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The Wall Street Journal Education Program Weekly Review & QuizCovering front-page articles from Oct 20-26, 2007Professor Guide with Summaries Fall 2007 Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

Inside the Greed ZoneBy GLENN R. SIMPSONOctober 20, 2007; Page A1http://online.wsj.com/article/SB119282544852865144.html

Marshall Gutierrez was classic military material, a working-class kid whose father and both grandfathers served in the armed forces.He joined the Army and marched steadily up the hierarchy, ultimately becoming a lieutenant colonel and chief logistics officer at this sprawling base in Kuwait. His Army record was spotless, and he developed a reputation as a bit of a straight arrow.So it isn't surprising how Lt. Col. Gutierrez reacted in 2005 when he discovered signs of rampant overcharging by the Army's main food supplier for the Iraq war. Bags of Coca-Cola syrup available in the U.S. for about $10, for example, were going for $90. He blew the whistle. That triggered a massive criminal probe of Kuwait-based Public Warehousing Co. that is now raising questions for such major American food companies as Perdue Farms Inc. and Sara Lee Corp., and is shaping up as one of the biggest fraud probes of the Iraq War.Then the tables turned. The Kuwaiti contractor accused Col. Gutierrez of seeking bribes, setting in motion a bizarre chain of events that left his military career and his 22-year marriage in ruins. On Sept. 4, 2006, he was found dead in his quarters at the age of 41. Next to his body were an empty container of prescription sleeping pills and a plastic bottle of antifreeze.The story of Col. Gutierrez, who Army investigators allege wound up tainted by the very corruption he complained about, is one thread in the expansive fraud and corruption investigation into firms supplying food to troops in Iraq. The Justice and Defense Departments are investigating overcharging and possible favoritism in awarding of contracts. Col. Gutierrez's role in the inquiry emerges from interviews with military officials, contractors and others involved, as well as emails, letters, court filings and other written material.Marshall Gutierrez grew up in the little town of Las Vegas in the foothills of New Mexico's Sangre de Cristo Mountains, a descendant of the original farmers who received Spanish land grants to settle the area. He was a driven and intensely proud man, both of his achievements as a soldier and his Hispanic heritage, says his widow Brenda, also a Las Vegas native.The two met a quarter-century ago at a church event. He was 15, she was 13. At the age of 16, Brenda discovered she was pregnant -- a harsh predicament for two teenagers in a small, conservative Catholic community. "His mother offered to send him away to

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another school elsewhere in the state, and he didn't. He married me," Ms. Gutierrez recalled. "This was not a guy that ran away from trouble or from any type of a difficult situation."They married two years later, and he started serving in the Army National Guard the very next weekend. After high school, he worked his way through college on a scholarship from the Army Reserve Officers' Training Corps and became a commissioned officer in 1987. The couple commenced the itinerant life of a military family, bouncing from Newport News, Va., to Colorado Springs, Colo., to Saudi Arabia after the 1991 Persian Gulf War. In Panama, Capt. Gutierrez led the 1097th Transportation (Medium Boat) Company, which moved thousands of tons of materiel and in 1994 won a prestigious Army award."He was a hard charger. He did not accept any sort of failure. His way or the highway was how he was," recalls Sgt. Sean Kelly, who served under him in Panama. "But he also was able to motivate the people who worked under him to literally accomplish the impossible."Eventually Mr. Gutierrez rose to the rank of lieutenant colonel, and in 2005, he shipped out to Camp Arifjan in Kuwait, a large logistics and staging facility with fast-food restaurants and Internet cafés.CAMP ARIFJAN is now at the center of the U.S. inquiries into contracting corruption. One Saudi catering company, Tamimi Global, allegedly had a "party house" frequented by contractors and at least five military contract officers, according to a sworn statement in July 2006 by a former Army officer, contained in U.S. court records. The officer admitted taking $8,000 in bribes and gifts from a Tamimi executive and another $50,000 from another catering firm. He claimed he had witnessed at least five other Army officers taking bribes in the course of roughly a dozen parties at the Tamimi house.Camp Arifjan sends numerous truck convoys to Iraq every day. Most of the freight is handled by Public Warehousing, which began as a modest Kuwaiti government spinoff. Now publicly traded, it is one of the largest transport companies in the world. Under a series of contracts worth more than $6 billion, Public Warehousing is designated a "Prime Vendor" for virtually all food served to U.S. forces in Iraq and Kuwait -- some 150,000 stomachs.Within months of arriving in Kuwait, Col. Gutierrez clashed with Public Warehousing over its prices for various items, according to emails he sent that are now part of the Army record of the case. He questioned why Public Warehousing was charging the Army about $90 for five-gallon bags of Coca-Cola syrup when they could be found for around $40 from Kuwait City merchants, the emails indicate.Col. Gutierrez began supplying information via email to Gary Shifton, a top official at the Pentagon's Defense Supply Center in Philadelphia. In November 2005, Pentagon officials launched an investigation. The inquiry focused on Public Warehousing's pricing agreements with its own suppliers.Investigators suspect the military wound up paying inflated prices for everything from preserved milk to lobster tails, according people involved in the investigation and courts records from U.S. civil litigation between Public Warehousing and the Defense Department. The investigators are looking into whether Public Warehousing passed along high prices from its suppliers to the military, then was improperly compensated by those suppliers through large rebates and discounts, the court records and the people involved


say. One focus is Sultan Center, a supplier with close ownership and managerial ties to Public Warehousing, which refunded to Public Warehousing some 10% of the military sales it received.

1. In 2005 Lt Col Gutierrez blew the whistle on _____.a. mistreatment of prisoners at Abu Ghraibb. overpricing of food by Public Warehousing Correctc. Enrond. the Wedding Party massacre

2. Camp _____ is now at the center of the US inquiries into contracting corruption.a. Sultan b. Tamimic. Globald. Arifjan Correct

Ship Shortage Pushes Up Prices Of Raw MaterialsBy ROBERT GUY MATTHEWSOctober 22, 2007; Page A1http://online.wsj.com/article/SB119301028152866449.html

The cost of shipping raw materials across the world's oceans has reached an all-time high, pushing up prices of grain, iron ore, coal and other commodities.The average price of renting a ship to carry raw materials from Brazil to China has nearly tripled to $180,000 a day from $65,000 a year ago. In some cases, ocean shipping can be more expensive than the cargo itself. Iron ore, for example, costs about $60 a ton, but ship owners typically are charging about $88 a ton to transport it from Brazil to Asia.The trend may force manufacturers to pay more for the basic ingredients they need to make their products. And those higher costs could be passed on to consumers, affecting the price of everything from automobiles and washing machines to bread.The main reason commodity shipping rates are escalating: not enough bulk ships. The shortage stems from the surging volume of global trade as growth explodes in China, India and other developing nations. China's voracious manufacturing sector is compelling it to look increasingly far afield for resources, such as to Brazil for iron ore. (See related article1.)The Baltic Exchange Dry Index, the most important and widely used indicator of world-wide ocean freight rates for bulk commodities, hit a record Friday after rising 169% over the past year. And shippers, brokers and commodity merchants are braced for higher rates next year and possibly through 2009. By then enough new bulk freighters are expected to come on line to ease the shortage."All of the ship owners are making a lot of money because these are numbers that the market has never seen," said John P. Dragnis, commercial director of Athens-based Goldenport Inc., one of the largest providers of ships to commodity sellers.Even when ships are available to carry the cargo, inadequate port facilities can cause delays, driving up the cost of shipments. At Brazilian ports, ships often wait offshore for


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as long as two weeks for their turn to load or unload, like airplanes sitting on a runway waiting for a gate.Brazil isn't the only source of bottlenecks. As of last week, 131 vessels were waiting to pick up or unload coal and iron ore at Australia's main ports, according to the Global Ports Congestion Index, which tracks wait times world-wide.As a result, some Australian coal producers are being forced to cut back on exports, which is expected to add to the upward pressure on global coal prices. Likewise, commodity merchants are building higher costs for transportation into the price of steel, grain and aluminum. The steep run-up in bulk shipping rates has largely bypassed other types of vessels, like oil tankers or the container ships that transport finished goods like television sets, because those ships aren't in such short supply.Though bulk shipping costs have been rising for a couple of years, the run-up has intensified over the past year. The full impact of those spot-market rate increases has yet to filter through to the 70% of bulk commodity shipments that are covered by long-term contracts.

