Dreams, Web-Security Software Firm Says." Because security companies are often accused of exaggerating Web threats, it won't surprise too many people to learn that the situation wasn't exactly what Symantec suggested. It turns out, Symantec researchers merely started at those five sites. They then proceeded to click around, downloading programs as they went. But they didn't keep records of where they went, or how far from the original sites -- one link away? 10? -- they had strayed. In other words, they could have been anywhere on the Web. A scare tactic? No, said the company. It was just trying to demonstrate the risks of going without security software by showing what might happen to an average Web user. "We would not want this data to be taken out of context or used as fear-mongering."

15. When a computer is turned into a ______, it sends your personal information back to a hacker or becomes part of a collection of "bots" under the control of remote hackers, who often use them to send out spam. a. Trojan b. malware c. zombie Correct d. spamalot

Microsoft and Its Rivals Take 'Office' Politics Global By CHARLES FORELLE August 30, 2007; Page B1 http://online.wsj.com/article/SB118843789318613086.html

Ente Nazionale Italiano di Unificazione, or UNI, Italy's national standard-setting body, handles such matters as drawing up specifications for water tanks and establishing the proper diameter of nuts and bolts. Its work rarely draws a crowd. That changed this spring when a UNI subcommittee began to consider a bid by Microsoft Corp. to win its support for the file format used in new versions of its ubiquitous Office software. Microsoft is seeking to make that format an international standard for creating and storing computer documents. Within months, a technical committee of some half- dozen members ballooned to no fewer than 85 Italians. Opponents say Microsoft packed the committee with its allies. The Redmond, Wash., giant levels a similar charge at its critics, saying rival International Business Machines Corp. is playing the same game in other national committees to block the Office format's approval as a world-wide standard ahead of a key deadline Sunday. That the work of an obscure Italian committee on the codes that tell a computer how to turn bits of data into business letters, spreadsheets and presentations has drawn the feverish attention of technology's largest players speaks to the stakes surrounding

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 13 of 28 Microsoft's delicate pas de deux with governments around the world. Nowhere are those stakes higher than in Europe, where Microsoft awaits a critical court ruling next month in its long-running antitrust battle with European Union regulators. Ahead of that ruling, Microsoft is taking pains to persuade officials that it is playing nice in the giant markets for computer software it dominates. That's, in part, why it cares about the work of Italy's UNI and other national standards bodies. To gain approval as an international standard, Microsoft had to bare the code that undergirds the Office file format, called Open XML. Making that public could help Microsoft persuade EU regulators that the company is allowing competitors to work openly with Office, which includes mainstays like Word, Excel and PowerPoint. Microsoft has been beleaguered by charges that it keeps formats and key pieces of computer code secret to freeze out competitors. Microsoft has racked up $1 billion in fines to the EU partly over claims it does just that with its Windows operating system. A European court in Luxembourg is expected on Sept. 17 to rule on Microsoft's appeal of the European Commission's charges. The ruling is being scrutinized as a barometer for the EU's future moves against Microsoft. Either side can appeal to Europe's highest tribunal, the Court of Justice. If the EU prevails, it could be emboldened to bring future actions against the software titan. EU regulators are already looking into a separate complaint by rivals that Microsoft abused its office-software dominance, blocking competitors from the market because, before the introduction of Open XML, it used file formatting it wouldn't broadly share. Without knowing precisely how Word documents are formatted, for example, competitors can't effectively market a Word alternative that can faithfully read and write its documents. Microsoft says the new Open XML format is open to everyone and doesn't pose the kind of concerns raised by older Office file formats. Opponents say Open XML is a wolf in sheep's clothing, a format that's nominally open but which is actually so complex and so loaded with Microsoft-specific features that no one but Microsoft can use it fully. Ratification of Open XML as an international standard would provide substantial support for Microsoft's argument. Jean Paoli, one of Microsoft's top standards experts, says the company wants Open XML adopted as a standard to encourage rivals to use its format, not squelch interoperability. He points out that other vendors, including Apple Inc., are adopting it. He says IBM is stirring up opposition to Open XML's gaining approval from the International Organization for Standardization, or ISO, to protect its Lotus Notes office suite, which uses the rival format Open Document. "It is very bizarre to see IBM try to block everyone from using" Open XML, Mr. Paoli says. Open Document is already an ISO standard, but Microsoft says there's room enough for more than one document standard. An IBM spokesman declined to address Microsoft's accusations. For years, Microsoft's Office file formats were closely guarded secrets. Rivals have decoded portions, enabling them to open and save Office documents. But the translation isn't perfect. That has made it hard for corporations to use rival products because they need documents to look the same all the time. Microsoft's sales of Office products total around $15 billion a year, placing it alongside Windows as a company cash cow. Some half-billion users create Office-formatted