3. The main reason commodity shipping rates are escalating:a. too many bulk ships b. not enough bulk ships Correctc. high fuel costsd. increased exports

4. As of last week, ______ vessels were waiting to pick up or unload coal and iron ore at Australia's main ports, according to the Global Ports Congestion Index, which tracks wait times world-wide.a. 31 b. 131 Correctc. 231 d. 331

More Debtors Use Bankruptcy To Keep HomesBy AMY MERRICKOctober 23, 2007; Page A1http://online.wsj.com/article/SB119309633953367729.html

With loan defaults rising along with many mortgage payments, fast-growing numbers of homeowners are gambling on bankruptcy filings to try to stay in their homes.Last month, as the nation's housing slump continued, consumer bankruptcy filings increased almost 23% from a year earlier -- representing nearly 69,000 people -- according to the American Bankruptcy Institute, a nonprofit research group whose members include bankruptcy attorneys, judges and lenders. Overall, consumer bankruptcy filings were up 44.76% during the first nine months of this year.In some areas where the real-estate boom was especially heated, the increase in filings has been even sharper -- especially for a type of bankruptcy that allows homeowners to halt foreclosures on their homes.



The surge in filings hasn't caught up with the flood of bankruptcy cases consumers launched in 2005, as they raced to beat a change in federal law that made it harder for individuals to declare bankruptcy. Even so, it shows the rising sense of insecurity many Americans feel as housing values fall, lending standards get tighter and hundreds of thousands of mortgages with low introductory interest rates "reset" to higher rates, boosting the homeowner's monthly payments.Most consumers filing for bankruptcy continue to do so under Chapter 7 of the federal Bankruptcy Code. Under that provision, a person must forfeit certain assets -- including, in some cases, a portion of home equity. Those assets are sold to pay off debts.While Chapter 7 filings stop foreclosure proceedings, the break is usually only temporary. As a practical matter, many homeowners who file under Chapter 7 lose their homes.In recent months, however, an increasing number of homeowners have filed for bankruptcy under Chapter 13, which staves off foreclosure proceedings while the homeowner works out a plan to pay off mortgage debt and other obligations over time -- usually three to five years. To qualify, debtors must have a regular income and must stay current on their new bills. About four in 10 filers today are filing under Chapter 13 -- up from three in 10 two years ago. The 2005 change in bankruptcy laws was designed in part to shift more filers to Chapter 13, which forgives less debt than Chapter 7.In California, one of the nation's hottest markets during the recent real-estate boom, the number of nonbusiness Chapter 13 petitions in the second quarter of the year more than doubled from a year earlier, according to records compiled by the Administrative Office of the U.S. Courts in Washington. Over the same period, such filings increased nearly 40% in the northern district of Illinois, which includes Chicago, and 70% in Massachusetts."It's a mess," says William McLeod, a Boston bankruptcy attorney who says he is receiving twice as many calls from debtors as he did a year ago. "This is fed right now by real estate, and what's been this mortgage frenzy in the last several years."Some bankruptcy attorneys are promoting Chapter 13 bankruptcy in press releases and commercials, and are contacting borrowers whose homes are already in the foreclosure process. But it isn't a strategy that works for everyone. Consumer advocates say the homeowners who are most likely to benefit from Chapter 13 are those facing foreclosure because of a temporary financial setback, but who expect to be able to cover their mortgage payments in the future.Early this year, 47-year-old Briant Titus saw sales start to lag at his family's vacuum-cleaner sales business. He missed several payments on the two-story Cape Cod home in Potterville, Mich., that he purchased 15 years ago for $139,000. When he called his lender to find out why two recent checks hadn't been cashed, a manager told him that foreclosure proceedings had begun."I was freaking out," says Mr. Titus. "All I was thinking about were my two little kids," who are 9 and 6 years old.Mr. Titus saw a TV commercial for a local bankruptcy attorney, Gene Turnwald. Encouraged by the suggestion that he could save his home, Mr. Titus hired Mr. Turnwald and filed a Chapter 13 petition about six months ago. Since then, he has paid his regular monthly mortgage bill of $950 as well as $2,000 under his debt-repayment plan, half of which is applied to his past-due mortgage payments and the other half to business


creditors. Vacuum sales are still sluggish, but he says he can make his payments by budgeting carefully."I think if people knew they had the Chapter 13 option, a lot of people would save their house," Mr. Titus says. He says he can't recall what he paid in legal fees but says he thinks he spent a total of about $1,200 to file his case.Of course, there are pitfalls. A Chapter 13 filing stays on a person's credit file for a decade, wreaking havoc on his or her ability to get financing. And the repayment plans leave borrowers with little room for maneuver. Indeed, many Chapter 13 plans fail because of unforeseen problems such as an illness, job loss or expenses for an emergency home repair.

5. An increasing number of homeowners have filed for bankruptcy under ______, which staves off foreclosure proceedings while the homeowner works out a plan to pay off mortgage debt and other obligations over time -- usually three to five years.a. Chapter 7 b. Chapter 13 Correctc. Chapter 11d. Chapter 5

6. Overall, consumer bankruptcy filings were up 44.76% during the first nine months of this year.a. down 24.76% b. up 24.76%c. down 44.76%d. up 44.76% Correct

To Sharpen Nike's Edge, CEO Taps 'Influencers'By NICHOLAS CASEY and BRUCE ORWALLOctober 24, 2007; Page A1http://online.wsj.com/article/SB119317864699068959.html

BEAVERTON, Ore. -- Nike's iconic co-founder Philip H. Knight built the company by sealing endorsement deals with sports heroes such as Michael Jordan and Tiger Woods. But under current Chief Executive Mark Parker, Nike is also depending on lesser-known figures -- like a Los Angeles tattoo artist known as Mister Cartoon.Though far from mainstream, Mr. Cartoon rivals Nike's high-profile jocks for influence among a certain crowd that is young, Latino and hip-hop. His ink-on-flesh flourishes are popular with rappers like Eminem and 50 Cent. Born Mark Machado, Mr. Cartoon has also written comic-book style graphic novels and created a brand called Joker to sell T-shirts and baseball caps with his designs. Nike's Mr. Parker, who met Mr. Cartoon several years ago, calls him an "aesthetic influence and a friend."So far, the artist has designed six lines of limited- edition shoes for Nike, ranging in price from $70 to $130. They include a version of the company's classic Air Force One basketball shoe that nods to what Mr. Cartoon calls the "old icons of the gangsters": skulls and roses, dark tenements and "sexy, female clowns." The heel of one model is adorned with the initials "L.A." rendered in Gothic letters.



Athletes still rule at Nike. But the game is changing. Nike's traditional endorsement strategy has taken a few hits recently. It dumped NFL star Michael Vick from its lineup in the wake of his August guilty plea in a criminal dog-fighting case. More recently, one of its most prominent former pitchwomen -- track star Marion Jones -- admitted to using performance-enhancing steroids after years of staunch denials.Meanwhile, delivering the sales growth Mr. Parker has promised Wall Street -- a 50% increase in revenue, to $23 billion by 2011 -- means expanding Nike's hold on fickle, style-conscious consumers.The company hasn't lost its traditional focus on pure sports, utilitarian design and performance. Just yesterday, Nike penned a $582 million deal to acquire Umbro PLC, the British soccer brand. But now, Nike's vast expansion has created pressure to broaden and deepen its appeal -- even among non-athletic types. Mr. Knight recently told Mr. Parker: "Your job is way more difficult than my job was."Mr. Parker sees the challenge thusly: "The question is, how do you not let your size become a disadvantage? How do you keep an edge, a crispness, a relevance?"One answer, for many marketers over the years, has been to divine the future -- to find the most cutting-edge, trend-sniffing individuals and set them loose to formulate new ideas, new products. Such "coolhunters," as some types are known, scour the globe's streets, stores, clubs and hidden haunts picking up clues as to what's hot, what's next. They then interpret their findings to help companies better resonate with their core audience.At Nike, the drive to recruit under-the-radar influencers like Mr. Cartoon is on the rise and a key part of the company's strategy. While other sneaker-makers have also called on cultural soothsayers to shape their aesthetic agenda, Mr. Parker has taken the practice all the way to the executive suite -- acting as the company's ambassador of cool."I have a personal interest in popular culture and the influence of culture on the consumer landscape," says Mr. Parker, rattling off the worlds he turns to for inspiration: interior design, cuisine, art and music among them.Following his own instincts, Mr. Parker has moved to aggressively link Nike with those who can help maintain the company's standing among what he calls the "influencers of influencers."The 52-year-old Mr. Parker plumbs a global network of friends -- including artists, DJs, designers and other early adopters -- for tips on who might be able to confer credibility on the company. The result, Mr. Parker says, is a bit like social networking on the Internet. It's about "looking peripherally, not just straight ahead."In addition to Mr. Cartoon, Mr. Parker has fostered Nike collaborations with a New York graffiti artist named Lenny Futura, the industrial designer Marc Newson and a pair of twin Brazilian muralists known as Os Gêmeos.

7. Nike Chief Executive Mark Parker has promised Wall Street a ____ increase in revenue, to $23 billion by 2011.a. 10 % b. 30 %c. 50 % Correctd. 70 %


8. Mr. Parker has moved to aggressively link Nike with those who can help maintain the company's standing among what he calls the ______.a. "writers of writers" b. "leaders of leaders" c. "influencers of influencers" Correctd. "runners of runners"

Economic Reckoning Looms In Argentina's ElectionBy MATT MOFFETTOctober 25, 2007; Page A1http://online.wsj.com/article/SB119327033336170614.html

BUENOS AIRES -- Argentina has had plenty of anti-inflation plans over the years. The current one may be the first that rests heavily on a public servant whom some executives and politicians have nicknamed "El Loco," or the Crazy Man.The official, Guillermo Moreno, is Argentina's Secretary of Internal Commerce, the government's price policeman. His mission is limiting price markups in the red-hot economy -- at least until the leftist Cristina Kirchner, the wife of the current president, Néstor Kirchner, can win her own bid for president. Elections are scheduled for this Sunday, and she's heavily favored to win.With the Kirchners' blessing, Mr. Moreno has hammered out price-control agreements with industry, doled out subsidies and imposed export restrictions to keep the domestic market awash in goods. He has also threatened uncooperative businesses with prosecution under a recently resurrected 33-year law against hoarding goods. When none of that worked to restrain prices, a prosecutor has alleged, Mr. Moreno ousted the government statisticians who prepared the consumer price index and installed his own people to massage the numbers. Mr. Moreno denies that; a judge is reviewing the case.Argentina has often been a standard-bearer for economic trends in Latin America. In the 1990s, it was a leader in the wave of free-market capitalism that swept the region. That ended in a harrowing collapse in 2001. This decade, the Kirchner government has moved toward greater state control over the economy alongside several Latin American countries, including Venezuela, Bolivia and Ecuador. With Latin America divided between those populist governments and countries pursuing free-market economics, the fate of Ms. Kirchner and Argentina could affect policy choices around the region.As Argentina's governing faction tries to prolong the country's roaring economic recovery -- and maintain its grip on power -- it is waging an increasingly desperate battle to contain inflation. The government's tainted figures put the annual figure at 8%, while most independent economists peg it around twice that high. Rather than cooling off the economy and fixing bottlenecks to future prosperity, Mr. Kirchner's government has been intervening in markets and prices with a heavy hand.The moves are often proving ineffective and sometimes sow distortions in the economy that could make lasting solutions even more difficult. When Mr. Moreno tried to set potato prices following a bad crop, with a hotline for reporting profiteers, consumers rejected the officially priced spuds as low-quality. ("They were not fit to feed pigs," said a consumer advocate.) Most ominously, artificially low power prices -- one-third the region's average for residential electricity -- have spurred demand while discouraging



new investment in electricity and natural gas. That led to power rationing during the last Southern Hemisphere winter in June and July and raised fears about the coming summer months.Ms. Kirchner, a senator and top adviser to her husband, has been running as the guarantor of his legacy -- a 50% expansion in Argentina's annual economic output in the past five years. Polls show her winning election without the need for a runoff, largely because the boom is the most vigorous in Argentina in the past century. Since Mr. Kirchner took office amid a withering crisis, Argentina has reduced unemployment to about 8% from 18% and taken a big bite out of the poverty rate. His backers note that mainstream economists have frequently scoffed at his policies despite the country's recovery. Mercedes Marcó del Pont, an economist and congresswoman of the Kirchners' party, contends some government intervention in prices is justified to confront inflationary pressures coming from abroad.The opposition seems too divided to overcome Ms. Kirchner, especially since her husband's government has used the power of incumbency to direct benefits such as pension and wage increases toward key voter blocs. One leading opposition candidate is Roberto Lavagna, Mr. Kirchner's former economy minister who broke with him in 2005 amid disagreements over inflation policy, and wants to restrain government spending to control inflation -- not a popular position. Mr. Lavagna, who also wants to aggressively court investment, derides the Kirchners' policy as "the ostrich plan: You put your head in a hole."

9. Guillermo Moreno, is Argentina's Secretary of Internal Commerce and is responsible for Argentina’s _____ plans.a. banking b. beef stockingc. securityd. anti-inflation Correct

10. Independent economists peg Argentina’s inflation rate at ______. a. 5 percent b. 8 percent c. 14 percent d. 16 percent Correct

Marketers Use Trickery To Evade No-Call ListsBy JENNIFER LEVITZ and KELLY GREENEOctober 26, 2007; Page A1http://online.wsj.com/article/SB119335472901272206.html

Older Americans around the country are getting duped by a seemingly innocuous tactic that can expose them to hard-sell pitches from the insurance industry.The technique is centered on a marketing tool called the lead card, and it became popular after the federal government created its Do Not Call Registry in 2003 to shield consumers from unwanted solicitors. Sent through the mail, the lead card invites the recipient to mail off an enclosed reply for free information about, say, estate planning.



But the cards fail to warn that by sending off replies, recipients are giving up their right to avoid telephone solicitations from the sender -- even if their phone numbers are on the Do Not Call list."It's a huge loophole," says Pam Dixon, executive director of the World Privacy Forum, a San Diego nonprofit researcher of privacy issues including commercial use of personal information.The technique is prompting legal action from states across the country. Because the loophole itself violates no law in most states, prosecutors are focusing their cases on other lead-card deceptions. The cards often falsely imply an affiliation with the federal government or with advocacy groups such as AARP, for instance. Many of the cards also fail to mention that replies will be turned over to insurance salespeople.When Naomi and Horace Williams got a postcard warning that estates of older Americans could be wiped out by taxes unless they moved quickly, they believed it came from AARP, the Washington-based lobbying group for older Americans, since it said that "AARP found" probate taxes were hurting seniors.So the Williamses filled out a reply card that promised more information and mailed it to a post-office box in Washington, D.C. Soon after came a phone call from a man saying he wanted to drop by their North Carolina home to deliver the information they'd requested. It never occurred to the Williamses -- who had registered on the Federal Trade Commission's Do Not Call Registry -- that the caller was a marketer. They assumed he was affiliated with AARP, they say.