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 14 of 28 documents; countless billions of Office documents reside in the hard disks, networks and archives of the world's computers. The scramble over standards has become remarkably contentious. Countries like Italy that participate in ISO have until Sunday to submit their votes on Open XML to the organization. Setting a standard is complex; 104 countries have national bodies represented at ISO. One of the requirements for a standard to pass is that no more than one-quarter of the countries can vote against it. The requirement has given rise to an stampede to win votes in every corner of the globe. Each country has its peculiar membership rules for the national committees that decide whether to support a standard. Some let all comers join, perhaps requiring a fee; others have strict nominating procedures. On Mauritius, an island nation in the Indian Ocean some 1,200 miles off the east coast of Africa, the national standards body is governed by a small council. One member is a Microsoft sales manager, though he'll have to recuse himself from the final vote, according to the agency's director. Microsoft's network of resellers is also active. Microsoft resellers sit on standards bodies or technical committees in several countries, including Kenya and Portugal. Microsoft Portugal executive Miguel Sales Dias is chairman of the technical standards committee there. Rui Seabra, an Open XML opponent also on the committee, says the group was dominated by Microsoft allies. The committee was opened to a dozen new members -- including both Microsoft supporters and opponents -- but IBM and Sun Microsystems Inc., major Open XML foes, were turned away for lack of space. Mr. Seabra says Mr. Dias "was bullying the meeting toward a vote." Debate was cut off after the third session, he says. In the end, Open XML was approved, 13-7. Besides Mr. Dias, five committee members were Microsoft resellers, according to the standards body's roster.

16. To gain approval as an international standard, Microsoft had to bare the code that under girds the Office file format, called ______. a. Open ISO b. Open XML Correct c. Open UNI d. Open IBM

SEC Asks Firms to Detail Top Executives' Pay By KARA SCANNELL and JOANN S. LUBLIN August 31, 2007; Page B1 http://online.wsj.com/article/SB118851491281613993.html

Stepping up its campaign to shed light on the mysteries of executive pay, the Securities and Exchange Commission has sent letters to nearly 300 companies across America critiquing disclosures in this year's proxy statements and demanding more information. The SEC's requests could set up a confrontation over details the agency wants that companies say are competitive and should remain secret. The federal securities regulator, for example, wants to know more about the targets and benchmarks companies use when they tie pay to performance.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 15 of 28 The SEC's letters, which were faxed to chief executive officers, have caused much consternation -- and some complaints. Companies are racing to set up emergency meetings of their board compensation committees to answer the questions. Some are considering lobbying as a group against certain SEC requests, such as providing more information about specific performance goals, lawyers say. Companies contacted by the SEC are of all sizes and come from a variety of industries, corporate lawyers say. Recipients of the letter include drug makers Pfizer Inc., Schering- Plough Corp. and Bristol-Myers Squibb Co.; insurance firm Prudential Financial Inc.; Coca-Cola Co. and General Electric Co. American Express Co. is expecting to receive one, according to a person familiar with the matter. "CEOs aren't used to getting communications from the SEC," said one attorney. "They're a bit anxious." In forwarding his letter to a colleague, one annoyed chief scrawled in the margin: "What the hell is this?" In the case of Pfizer, the SEC asked the big drug maker to more fully describe the work performed by the board's independent pay consultant. "I don't think this kind of detail will be of additional benefit to investors," sniffed a person familiar with the situation. "Do they want [Pfizer] to tell how many Diet Cokes he drank at the meetings?" The SEC does want Pfizer to better explain how the board compensation committee used "tally sheets," compilations of data of the kind usually prepared by a board's outside pay consultant and then used by the compensation committee in making executive-pay decisions. The sheets offer a more complete picture of the true value and possible future cost of executive-pay packages. Last year, investor activists criticized the compensation package for the then chief executive, Henry "Hank" McKinnell. They took advantage of Pfizer's voluntary proxy disclosure that he could have pocketed a lump sum of $83 million if he had retired at the end of 2005. Mr. McKinnell unexpectedly quit as CEO in July 2006.

17. The federal securities regulators wants to know more about the targets and benchmarks companies use when they tie pay to ______. a. profits b. tenure c. performance Correct d. travel benefits

Questions 18 – 23 from Money & Investing

School Season Heralds a Time To Talk Savings By RON LIEBER August 25, 2007; Page B1 http://online.wsj.com/article/SB118800312825108535.html

If you're the parent of a college-aged kid, the back-to-school season offers one of the best chances you'll ever get for a crucial, teachable money moment. Whether you're packing students off to college with a four-figure financial-aid package, or writing a $45,000 check out of your current income, it's time to sit down and explain how you ended up here, and what your child can learn from it.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 16 of 28 Parents who claim their children as dependants on their tax forms are all but forced into full disclosure if the family applies for financial aid. That's because the Free Application for Federal Student Aid (FAFSA), which most fill out, asks for information on income and assets. Both students and parents must sign, and the kids have access to the data if they want it. That doesn't mean the numbers inspire a searching discussion, though. Why not? Joline Godfrey, chief executive of Independent Means Inc., which does financial education for children and families, describes a silent collusion of sorts: Parents, facing the prospect of an empty nest, may have mixed feelings about their kids growing up. Thus, they avoid starting grown-up conversations about family finances. Ideally, you've taken an entirely different approach all along. Shira Boss, a New York writer, says her family didn't take fancy vacations or buy many new clothes when she was growing up. To help explain why, Ms. Boss's father, Bruce, regularly marched each of his daughters down to Michigan National Bank in Flint. Once there, he pulled out the safety deposit box and showed them the stock certificates slowly stacking up. "Every year, we'd make a pilgrimage," says Mr. Boss, a retired professor. "I'd explain that this is what the objective is, this is what we have, this is how we got it and this is what we're doing to manage it." Sure enough, come college time, Mr. Boss, who supported the girls on one salary with some help from his family, was able to write a check to pay the bills outright. And Ms. Boss grew up to write "Green with Envy," a book that explores the consequences of silence about money. For many families, a lack of savings may cause regret -- and silence. Forget it. You did the best you could. Explain the reality to your child without apology -- but do explain it. If you don't have a lockbox at the local bank like the Bosses, translate your 529 college- savings account statement. Make sure they run their iTunes purchases through Upromise, so they get a kickback for college with each download. Then, show them your credit-card bills as they're heading off with one of yours tucked away for emergencies. Lay out how much a few kegs of beer will ultimately cost them at 18% annually -- and that the family bailout policy doesn't cover alcohol crises. Finally, help them project the final amount of any student-loan debt. Just as you saved for years to help, it might take years for them to pay for their share. Feel bad? Then let the bailout policy apply during that first lean year out of school. • Ron Lieber is managing editor of FiLife.com1, a forthcoming personal-finance Web site that is a joint venture of Dow Jones and IAC.

18. Parents of college students should: a. explain if they do not have enough savings to pay for school b. not talk to their children about finances c. probably give them a credit card for emergencies d. both a and c Correct

Bank Lending May Feel Bite Of Credit Storm By JUSTIN LAHART August 27, 2007; Page C1 http://online.wsj.com/article/SB118817522996009399.html

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 17 of 28 Since the Federal Reserve's discount-rate cut, investor worries about liquidity have rapidly ebbed. Banks don't seem so sanguine. Two Fridays ago, the Fed lowered the rate it charges banks for loans at its discount window, and the Dow Jones Industrial Average skipped 233 points higher. The recovery continued last week, as the Dow industrials rose 299.79 points to 13378.87. Corporate-bond prices also rose, pushing yields lower. But throughout the week there was furious buying of Treasury bills, securities whose reputation for safety in times of turmoil is up there near canned goods. Prices eased, and yields rose, after the Treasury Department responded to the increase in demand by announcing Thursday that it will sell $43 billion in three-month and six-month bills today -- its largest combined auction for such bills ever. Even so, at 4.22%, the yield on the three-month bill was well below the Fed's 5.25% target rate for overnight loans between banks. Such a large difference between the yield on the three-month bill and the Fed's target rate is unusual, typically occurring only in times of distress in the credit markets when concerns about liquidity -- the availability of cash -- are running high. Also last week, the Fed reported that the amount of outstanding commercial paper, a form of short-term debt typically used by companies to finance operations, fell for a second week in a row. In recent years, the commercial-paper market has been tapped by banks and other credit-market participants as a source of funding for investments. The collateral they put up for this asset-backed commercial paper, as it is called, included other credit instruments backed by subprime mortgages, or housing loans to borrowers with spotty credit records. With the recent trouble in subprime, lenders are questioning the safety of holding such paper. The amount of asset-backed commercial paper outstanding fell by $77 billion, or 6.8%, to $1.06 trillion -- the biggest percentage decline ever. The flight into Treasury bills and the drop in the amount of asset-backed commercial paper may be closely linked. Credit-rating providers have only just begun downgrading their ratings on credit instruments backed by subprime mortgages. Similarly structured instruments backed by other kinds of debt also may be at risk for rating downgrades. This poses a problem for banks. According to international banking standards, the lower the rating on a bank's credit portfolio, the more money it needs to keep in reserve in case the assets default. If ratings are cut on a wide swath of the portfolio's holdings, then the bank has to raise cash in a hurry. Analysts at GaveKal Research, Hong Kong, believe the fear of such downgrades has driven banks around the world to reduce their credit holdings. That would prompt them to both cut back on the amount of commercial paper they hold and the amount of commercial paper they issue. Cash from the sale of some of their holdings then goes pouring into Treasury bills. The result of the banks' drive to shore up capital, say the GaveKal analysts, is that in the months to come, the ability of banks to make loans will be "seriously inhibited." If that's right, the real trouble may have only just begun.