11. Sent through the mail, the ______ invites the recipient to mail off an enclosed reply for free information.a. call card b. heads up cardc. lead card Correctd. toll free card

12. When Naomi and Horace Williams got a postcard warning that estates of older Americans could be wiped out by taxes unless they moved quickly, they believed it came from ______, the Washington-based lobbying group for older Americans.a. AARP Correctb. CARPc. BPOEd. AAA

Questions 13 – 17 from Marketplace

For Boards, Firing Or Keeping a CEO Can Be Tough CallBy JOANN S. LUBLINOctober 22, 2007; Page B1http://online.wsj.com/article/SB119301090157566455.html

Citigroup Inc.'s directors stood by Chief Executive Charles Prince last week as the nation's largest bank reported a 57% drop in third-quarter earnings. But the expression of



support did little to allay speculation abut Mr. Prince's future. The reason: Boards of directors of struggling companies typically trumpet their faith in the chief until the day they force him or her out.Deciding whether to unseat a leader poses a dicey dilemma for directors. Wait too long, and they risk letting a bad situation get worse. Act too quickly, and they may short-circuit a potential recovery and create a demoralizing power vacuum."Nobody has mapped this process so well that they could give you a cheat sheet," says Paul Danos, dean of the business school at Dartmouth College in New Hampshire and a director of General Mills Inc. and BJ's Wholesale Club Inc. Frequently, Mr. Danos suggests, the decision comes down to "whether you have someone to replace him with."More directors are struggling with the issue at a time of growing board authority, increasing investor impatience and shrinking CEO tenure. As at Citigroup, directors of Alcatel-Lucent and Motorola Inc. also recently backed CEOs Patricia Russo and Ed Zander, respectively, amid shareholder complaints. Earlier this month, Sprint Nextel Corp. CEO Gary Forsee resigned after his fellow board members launched a search for his successor.

13. According to the article, For Boards, Firing Or Keeping a CEO Can Be Tough Call, boards of directors of struggling companies typically trumpet their faith in the chief until ____.a. profit sags 10 percent b. profit sags 25 percent c. corruption is provend. the day they force him or her out Correct

Do You Hear What I Hear? Telling Off a Colleague -- SilentlyBy JARED SANDBERGOctober 23, 2007; Page B1http://online.wsj.com/article/SB119309292987667651.html

Bill Seybolt, a system administrator, was recently helping one of his colleagues with a technical problem when another colleague issued a drive-by insult, putting down the planned upgrade to a new program."It really pierced me," Mr. Seybolt says. Before responding, he decided he'd give himself the night to sleep on it. But later he couldn't sleep, coming back to the conversation. "It's like taking a shot of espresso," he says.The conversation kept playing through his mind when he was walking his Beagle mix, Millie. "If you were here right now you know what I would tell you?" he told his foe in his head. Ultimately, his boss "talked me off the ledge," he says, and he dropped the issue.At work there are countless things you should and could and would have said. But the tormenting fact is, you didn't. So, hemmed in by forces such as the fragility of reputations, your dependence on a paycheck, or even just slow-footedness, you re-enact one of the countless little workplace defeats in the confines of your head. Maybe if you think about all that conversation's permutations, you can right all the little workplace wrongs -- and then bend spoons with your mental powers.



The process of chewing over old conversations is referred in psychology circles as rumination. It's prevalent enough in the office that various leadership-training programs administer personality tests asking how often you "replay an incident over and over" in your mind.The idea is to probe whether someone is predisposed to festering in a cycle of anger that produces more bad thoughts that then create more anger, says Craig Runde, director of new program development at Eckerd College Leadership Development Institute, St. Petersburg, Fla. Ruminating too much, he says, "keeps you stuck."

14. The process of chewing over old conversations is referred in psychology circles as ________.a. re-scriptingb. regurgitationc. re-dramatizationd. rumination Correct

Editing on Big Films Is Now Being Done On Small ComputersBy LEE GOMESOctober 24, 2007; Page B1http://online.wsj.com/article/SB119318119331269063.html

Like any modern professional, Naomi Geraghty took her laptop with her when she went on a business trip in January. The machine got a lot of use -- but not just for email.Ms. Geraghty is a film editor and was spending 10 days at the Irish coastal home of Terry George, director of "Reservation Road," starring Joaquin Phoenix, which opened across the U.S. last week. Mr. George couldn't travel for the editing, so Ms. Geraghty loaded a copy of Avid editing software on her Apple MacBook and went to him.Most people have a mental image of film editors hunched in the dark over editing consoles with lengths of film pinned to the wall behind them. These days, they sit at computers, moving scenes around as easily as paragraphs in a word processor.Video files are so demanding, editing computers used to cost tens of thousands, even hundreds of thousands, of dollars. But as Ms. Geraghty's tale suggests, even relatively low-end personal computers, laptops included, are now so powerful that Hollywood pros have joined student filmmakers and indies in taking advantage of them.It's one more example -- along with music recording and graphic design -- of the way cheap computers are blurring the distinction between professional and amateur tools. Not that just having software makes you good at something, as a quick trip around the Web makes clear.Ms. Geraghty says that while she enjoys the comfort of her regular editing studio, a notebook is not without its charms. "I could look out over a fishing harbor," she says. "It was the best view I've ever had from a cutting room."Like "Reservation Road," the typical Hollywood feature film these days is an analog-digital hybrid. Reels of film might be developed at a lab such as Technicolor, but then $1.5 million scanners digitize them and put them on a $100 generic USB hard drive. From there, it's on to the editors.



Editing on computers is so much easier than editing physical film that it's how nearly all movies are now cut. USC's film school once had 50 editing consoles; now it has only two. Indeed, editing may have become too easy. "You can easily recut your movie 10 times a day," says Matt Furie, who teaches editing at USC. "Some students go off the deep end and cut, cut, cut. We tell them they need to discipline themselves to push away from the desk, drop the mouse and just think."Like others, Mr. Furie suggests that one of the reasons there are so many rapid-fire cuts in today's movies is that editing software has made them so simple to do.Editors are lucky in that theirs is one of the few industries with intense software competition. Anyone paying attention to computers the past 20 years will understand its dynamics.Avid, of Tewksbury, Mass., is the long-established leader. Your average Academy Award winner typically is cut on an Avid. The company was one of the first in the field, and designed its software to work the way editors were used to working. For example, Avid's programs, like most software, use folders. But they're called "bins," after the canvas bags into which editors used to toss small lengths of film.Avid software does just about anything you could ask -- for a price. The company's flagship Media Composer package runs $5,000. Philip Hodgetts, who follows the industry for Creative Planet, says Avid has an epic fight on its hands from newer, lower-cost alternatives. Apple sells Final Cut Studio for $1,300, while Adobe's Premiere Pro is just $800.While film still is central in big Hollywood features, it's unclear how long it will be before even the biggest feature movies go all-digital. The buzz in technical movie-making circles these days involves the two-month-old, ultra-high-resolution digital Red camera. Boosters say it looks nearly as good as 35mm film -- and costs around $30,000, or about the same as renting a 35mm camera for 10 days.Thanks to cheap computers, a similar sort of creative destruction is happening everywhere in the industry. Color adjustment used to require expensive oscilloscope-like monitors. It first moved to specialized -- and expensive -- software, but lately it's done with relatively low-cost (say, $200) "plug-ins" by companies like Red Giant Software.Angus Wall, editor of "Zodiac," a film released earlier this year, says the real impact of all of this digitization is to bring simplicity and artistic control back to the process. He says postproduction work on the typical Hollywood movie is a vast assembly line of runners, technicians, assistants and others. With Murphy's Law in force at every step, it isn't always easy for filmmakers to get the results they want.The "Zodiac" crew, by contrast, sought to rethink and streamline the process. Right on the set, the digitized film went into a computer; after that, just a handful of people were involved. While the skills were different, coordinating the work of these editors and others wasn't much more difficult than what happens in an average office with a typical PowerPoint presentation. "It's revolutionary and empowering, because you don't have to worry anymore about some nameless person somewhere not doing their job right," Mr. Wall says. "You start to see the joy come back into the movie-making process."