19. Treasury bills reputation for safety in times of turmoil is ______. a. in question by international markets b. in question by domestic markets c. high Correct

Consumers And Confidence: Key to Fed Cut? By JUSTIN LAHART August 28, 2007; Page C1 http://online.wsj.com/article/SB118826400895410504.html

With Wall Street's recent woes, Main Street probably is feeling a bit less chipper. But it is all a matter of degree. Today, the Conference Board releases its monthly consumer-confidence index. Economists polled by Dow Jones Newswires estimate it fell to 105 for August from July's 112. If economic forecasting is more art than science, forecasting confidence numbers -- a finger-in-the-wind attempt to quantify what a poll of 5,000 households will say about the national mood -- is closer to divination. Still, with the recent trouble in financial markets and a drumbeat of bad news on mortgages, it is a good bet the confidence measure will be lower. How much lower is the question? Most of the time, the confidence report is merely a reflection of what is going on in the labor market, how the stock market is faring and whatever news is hitting the headlines. When confidence falls significantly more than economists expect, it can be an early warning that the economy is getting a lot worse. That makes this confidence report, coming when worries that tighter credit is squeezing the economy, more important than usual. A sharp break in confidence would be a sign it isn't just hedge-fund managers and private-equity players who are getting hit, but also average Americans. It also would be a sign to the Federal Reserve that it no longer can treat what has been happening merely as a financial market event, but an economic one, too. While the central bank has been understandably reticent to be seen as bailing out fat cats, if it believes the economy is at risk, it will act. If, on the other hand, confidence doesn't drop too sharply, the cut in the Fed's overnight target rate that Wall Street so desperately wants may not come so quickly. Not-So-Stellar Booksellers: Borders and Barnes & Noble Investors have fled the shares of booksellers Borders Group and Barnes & Noble this summer faster than Harry Potter fans scooped up the final installment of the boy wizard's series. Despite record-setting sales of "Harry Potter and the Deathly Hallows," released in July, shares of Borders are down 30% since the end of May; Barnes & Noble is down 16%. Stiff competition from such discounters as Wal-Mart Stores and Costco Wholesale, as well as online retailer Amazon.com, is pressuring the old-line booksellers to slash prices to lure customers, squeezing profits. Borders reports fiscal second-quarter earnings today. Analysts surveyed by Thomson Financial expect a loss of 34 cents, compared with a loss of 29 cents a year earlier. Some investors are wagering on more bad news. About 20% of Borders's shares are held by short sellers, investors who bet on stock declines. That means any good news from Borders today could provide a pop for the stock that would be boosted again if the shorts were to then run for cover.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 19 of 28 Strong Harry Potter sales could help. Still, how sales fared excluding Harry Potter might give investors pause. Barnes & Noble last week said sales at its superstores open more than a year rose 4.4% in its latest quarter from last year. Excluding the Harry Potter novel, sales rose 1% -- hardly the ingredients for a turnaround.

20. Economists polled by Dow Jones Newswires estimate the monthly consumer- confidence index will ____ for August over July. a. double b. triple c. increase d. fall Correct

Tight Course Lies Ahead For Bernanke By JUSTIN LAHART August 29, 2007; Page C1 http://online.wsj.com/article/SB118834982273711742.html