15. ________ was one of the first in the field and is the long established leader in film editing software.a. USC


b. Red Giant c. Avid Correctd. Creative Planet

New Shipping Law Makes Big Waves In Foreign PortsBy JOHN W. MILLEROctober 25, 2007; Page B1http://online.wsj.com/article/SB119324934731170078.html

ROTTERDAM, the Netherlands -- A U.S. law that will require foreign ports to scan every container they ship stateside looks set to create big winners and losers and force consolidation at ports around the world.Designed to ensure freight containers aren't used by terrorists to smuggle weapons or bomb materials into the U.S., the Law on Maritime Cargo Scanning Requirements is shaping up to have a dramatic impact on the global shipping industry, port officials and operators in Europe and Asia say.Companies that make the giant $5 million X-ray or gamma-ray machines needed to scan shipping containers are anticipating a boom in orders as roughly 700 ports around the world gear up for the U.S. rules, which were signed into law in August but take effect in 2012. Industry analysts say each will have to buy one to 10 of the scanners or stop exporting to the world's richest market.Large modern ports, mostly in Asia, also expect to win new business as smaller and older ports struggle to meet the U.S. requirements. The European Union estimates the average start-up cost for a port to buy and support the scanners will be around $100 million, too much to make business sense for some minor ports to go on shipping to the U.S.Big, older river ports like Antwerp in Belgium are also at a disadvantage. Antwerp would need to build new roads and bridges to get all containers to scanners from its scattered docks and may not be ready in time. "We're looking at billions [of euros] in extra spending," says Lieven Muylaert, a Belgian customs official.The EU has led opposition from around the world to the new U.S. requirements, worrying the relative lack of flexibility at many European ports will add to cost advantages Asian exporters already hold over European companies. Asia's newer ports tend to be bigger, but more compact, than their European counterparts. They will have less trouble meeting the requirements, port operators and analysts say. The EU has threatened to impose reciprocal constraints on all containers landing in the EU from the U.S.Since the attacks of Sept. 11, 2001, the U.S. has toughened rules that aim to stop terrorists from smuggling weapons into the country in containers, the 20- or 40-foot steel boxes that carry everything from bananas to toys to lawn mowers around the globe. The U.S. imported 12 million containers of goods last year, and that number is expected to rise, according to the U.S.Security experts say the container-scanning law may reduce, but won't eliminate, the risk of terrorists smuggling weapons aboard ships. That is partly due to the poor resolution of X-rays able to scan something as big as a container, according to Jim Cowling, managing director for Maritime Security Solutions Ltd., a London-based consultancy. It is also because ships remain vulnerable to tampering after leaving port. "It could be possible to



hijack or bribe a ship and put a container on it in the middle of the ocean," says Mr. Cowling.The new U.S. scheme will replace the current risk-based system, under which only selected containers get scanned. Under the new system, giant X-ray devices would scan every container for suspicious shapes at a rate of about three containers per minute. It now takes several minutes to scan a container.The three main international suppliers of container scanners are Nuctech Co., a Chinese state-owned company that dominates in Asia; U.S. defense contractor Science Applications International Corp., which sells mainly in the U.S.; and Smiths Heinmann GmbH, part of Smiths Group PLC, a pan-European firm. All three compete in Europe and Latin America. A fourth company, Rapiscan Systems, a division of OSI Systems Inc., also makes scanners but is behind the others in orders, say analysts.Michel Lequy, who sells Nuctech scanners in Europe, says orders already grew to dozens per year from low single digits before U.S. lawmakers started talking about the scanning law in 2003. He expects a further increase after governments and ports start budgeting for the actual law next year. "We can cash in on a boom," he said.Though Europe's governments are likely to pick up much of the extra cost for major ports like Antwerp to meet the rules, construction can take years in the face of tough EU environmental laws, putting them at a significant disadvantage.Antwerp's troubles, could mean more business for the nearby Dutch port of Rotterdam, which is more compact than Antwerp and expects to be able to install the scanning equipment quickly and at comparatively low cost. "Security is a good business opportunity," says Peter Struijs, chief operating officer at Rotterdam.Without significant change to the rules, smaller ports such as Seville in Spain, Dunkirk in France and Naples, Italy, could have to stop shipping to the U.S. altogether. "The law will force us to stop shipping to the U.S., unless we can attract a lot more customers, which would justify investment in the equipment," says Philippe Revel, manager for the shipping terminal at Dunkirk.The Bush administration has said it wants to cut the number of ports that ship containers to the U.S. to around 100 world-wide, from 700 today because that would make it easier to monitor security. Consolidation would also force more trucks onto Europe's already congested roads, however, as they move U.S.-bound goods to bigger, but more distant, ports for shipping.

16. The Bush administration has said it wants to cut the number of ports that ship containers to the US to around ____ world-wide, from 700 today because that would make it easier to monitor security.a. 100 Correctb. 150c. 300d. 400

From Balls of Concrete To Habitats for Sea LifeBy GAUTAM NAIKOctober 26, 2007; Page B1http://online.wsj.com/article/SB119334933043772085.html



ISLA MUJERES, Mexico -- During a recent dive here, Todd Barber hovered above such familiar tropical sights as red sea sponges, iridescent fish and a half-hidden moray eel. But the coral reefs -- hollow, spherical and made entirely from concrete -- were anything but typical.Mr. Barber wasn't surprised, though. A decade earlier, he created the artificial reefs using 300 concrete "reef balls." Now, those once-bare and ugly spheres have been transformed into minireefs, rich with life."They're in pretty good shape," said Mr. Barber after he climbed onto a boat and stripped off his scuba gear. He was particularly pleased by the presence of a Pederson shrimp, a translucent creature with blue flecks making a reef ball its home.Mr. Barber is leading a charge to build "designer reefs" that will replace or support natural ones as the effects of overfishing, pollutants and disease take a growing toll on these vital ecosystems. His nonprofit Reef Ball Foundation has so far cultivated about 4,000 reefs in 55 countries. Projects range from a mile-long reef in Malaysia to a half-mile one at a millionaire's island in the Caribbean.Artificial reefs aren't a new idea. For years, fisheries have made faux reefs by dumping junk -- old boats, airplanes, washing machines -- into the sea. But such unscientific efforts can go haywire. In 1972, about two million tires were dumped in the waters near Ft. Lauderdale, Fla., in an attempt to provide a habitat for fish. The tires failed to attract marine life and instead littered the ocean floor. They are now being removed.The new "designer reefs" are much more sophisticated. EcoReefs Inc., of Jackson, Wyo., sells ceramic structures shaped like branching corals, essentially a prefabricated kit for making a customized reef. A Philippine company molds artificial coral whose shape, texture, color and even chemical signature are much like the real thing. One quixotic scientist tries to spur coral growth by piping low-voltage electricity through large metal mesh placed underwater.

17. In 1972, ____ were dumped in the waters near Ft Lauderdale, Florida, in an attempt to provide a habitat for fish. The project failed to attract marine life and instead littered the ocean floor. They are now being removed.a. scuba gear b. spongesc. concrete ballsd. tires Correct

Questions 18 – 23 from Money & Investing

Municipal Bonds Are Awkward Fit In ETF WorldBy SHEFALI ANANDOctober 20, 2007; Page B1http://online.wsj.com/article/SB119283727030365518.html

In just the past few weeks, investors have gotten a new tool to invest in tax-exempt municipal bonds: exchange-traded funds.



At least nine ETFs -- mutual funds that trade like regular stocks -- have been launched in recent months designed to track indexes of munis. They are being marketed aggressively, but they may not be the best choice for everyone.

18. In just the past few weeks, investors have gotten a new tool to invest in tax exempt municipal bonds:a. exchange-traded coupons b. exchange-traded funds Correctc. exchange-traded blocksd. exchange-traded stocks

Avon Makeover Isn't CosmeticBy ELLEN BYRON and KAREN RICHARDSONOctober 22, 2007; Page C1http://online.wsj.com/article/SB119300954290366425.html

Waiting for a restructuring to deliver results can give any investor worry lines, but Avon Products Inc. is showing signs that its big, multiyear makeover -- projected to cost $500 million -- is working.The maker of cosmetics and toiletries this month announced a $2 billion share-buyback plan over the next five years, which it will fund from cash flow. Although last quarter's net income was 25% lower than a year earlier amid restructuring charges, the longer-term outlook for Avon's shares appears to be getting prettier.The buyback plan, which amounts to about $400 million a year, "is pretty aggressive and bold" in the midst of a cash-consuming turnaround, says Anant Sundaram, a finance professor at Tuck School of Business. "Management could be signaling confidence in its ability to generate substantial free-cash-flow growth in the future," he says.Avon's latest progress report -- its third-quarter results -- comes next week. Chief Executive Andrea Jung "needs to do well this quarter. There are a lot of investors even more frustrated than they have been historically," says Ali Dibadj, an analyst at Sanford C. Bernstein who has a "hold" recommendation on the stock and doesn't own Avon shares.At 4 p.m. in broadly lower New York Stock Exchange trading Friday, Avon shares were down $1.31, or 3.5%, to $36.19. The share price of the $15.6 billion company is up about 9.5% this year, but still lower than in 2005, before the restructuring kicked off, adding to the stock's allure.In the past two years, the 49-year-old Ms. Jung has trimmed management almost 30%, and nearly tripled ad spending, including its first sales-representative recruitment campaign in the U.S. Avon invested $100 million in its research facilities and has been introducing more-sophisticated skin-care products, including a new $54 face cream, its most expensive one yet. And rapid expansion in developing markets continues. In China, for instance, where Avon was first to win a direct-selling license, its sales force now surpasses 700,000."It's a textbook study of how to turn around a company," says Robert Sellar, senior investment manager of Aberdeen Asset Management, which manages about $10 billion in assets in North America. As a value investor, he says he will consider buying Avon at



a forward price-to-earnings ratio of 16 to 17 times. The shares now trade around 18 times, in line with its peers.

19. In China, Avon was first to win a direct selling license, its sales force now surpasses _____.a. 7000b. 70,000c. 700,000 Correctd. 7,000,000

Focus Shifts From Credit To EconomyBy JUSTIN LAHARTOctober 23, 2007; Page C1http://online.wsj.com/article/SB119309548521867698.html

The word on Wall Street is that while the stock market's summer slide stemmed from a narrowly defined credit crisis, the latest trouble is about much broader problems in the economy.Disappointing results from Caterpillar and 3M, rather than trouble in some obscure, yet incredibly important, credit instrument, helped to knock the Dow industrials lower last week. In fact, the credit markets behaved well -- a sharp contrast to August, when commercial paper and other short-term debt showed signs of distress.Of course, the problems in the economy that now worry Wall Street so much are directly connected to the credit crisis. This summer's credit turmoil wouldn't have happened if the housing downturn hadn't brought the mortgage boom to a halt. And troubles in the credit market now shows signs of reverberating back onto the economy and potentially into corporate profits.

20. The problems in the economy that now worry Wall Street so much are directly connected to ______.a. the price of oil b. the price of natural gasc. the credit crisis Correctd. the weather crisis

The Dish on AT&T's Satellite PlansBy DIONNE SEARCEY and DANA CIMILLUCAOctober 24, 2007; Page C1http://online.wsj.com/article/SB119314123850168314.html

AT&T Inc. has been circling the satellite-television sector for several years, contemplating a bid for one of the two major players. Now, with consolidation in the telephone industry mostly done, AT&T appears to be getting ready to swoop in.Investors should be wary.AT&T has been consulting lawyers in Washington about how long it would take to get government approval to purchase either EchoStar Communications Corp. or DirecTV




Group Inc., people familiar with the matter said. If it does make a bid for one of the satellite providers, AT&T could unveil the offer before year's end in hopes of getting federal antitrust officials to approve the combination before a new administration takes over, these people say.

21. AT&T Inc is expected to try to buy controlling interests in the _____ sector.a. cell phone hardware b. satellite-television Correctc. online-televisiond. Chinese-television

Brazil Exchange Strikes While It's HotBy ANTONIO REGALADO and AARON LUCCHETTIOctober 25, 2007; Page C1http://online.wsj.com/article/SB119327360387370734.html

Until now, the race to cash in on stock exchanges -- through initial public offerings and mergers -- has been concentrated in the northern half of the globe. Now, it is Latin America's turn.Tomorrow's planned $3.2 billion IPO by São Paulo's stock exchange, Bovespa Holding SA, is drawing attention to Brazil's red-hot IPO market and offering a peek into what could be the next region for deal making among exchanges.In recent years, public offerings by exchanges in Asia, Europe and the U.S. have set off a wave of modernization as broker associations have morphed into for-profit groups with an eye on expansion. Just this year, the New York Stock Exchange's takeover of European exchange operator Euronext NV formed a company, NYSE Euronext, that owns exchanges in six countries and is valued at more than $20 billion.Latin America has lagged behind the trend, but several IPOs are awakening strategic interest in the region. In addition to Bovespa, Brazil's main futures and commodities exchange, the Bolsa de Mercadorias & Futuros, and Mexican exchange operator Bolsa Mexicana de Valores, also are planning IPOs.And in the first foray by a major U.S. exchange into Latin America, Chicago Mercantile Exchange owner CME Group Inc. announced plans late Tuesday to acquire about 10% of Brazil's BM&F, which trades things including cotton and currencies, in return for a 2% stake in the Chicago market operator. The swap is valued at about $700 million.

22. Until now, the race to cash in on stock exchanges, through initial public offerings and mergers, has been concentrated in the northern half of the globe. Now, it is ____ turn.a. Cuba’sb. Africa’sc. Asia’sd. Latin America's Correct

China Makes Splash, AgainBy RICK CAREW and JASON LEOW in Beijing, and JAMES T. AREDDY in ShanghaiOctober 26, 2007; Page C1




A $5.5 billion investment by China's biggest bank in South Africa is the latest sign of China's growing power as an exporter not just of toys, sweaters and MP3 players, but of capital.Yesterday, the state-owned Industrial & Commercial Bank of China Ltd., based in Beijing, announced it was purchasing a 20% stake in Standard Bank, South Africa's largest bank by assets, for 36.67 billion rand ($5.5 billion). The deal will be the largest overseas investment by a Chinese entity and follows a string of billion-dollar-plus investments by China's rapidly growing finance sector.

23. A $5.5 billion investment by China's biggest bank in South Africa is the latest sign of China's growing power as an exporter of:a. toys b. sweatersc. MP3 playersd. capital Correct

Questions 24 – 26 from Personal Journal, Section D

Cheap Holiday Fares? They Aren't in the Cards This YearBy SCOTT MCCARTNEYOctober 23, 2007; Page D1http://online.wsj.com/article/SB119309827708367795.html

There are 62 shopping days until Christmas, but most of the airfare bargains are already sold out.Ticket sellers say smart consumers bought early for Thanksgiving and Christmas holiday trips this year. Now, prices are up, and the number of open seats is down. Spurred by higher fuel prices, many airlines have boosted fares in recent weeks. And with some big airlines still cutting domestic capacity and demand for tickets running high, especially to beach destinations, the availability of cheap holiday seats has dwindled, experts says. But savvy travelers can still sleuth out holiday deals -- if they are willing to be flexible with their travel dates.Seats are particularly scarce in some leisure hot spots, as more families choose to spend their holidays in more exotic locales, rather than going home to grandma's. One of the most popular Thanksgiving destinations this year at Travelocity.com: Las Vegas.Beach destinations have seen some of the biggest jumps. A San Francisco-Honolulu ticket for Thanksgiving on UAL Corp.'s United Airlines was priced last week at $1,670 round trip. The cheapest price on that route for a Nov. 21-25 trip was $1,582 round trip on Northwest Airlines, according to Orbitz.com. Peak travel days at Christmas have already run up to more than $1,300, too. Non-holiday tickets in December and January can be had for under $400 round trip."If you haven't bought by now, you need to buy now. Things are only going to get more expensive," says Rick Seaney, chief executive of FareCompare.com, which tracks ticket-price changes.