Forget about Scylla and Charybdis. In the next few days, Federal Reserve Chairman Ben Bernanke has to set a course between market mayhem and the "Greenspan put." The Greenspan put is the idea that, in times of crisis, the Fed will step in to bail out financial-market participants with lower interest rates, as it did in response to the Russian debt crisis in 1998, when Alan Greenspan was at its helm. The term was coined in early 2000 by Credit Suisse trader Steve Kim, then a derivatives analyst at Merrill Lynch, and popularized by Pimco economist and fund manager Paul McCulley. A put option insures investors against losses. Both men felt that the belief the Fed would similarly insure investors against losses whenever markets got rocky encouraged risky investment behavior. With markets again in turmoil, there's been a cry from some Wall Streeters and corporate head honchos lately for the Fed to lower short-term interest rates to settle frayed nerves. The Fed took a step in that direction this month when it lowered rates on borrowing from its discount window. The more widely used federal funds market could be next. Fed- funds futures contracts, which price off of interest-rate expectations, show investors are nearly certain the Fed will cut its target fed funds rate by a quarter point to 5% next month. But as they head off to their annual symposium at Jackson Hole, Wyo., this weekend, Fed officials may try to disabuse Wall Street of the notion. As ING Investment Management economic advisor Jim Griffin recently put it, the Fed "doesn't want to embed a 'Bernanke put' in market mythology, or otherwise validate the irresponsible lending that produced the current mess." A Philip Morris Spinoff Would Only Buy Time The board of Marlboro-cigarette-maker Altria Group is widely expected to announce a spinoff of its Philip Morris International division after a directors meeting today. Such an announcement will likely give the company's stock a nice pop. The longer-term prospects for investors are more smoky.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 20 of 28 The idea is to free the overseas unit from its lumbering Philip Morris USA twin, which is burdened with legal and regulatory issues, high taxes and a dwindling market as Americans quit smoking. Altria's overseas operations have been the company's prime growth engine. In the second quarter, cigarette volumes at Philip Morris USA fell 3.3% from a year earlier. International cigarette volumes rose 3.3%. Morningstar estimates domestic cigarette sales volumes will decline by 1% to 2% a year over the next 20 years, while overseas volumes should climb by the same amount. The stock of a spun-off international unit could put up hefty gains for a while. But one has to wonder whether an Altria restructuring will be anything more than cosmetic in the long run. A bet on international growth amounts to a bet that smokers and policy makers in places like Asia and the Middle East, where smoking has been increasing, won't soon figure out what smokers and policy makers in the U.S., Western Europe and Latin America have figured out: Cigarettes are deadly, and it pays to quit.

21. Morningstar estimates domestic cigarette sales volumes will decline by _____a year over the next 20 years, while overseas volumes should climb by the same amount. a. 1 % to 2% Correct b. 5% c. 10% d. 12%

GDP Figures May Receive Cold Shoulder By JUSTIN LAHART August 30, 2007; Page C1 http://online.wsj.com/article/SB118843693695313071.html

With worries about the economy running high, investors ought to welcome good news about growth. Today they might give it the cold shoulder. The government releases revised figures on second-quarter gross domestic product, the broadest measure of economic output. These numbers are likely to be better than was earlier reported. The trade gap in the second quarter was narrower than thought, while companies added more to inventories and consumer spending rose by more than was originally estimated. All of that adds up to more output. Economists estimate GDP grew at an annualized rate of 4.1%. That's more than the 3.4% growth rate originally estimated and much stronger than the first quarter's 0.6% growth rate. Given the recent market turmoil, it helps that the economy was on stronger footing going into the current quarter. Many investors are desperate for the Fed to cut interest rates, but stronger growth numbers undercut the argument to ease. In the end, the economy might need relief. Households have found it increasingly difficult to find mortgage financing. And it may not be long before many companies find that the credit-market turmoil affects their ability to grow. "I think you're going to see it creeping in the data," says Raymond James economist Scott Brown. "A little bit in the August numbers, a little more in September." But it will be weeks before the Fed gets to see all of these data and determine whether growth is slowing. In the meantime, Wall Street's masters of the universe may have to

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 21 of 28 face up to the fact that their howls for lower rates aren't necessarily the center of the Fed's universe. Sears's Results Could Add to Lampert's Tough Streak It has been a tough year for Edward Lampert, who runs ESL Investments, a large Greenwich, Conn., hedge fund. ESL holds a big stake in Citigroup, which is down 16% this year. It also holds 625,000 shares of cellphone maker Motorola, off 20% year to date, according to recent regulatory filings. The losing streak doesn't seem likely to end today. ESL's biggest pony, Sears Holdings, reports fiscal second-quarter earnings. Analysts expect Sears to post earnings after one- time items of $1.13 a share, down 35% from last year. Shares of Sears are off 13% this year amid weakening sales and worries about consumer spending. That's bad news for ESL, which held a 66-million-share stake in Sears as of June 30. It's hard to envision things picking up at Sears soon. In August, the retailer lowered its earnings guidance for the quarter in part because it cut prices to move rising inventories. Same-store sales for the quarter were also weak, off 4.3% from last year. Investors have been betting Mr. Lampert will use his hedge-fund-trader prowess to turn Sears's cash flow and real-estate into lucrative strategic acquisitions. But commercial real estate is looking increasingly shaky as credit troubles spread beyond housing. And if consumers don't shop at Sears, there won't be much cash to flow anymore

22. _____holds a big stake in Citigroup, which is down 16% this year. It also holds 625,000 shares of cellphone maker Motorola, off 20% year to date, according to recent regulatory filings. a. Sears b. GDP Holdings c. Lambert Incorporated d. ESL Investments Correct

Go Figure: Stocks' Woes Help Dollar By JOANNA SLATER August 31, 2007; Page C1 http://online.wsj.com/article/SB118848112254513491.html

In a sign of the unease that still pervades the markets, bad news for stocks is paradoxically translating into good news for the dollar. As concerns about subprime mortgages have deepened and stocks tumbled, the beleaguered dollar instead rallied against a host of currencies from the euro to the Brazilian real. The dollar's recent performance is an indication of just how skittish investors have become. Many analysts say the dollar should be weakening because the subprime crisis may slow economic growth and the U.S. remains burdened with huge deficits. But during times of turmoil, the dollar also stands to benefit. That is because investors flock to the safety of plain-vanilla Treasury bonds. So even as other U.S. investments suffer, the dollar and Treasurys have rallied.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 22 of 28 "We do offer the deepest markets where money can be parked," says John McCarthy, manager of currency trading at ING Capital Markets in New York. "In an immediate crisis there's a bit of a flight to quality." The Dow Jones Industrial Average is down by more than 5% from its July peak. Yet in that period, the dollar has risen by 1.3% against the euro, by 1.4% against the Canadian dollar and by 6.4% against Brazil's real. The main exception is the Japanese yen, which has strengthened during this period. The dollar's run is emblematic of the disarray still nagging at markets as the U.S. heads into a long holiday weekend. Two weeks ago, Federal Reserve officials lowered borrowing rates from the Fed's discount window, which banks can tap for short-term loans. But since then, stocks have seesawed and the bond market remains in many ways out of whack. The Fed reported yesterday that issuance of commercial paper -- a kind of short- term loan often used by banks and corporate borrowers -- dropped $63 billion in the week ended Aug. 29, bringing commercial-paper levels outstanding down more than $200 billion this month. Meanwhile, the interest rate on safe-harbor, three-month Treasury bills is down more than one percentage point in the past month, to 3.9%, a drop that is comparable to the declines right after the Sept. 11, 2001, terror attacks. Currency markets are also demonstrating some unorthodox behavior. The dollar often moves based on investor views about economic fundamentals like the outlook for growth or the size of the U.S. trade gap.

23. The Dow Jones Industrial Average is down by more than 5% from its July peak. Yet in that period, the dollar has ____ against the euro. a. risen by 1.3% Correct b. only fallen by 1.3% c. risen by 3.3% d. only fallen by 3.3%

Questions 24 – 26 from Personal Journal, Section D

Social Networking Goes Professional By JESSICA E. VASCELLARO August 28, 2007; Page D1 http://online.wsj.com/article/SB118825239984310205.html

When radiation oncologist Michael Tomblyn recently saw a 21-year-old patient whose eye was protruding from its socket, he turned to his fellow physicians for help. Dozens of doctors offered suggestions, including fungal infection, HIV-associated lymphoma or a cocaine-associated sinus problem, eventually steering him toward the correct answer: rhabdomyosarcoma, a fast-growing cancer most often observed in young children. The diagnosis didn't take place in a doctor's lounge. It happened on Sermo.com1, a social- networking site for licensed physicians, which Dr. Tomblyn and 25,000 doctors like him visit regularly to consult with colleagues specializing in areas from dermatology to psychiatry.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 23 of 28 "It is a way for us to commiserate and know we are still talking to others like us," says 36-year-old Dr. Tomblyn, who works for the University of Minnesota Medical Center. Social networking, popularized by teens sharing information with their friends online on Web sites such as Facebook Inc., is now blooming in the business world, thanks to new social networks that enable professionals and executives in industries such as advertising and finance to rub virtual elbows with colleagues. Millions of professionals already turn to broad-based networking sites like LinkedIn to swap job details and contact information, often for recruiting purposes. Business executives also have turned to online forums, email lists and message boards to sound off on information related to their industries. Now, online services are trying to promote a more personal type of business networking. Unlike relatively simple message boards that are open to all, these new sites -- including Sermo.com for doctors and INmobile.org2 for the wireless industry -- have features such as profile pages showing professional credentials; personal blogs that function like a kind of online diary; links to "friends" online; electronic invitations to real or online events; and instant-messaging. Social networking is just one of many consumer technologies, including blogs, wikis and virtual worlds, to cross over into the corporate world. It is happening as social networking is moving more into the mainstream. Leading consumer social-networking sites attracted more than 110 million unique monthly U.S. visitors in July, up more than 40% from the previous July, according to comScore Inc. For a variety of reasons, social networking has been slower to take off in the business world. Employees are wary of disclosing too much to potential competitors, and loose- lipped executives can easily embarrass themselves and their companies online. Policing these services' memberships to weed out impostors can be difficult, and the sites are still in the early stages of turning their networks into sustainable businesses. Also, business users typically have less time to devote to socializing online and are willing to do so only if they believe they are getting a unique benefit from the site. "Professionals are fairly protective about their social networks which they spend their whole lives to build," says Mikolaj Jan Piskorski, assistant professor of business administration at Harvard Business School. He adds that the appeal of social networking is limited largely to industries where workers are fairly isolated from their colleagues on a day-to-day basis, like medicine, construction and sales. Many of the new services are free to members. Revenue comes from advertising or charging outside businesses access to data and member discussions. For example, Sermo Inc. of Cambridge, Mass., generally charges $100,000 to $150,000 a year to nonmedical businesses like hedge funds, which use it to research such things as how doctors feel about new drugs. They can monitor online discussions, with the doctors' names omitted, or see a tally of topics being discussed on the site -- like a new medical device or a controversial cancer treatment -- to determine what's rising or falling in popularity. The site, founded by Daniel Palestrant while he was a surgical resident in Boston and launched last year, discloses its business model to users when they register. Members say they don't mind that their conversations are accessible to others, particularly since their identities are concealed. In this, Sermo is different from many other sites. Doctors are generally more interested in getting treatment advice and access to other doctors' experiences than in networking for new business partners. As a result, the site doesn't