Mr. Seaney says fares for holiday travel were actually lower than last year through early September, but then airlines raised prices as consumers gobbled up seats. Those who bought very early got good deals. At Travelocity.com, prices on tickets sold for Thanksgiving-week travel are up 4.5% over last year and 9.5% over 2005, the company said. The average price of Thanksgiving tickets already sold was $387, compared with $371 last year and $354 two years ago, according to Travelocity, a unit of Sabre Holdings Corp.Delays, like fares, will be higher this year, too. Last winter, airlines had difficulty coping with storms. With flights packed, some people were left stranded for days in Denver. Just before New Year's, AMR Corp.'s American Airlines ended up with passengers stuck on flights for eight hours or more after storms in Dallas. And JetBlue Airways Corp. had planes stuck in terrible conditions for hours during a Valentine's Day ice storm. Summer was difficult, too, with airlines short on staff and airports and airways clogged with flights.There are ways you can beat the high prices this season. For the past two years, Christmas and New Year's Day have fallen on weekends, bunching up the peak days when people want to travel. This year, Christmas and New Year's Day fall on Tuesdays, giving travelers more flexibility. If you haven't already bought tickets and are looking for a break on higher prices, you'll have to travel on off-peak days.At American, the cheapest price on a Thanksgiving trip from New York to Las Vegas and back was a hefty $1,095 for travel on Nov. 21, the day before Thanksgiving, and returning on Sunday, Nov. 25. Those are the peak days for those holidays (other airlines still had cheaper seats, such as $569 on Continental Airlines Inc.). But change your itinerary to leave Thanksgiving Day and return the following Tuesday, and the Las Vegas getaway costs only $335 on American.At Christmas, United's cheapest price for a Chicago-Orlando trip on peak days of Dec. 22 returning Dec. 30 is $633. Leave a few days earlier and a Dec. 19-26 Chicago-Orlando trip costs only $327 on United. Houston-Cancun on those same peak Christmas days has already run up to $885 on Continental, but for Dec. 19-26, the same trip costs $525."If you want to refinance your home, go ahead and go at peak times," says Tom Parsons, president of BestFares.com. "But you can still get cheap deals if you are flexible."It doesn't work everywhere. Take Pittsburgh, for example, a city where US Airways Group Inc. has reduced flights dramatically over the past several years, and announced another big cut to take effect in January. A Washington-Pittsburgh ticket on United for peak travel days at Christmas priced at $345 on Orbitz.com last week; off-peak days priced at $345 as well.Nationwide airline inventory has been tight all year, particularly in the summer months. U.S. airlines filled an elbow-jabbing 86% of their seats in July, according to the Bureau of Transportation Statistics. Several big airlines have grounded flights because of high fuel prices and discount-airline competition and shifted more planes to more-profitable international routes. Low-cost carriers have filled in with solid expansion. But on the whole, capacity is up only slightly, and not growing as fast as demand. For the first seven months of the year, airline capacity, measured in available seat-miles, was up 2.8%, but passenger traffic was up 3.3% as more seats were filled, the BTS said.


That's allowed airlines to boost fares and stay profitable amid rising oil prices. Several carriers last week reported higher profits for the summer travel season because they have been able to raise prices and still sell more tickets than last year.With seats selling out this summer and ticket prices rising steadily, many consumers bought early this year for Thanksgiving and Christmas, travel companies say. At Travelocity.com, tickets for Thanksgiving week were sold an average of 85 days before departure, up from an 81-day average last year. That's a sizable shift given the millions of tickets sold. "This is the first time we've ever seen people booking so early," says Amy Ziff, Travelocity's travel analyst. "People are definitely onto the fact that travel costs more and you have to buy early to get a seat."And it's not just the winter holiday period. Steve Cosgrove, president of Dynamic Travel & Cruises Inc., says he's now seeing double the volume at his Southlake, Texas, travel agency for trips for spring and summer of 2008, compared with the same period last year.Another trend that has emerged, according to travel sellers: More people are using the holiday period for vacation trips to Europe and other international destinations.In terms of the portion of Travelocity tickets sold, the Caribbean's share is up 20% this year for Thanksgiving, Mexico is up 17% and Western Europe is up 10%, Ms. Ziff said. "Looking at the past seven years, this is the first time we've seen so much international focus at Thanksgiving," she said.

24. Cheap airfares for the holiday season a. are mostly sold out at this time b. can still be found if you are flexible about datesc. were booked a lot earlier this yeard. all of the above Correct

More People Are Freezing Credit ReportsBy JANE J. KIMOctober 24, 2007; Page D1http://online.wsj.com/article/SB119318394702669159.html

Spooked by the possibility of identity theft, increasing numbers of people are taking a radical approach to thwart criminals: They are putting their credit reports on permanent freeze.A frozen credit report prevents almost anyone from using your name to take out a loan or sign up for credit, such as a credit card, a bank account or cellphone service. That is because, with a freeze in place, potential new creditors can't get access to your credit record kept on file by the three main credit-reporting bureaus without your explicit permission.Michael Dana, a Dallas police detective, chose to freeze his credit reports after a Texas law took effect last month that made freezes available to all residents. Mr. Dana says he received several notices from financial institutions and the government saying that some of his personal information may have been compromised. "You can try to shred all your documents," says the 42-year-old. But "I'd rather shut my credit down and have the best security in place and not be a victim at all."



An estimated 50,000 to 70,000 people have so far signed up for credit freezes, according to the Consumer Data Industry Association, a trade group that includes the three credit bureaus. Consumer groups expect that number will grow after the bureaus -- Experian Group Ltd., TransUnion LLC and Equifax Inc. -- recently announced plans to offer credit freezes nationwide by next month. The bureaus' action comes after 39 states and the District of Columbia enacted laws in recent years allowing consumers to freeze their credit, though some states limit the option only to identity-theft victims.Florida enacted a credit-freeze law last year, and Jimmy Glass and his wife signed up the same day. "Just the thought of someone else being able to assume your identity and rack up thousands of dollars in your name -- that's just unthinkable," says Mr. Glass, of Orlando. "I have all the credit cards I need, no mortgage and no need for any car loans, so I just decided to shut it down."Sometimes a brush with identity theft prompts people to take action. Dave Schreima of Long Beach, Calif., says someone recently got a hold of his bank-account number and started making unauthorized withdrawals. "I had already decided to freeze my records. That just kind of prompted me that this is the time to do it," says the 49-year-old retired computer programmer."New account fraud is more serious than people hijacking your current accounts because you can go for a very long time and not realize that there's an account in your name at a store you never shop in," says Claudia Bourne-Farrell, a spokeswoman at the Federal Trade Commission.Freezing your credit can be cumbersome. You generally have to write a letter to each of the credit bureaus and pay a fee of about $10 to each. Although you can temporarily suspend the freeze, doing so could take several days and, in many cases, means paying more fees.When your file is frozen, the bureaus assign you a personal identification number, which you will need to remove the freeze from the file. To lift the freeze, you must notify the bureaus and specify the amount of time you want the lift in effect. With a fee of $10 per bureau in many states, it can cost a married couple as much as $60 to initiate a freeze across all three bureaus and another $60 to lift the freeze. Freezes are typically free for people who provide a police report confirming they were victims of identity theft.The credit bureaus are generally promising to lift a credit freeze within three business days of receiving the request. But some states are forcing them to go further. Beginning next year, Utah and the District of Columbia, for instance, will require the bureaus to lift the freezes for state residents within 15 minutes. Keep in mind that even if you don't plan to borrow money, you may need to suspend a credit freeze to get an insurance policy, cellphone or utility service, an apartment or even a job.Some states also are requiring the credit bureaus to charge lower fees in their states. As of last month, Indiana residents can request, lift or a remove a freeze for free, while consumers in other places, such as Nebraska and Delaware, pay only a one-time fee to place the freeze with no additional costs to remove the freeze. Some states, including New York, New Jersey and Montana, require that bureaus charge fees of $5 or less.Consumers can get more information on states' credit-freeze laws, along with general guidelines on how to place a freeze, at www.financialprivacynow.org, a site run by Consumers Union.