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 24 of 28 require users to use their real names, although Sermo itself verifies and holds the identities of everyone who registers. INmobile.org -- a social network for the wireless industry launched last year by Adam Zawel, former director of the Yankee Group's Wireless US Research Program and the executive search firm IdealWave Solutions, based in Harvard, Mass. -- has a different business model. Its basic services are free to its members, about 730 high-level executives at cellphone makers, wireless operators and media companies. But members can choose to pay $2,000 a year to list promotions and ads in a special "marketplace" section. Some of the new sites simply charge a membership fee. This fall, for example, Reuters Group PLC is planning to launch a new social-networking service, tentatively named "Reuters Space," for fund managers, traders and analysts. For a fee, which hasn't yet been set, they will be able to log on to create profiles with industry-relevant information like their "asset class" and "instruments," check financial news feeds and ruminate about the industry on personal blogs. However, the Reuters service will only allow employees to join if their companies are Reuters customers. It also plans to allow companies to block certain features like blogging and to archive employees' online activities for compliance purposes. Online networking services are trying to broaden their appeal with new ways of making sure their members are who they say they are. For example, Sermo authenticates each of its members by checking their credentials against several of the 10,000 databases they have access to. The service also requires users to answer three verifiable personal questions, ranging from their phone number to where they got their medical degrees before they can sign up. INmobile.org relies on member referrals and email confirmations, but says it is looking into stricter methods, like calling up the person or their colleagues, since emails can be easily faked. The service says it turns away more than half who apply, admitting only director-level employees and above from large companies, top-level executives from smaller companies and vice-president level and above from midsize businesses. Even after these measures, it can be difficult getting business people to converse freely with each other online. Alexander Pigeon, vice president of international for MLB Advanced Media LP, the interactive media and Internet arm of Major League Baseball, is guarded about what he shares on INmobile.org, which he recently joined to stay on top of big trends in wireless. "I certainly wouldn't post something about my company that wasn't publicly released," says Mr. Pigeon, who instead sticks with "pontifications" on broad trends like the future of mobile music. But taking a risk on an advertising social-network paid off for Angela Glenn of Long Beach, Calif. The 40-year-old graphic designer first joined a free social network created by the blog AdRants as a "lurker," reading but not contributing to the site. Before long, she gained the confidence to debate topics like Web-site design, and she and one sparring partner grew so fond of each other's styles that they eventually started an ad agency together, the GASP Company LLC. "You get to hear potential partners out and see how they think about things," she says. "It's the closest thing you get to a personal recommendation."

24. Social networking has been slower to take off in the business world because:

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 25 of 28 a. weeding out impostors can be difficult b. loose-lipped executives can easily embarrass themselves and their companies online c. business users typically have less time to devote to socializing online d. all of the above Correct

The Small Ways Wealth Begets Wealth By JONATHAN CLEMENTS August 29, 2007; Page D1 http://online.wsj.com/article/SB118833722444811379.html

There's a reason the rich get richer. Just graduated and got your first real job? If you can immediately start socking away $100 or $200 every month, you'll save yourself from a lifetime of irksome costs, some small, some large. Indeed, there's a virtuous cycle to managing money: As you amass more savings, like the rich you can sidestep more costs -- and that means your nest egg will grow even faster. • Financial-account fees. For instance, once you've built up some savings, you are less likely to get hit with bank charges, you will avoid the account-maintenance fees often levied on smaller brokerage accounts, and your mutual-fund company might waive its annual individual retirement account fee.

• Even bigger savings could lie ahead. Fund investors with $25,000 or $50,000 invested may pay reduced commissions on broker-sold "A" shares. Favor no-load funds? If you have $100,000 in a Vanguard Group fund -- or $50,000 and you've been invested 10 years -- you can qualify for the firm's lower-expense share class. Similarly, Fidelity Investments offers lower-cost shares to index-fund investors with a $100,000 fund balance.

Sound appealing? Unfortunately, many of today's 20-somethings will never enjoy these sorts of cost savings. In fact, they don't appear to be any more frugal than their famously profligate parents. As of 2004, 26- to 28-year-olds had a net worth equal to half their annual income. That's the same as the ratio for 26- to 28-year-olds in 1986, according to Boston College's Center for Retirement Research. • Credit-card charges. There are few mistakes more foolish than carrying a credit-card balance, which these days might cost you 14% or more in annual interest. Yet almost 48% of households headed by someone under age 35 have card debt, according to the Federal Reserve's 2004 Survey of Consumer Finances. The typical, or median, sum owed is $1,500.

Want to avoid that mistake? Your best bet is to live below your means, sock away that $100 or $200 every month and thereby accumulate a cushion of savings. An added bonus: If you pay your credit-card bills on time and don't use more than, say, 20% or 30% of your available credit, you will have a better credit score -- and that should mean a lower interest rate when you take out a mortgage or auto loan, or set up a home- equity line of credit.

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 26 of 28 • Borrowing costs. As you accumulate more savings, you may have the wherewithal to purchase a car, rather than being compelled to lease. And if you do buy, you might be able to pay cash or, alternatively, pony up a hefty sum, so you end up with smaller monthly loan payments.

Similarly, if you are a diligent saver, you may have enough to put down 20% when you buy your first home. That will allow you to avoid private mortgage insurance, which might cost you $500 a year for every $100,000 borrowed. • Insurance premiums. With your wealth ballooning, your tolerance for financial risk will rise. Before long, you may be comfortable raising the deductibles on your homeowner's and auto insurance, because forking over $1,000 or $2,000 toward fixing storm damage or repairing your crashed car will no longer seem like a financial catastrophe.

At some point, your nest egg may be big enough to cover your family's financial needs, should you die prematurely. That will allow you to ditch your life insurance or at least reduce coverage (though some folks may want to hang on to their policies for estate- planning purposes). You may also have more than enough saved to cover nursing-home costs, so you don't need long-term-care insurance, which can easily cost $1,500 or $2,000 a year. Your increased tolerance for risk may even affect your investing. You might be willing to stash more in stocks, which should translate into higher long-run returns. But here's the irony: Because you are well on your way to a comfortable retirement, you may not need such high returns -- and thus you don't need to take so much risk with your investments.

25. As of 2004, 26- to 28-year-olds had a net worth equal to ___ their annual income. That's the same as the ratio for 26- to 28-year-olds in 1986, according to Boston College's Center for Retirement Research. a. 1/4 b. 1/2 Correct c. 3/4 d. none of the above

Getting Your iTunes By PAOLA SINGER August 30, 2007; Page D1 http://online.wsj.com/article/SB118842866739212704.html

Problem: Accessing your iTunes library on any computer. Solution: Many third-party services stream your music across the Internet free of charge. With Simplify Media, for example, you can browse and play the entire contents of your digital music library on other computers using Apple's iTunes software. With Simplify Media's program (Simplifymedia.com1), you can authorize up to 30 other computers to access your melodies remotely whenever your home computer is connected to the Internet. Other streaming services, like NuTsie, work by uploading the contents of your library onto a server. Then you can listen to the music on any computer, or even a

© Copyright 2007 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 27 of 28 cellphone, by logging on to NuTsie.com2. The hitch is that the uploading process can take several minutes, and you can listen only to preset playlists. Avvenu Music (Avvenu.com3) is another software service that lets you listen to your iTunes songs on other PCs or Macs. Caveat: You can't use the services to burn remote songs to CDs or transfer them to an iPod or MP3 player.

26. Avvenu.com has a software service that lets you _____ on other PCs or Macs. a. view PowerPoint’s b. listen to your iTunes songs Correct c. talk to friends d. watch TV