The strategy isn't a total answer to identity theft: for example, a freeze won't stop someone from stealing your existing credit-card numbers and using them fraudulently. A freeze also doesn't prevent existing creditors and certain government or state and local agencies from accessing your credit files.Identity-theft experts say that freezes are often best-suited for people who have little need to apply for new credit, such as children or for elderly parents, or for those who have already paid off their mortgages, car loans and credit cards. Even with a freeze in place, consumers can still order their own credit report. A freeze also doesn't lower an individual's credit scores.Credit bureaus say there are less-cumbersome ways to prevent financial-identity theft. "File freezing is really the extreme measure," says Rod Griffin, Experian's manager of public education. "It can be the right thing for a person who has an extreme issue with identity theft, but if you freeze your credit file, you're removing yourself from the credit marketplace."Other tools are available for people concerned about identity theft but not inclined to freeze their credit reports. For people who are still active in applying for new credit, credit-monitoring services, offered by the credit bureaus for a fee of between $4.95 and $14.95 a month, typically send email alerts to customers if there is unusual activity or changes in their credit files.Consumers can also place free 90-day fraud alerts against their credit files, which require lenders and merchants to verify an applicant's identity before opening a new account. (Victims of identity theft qualify for alerts lasting longer than 90 days.) But consumer advocates say that some lenders may not take the alerts seriously, especially if they are eager to sign you up for a new loan.Scott Marberblatt of Swampscott, Mass., says he uses several credit-monitoring services to alert him to potential identity theft. But the 46-year-old small-business owner says he plans to drop some of these services, thereby saving "a decent amount of money," and instead freeze his credit after the option becomes available at all three bureaus next month."The whole purpose of the credit freeze is to keep yourself from being victimized in the first place," says Kirk Torgensen, chief deputy in Utah's attorney general's office. Once Utah's credit-freeze law goes into effect in September -- which will, among other things, require the credit bureaus to lift a freeze within 15 minutes of a consumer's request -- the attorney general's office plans to support the law with public-service campaigns in print and TV.Jaimee Napp of Omaha, Neb., says she recently froze her credit reports after her state's credit-freeze law took effect last month. Ms. Napp, a vocal supporter of the legislation as it was being considered, was herself a victim of identity theft two years ago when a former co-worker opened new credit cards in her name. "I would rather go through and plan my credit purchases with a little more caution than have to deal with cleaning up the credit reports after it's been damaged," says the 36-year-old, who now runs a nonprofit group that helps identity-theft victims.

25. A frozen credit report prevents:a. consumers from ordering their own credit report.


b. almost anyone from using your name to take out a loan or sign up for credit, such as a credit card, a bank account or cell phone service. Correctc. existing creditors and certain government or state and local agencies from accessing your credit files.d. children and elderly person from applying for credit.

With Buyers Sidelined, Home Prices SlideBy JAMES R. HAGERTYOctober 25, 2007; Page D1http://online.wsj.com/article/SB119326355265670448.html

Home builders are slashing prices, often by more than 10%. Some people who list their homes on Craigslist.org admit they are "desperate" to sell. Inventories of unsold homes are at the highest level in nearly two decades, providing plenty of choices.Yet a severe tightening of credit by mortgage lenders is keeping many buyers out of the market, while the huge supplies of homes for sale have persuaded others that they can wait for further price cuts.The National Association of Realtors reported yesterday that sales of previously occupied homes in September dropped 19% from the same month a year ago to a seasonally adjusted annual rate of 5.04 million units. The trade group blamed disruptions in the mortgage market.Meanwhile, The Wall Street Journal's quarterly survey of housing-market conditions in 28 major U.S. metropolitan areas shows that inventories of unsold homes are still rising in most of them, prices are generally falling and overdue loan payments are piling up. (See chart3)Some forecasters now warn that home prices are unlikely to start rising in most of the country before 2009 or 2010. A year ago, many home builders and lenders still thought that the housing boom -- which more than doubled prices in some areas during the first half of this decade -- would end with a gentle landing. Now those hopes are dead."Everybody's kind of at a stalemate now, waiting to see what happens next," says Donna Butera, who has a business in Phoenix "staging" homes for sale, adding furniture and other decorative touches to make them more appealing. Ms. Butera and her husband, Mark, are trying to sell six homes in Phoenix and Scottsdale. They bought the properties as investments over the past few years, but now find that the rents they collect don't cover mortgage payments that are resetting to higher levels after initial low-cost periods of a year or two.Home lenders have been growing more cautious for more than a year. But they suddenly tightened the screws much more in August, when investors grew so alarmed about rising defaults that most wouldn't buy loans other than those guaranteed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration. That led to a brutal drop in both lending and home sales.In one of the most extreme examples, home sales in the Orlando, Fla., area declined 55% in September from a year earlier to 924 units, the Orlando Regional Realtor Association reported. Sales in six Southern California counties -- Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange -- in September totaled 12,455, down 49% from a


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year ago and the lowest for at least 20 years, according to DataQuick Information Systems, a real-estate data firm in La Jolla, Calif.The National Association of Realtors said that the disruption in the mortgage market is temporary and that the availability of jumbo mortgages -- those that exceed the $417,000 limit for loans that can be sold to Fannie Mae and Freddie Mac -- has improved in recent weeks.Even so, home sales are likely to remain weak for months because lenders are still very cautious and huge supplies of homes are weighing on prices. On a national basis, the number of previously owned homes listed for sale is enough to last about 10.5 months at the current sales rate, the NAR said. The supply of detached single-family homes, at 10.2 months, is the highest since February 1988. Supplies hovered around four to five months for the first half of this decade. When the figure is longer than six months, it is considered a buyer's market.Inventory figures reported by Realtors probably understate supply because not all foreclosed homes are sold through real-estate agents, says Doug Duncan, chief economist at the Mortgage Bankers Association.In Miami-Dade County, the supply of condos is enough to last about 57 months at the current sales rate, while the supply of single-family homes is 38 months, according to Esslinger-Wooten-Maxwell Inc., a large local real-estate brokerage firm.In Orlando, the supply of single-family homes and condos is enough to last 28 months. That compares with about 24 months in the Detroit metro area; 20 months in Tampa, Fla.; 15 in Sacramento, Calif.; 13 in the Northern Virginia suburbs of Washington, D.C.; and 11 in the Atlanta area, according to Realtors and consultants. Even in some of the nation's strongest markets, such as Seattle and Portland, Ore., supply is rising fast. In the Portland area, for instance, the supply is enough to last 8.6 months, up from 4.5 months a year ago.The better news for sellers is that the number of homes on the market is no longer rising as fast. Supplies are up only slightly from a year earlier in some markets, such as the metro areas of New York, San Diego and Washington, D.C., including suburbs in Maryland and Virginia. The number of homes listed has declined in the Boston and Denver markets. But inventories have continued to rise rapidly in the Miami-Fort Lauderdale; Nashville; Raleigh-Durham, N.C.; and Orlando areas.

26. The National Association of Realtors reported yesterday that sales of previously occupied homes in September dropped ____ from the same month a year ago to a seasonally adjusted annual rate of 5.04 million units.a. 6 % b. 15 %c. 19 % Correctd. 26 %


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