The Wall Street Journal Weekly Quiz

The Wall Street Journal Education Program

Weekly Review & Quiz

Covering front-page articles from Feb 11-17, 2006

Professor Guide with Summaries Spring 2006 Issue #6

Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

U.S. Trade Deficit Ballooned To a Record in 2005

By GREG HITT and MURRAY HIEBERT

February 11, 2006; Page A1 http://online.wsj.com/article/SB113957739134570709.html

The nation's record $725.75 billion trade deficit last year, fed by a massive inflow of imports from China, is likely to aggravate protectionist sentiment in Congress and renew calls for Beijing to take steps to ease the imbalance.

The 2005 deficit -- 17.5% wider than the 2004 gap, according to a Commerce

Department report released Friday -- comes at a time of high economic tensions between

Beijing and Washington, and it produced an immediate reaction.

Sen. Charles Schumer, a New York Democrat and one of China's most vocal critics on

Capitol Hill, said that "the numbers show the need for China to play fair." Indeed, the yawning trade gap, which came despite an improved performance by U.S. exporters, is expected to reignite a battle over policies that critics say keep China's currency artificially weak, giving its goods an unfair advantage in global markets and threatening U.S. jobs.

That battle seemed to subside last year after China allowed the value of its currency, which had been pegged to the dollar, to fluctuate in a narrow range against a basket of other currencies. Though the increase has been modest, the yuan closed Friday at its highest level against the dollar since the July revaluation.

Even so, Mr. Schumer said that he and Sen. Lindsey Graham, a South Carolina

Republican, may push next month for a Senate vote on their proposal to impose a 27.5% across-the-board tariff on Chinese goods if Beijing fails to do more to strengthen its currency. The senators have twice postponed votes on the measure, which enjoys wide support, to give the Bush administration more time to work with China on the issue. But

Mr. Schumer said he is running out of patience. Sen. Graham plans to visit China in the spring to stress the depth of congressional concerns.

Oil also contributed to the gap. U.S. imports of petroleum products jumped 39.4% in

2005, as oil prices surged world-wide and refineries along the Gulf of Mexico were damaged by Hurricane Katrina.

But China commanded the bulk of the political attention. For the year, the U.S. deficit with China -- by far its largest gap with any single country -- rose to a record $201.62 billion, up more than 20% from $161.97 billion in 2004.

Despite the political heat generated by such numbers, the economic relationship between the U.S. and China is more complex than the figures indicate. For one thing, Commerce

Department's data on trade between two countries includes only goods, not services,

© Copyright 2005 Dow Jones & Company, Inc. All rights reserved. WSJ Professor Guide: Page 1 of 32

where American companies have a greater competitive edge. The U.S. ran a small overall surplus in services in 2005.

The U.S. and China also calculate the trade imbalance differently. Last month Beijing released figures suggesting its trade surplus with the U.S. was only $114.2 billion.

Behind the discrepancy is the intermediary role Hong Kong plays in the shipment of goods, argued U.S. Federal Reserve Board analysts in a recent report. Washington counts in its trade figures with China goods shipped through Hong Kong, while Beijing doesn't count those transitory shipments.

Some analysts say all official statistics inflate the value of Chinese exports, because a growing number of U.S. and Asian companies now ship components to China for final assembly. However, China's export figures reflect the full value of those products, rather than the value added in China. More than 58% of China's total exports -- and 64% of its exports to the U.S. -- last year came from foreign companies or foreign joint ventures, according to China's General Administration of Customs.

Businesses in the U.S. and elsewhere also typically share in the profits reaped from marketing Chinese-made goods. For example, a bra produced in China by Ace Style for such labels as Vanity Fair or Calvin Klein retails at Wal-Mart for about $23. Chief

Operating Officer Stephen Lo estimates that the Hong Kong-based manufacturer earns about 50 cents for each bra, while the retailer and brand owner earn $1.15 to $2.30 each.

The remainder goes to covering production costs, as well as transport and other costs incurred by Wal-Mart Stores Inc.

1. Sen. Charles Schumer and Sen. Lindsey Graham may push next month for a Senate vote on their proposal to impose a _____ across-the-board tariff on Chinese goods if

Beijing fails to do more to strengthen its currency. a. 25.3% b. 27.5% Correct c. 29.3% d. 32.1%

2. More than _____ of China's total exports – and______ of its exports to the U.S. -- last year came from foreign companies or foreign joint ventures, according to China's General

Administration of Customs. a. 25% & 35% b. 32% & 45% c. 52% & 67% d. 58% & 64% Correct

A Coal CEO's Unusual Pastime: Firing Up West Virginia Politics

By DEBORAH SOLOMON


CHAPMANVILLE, W.Va. -- The 30-second television advertisement that aired here last

June had all the hallmarks of a professional political attack. As playing cards and poker


chips appeared onscreen, an announcer warned that a $5.5 billion bond offering to shore up the state's underfunded employee pension plan would be a "big gamble." The bonds wouldn't save pensions but would make bankers and lawyers rich from fees, the ad said.

Voters rejected the bond issue, a blow to West Virginia's Democratic Gov. Joe Manchin.

It was a big victory for the person behind the $650,000 ad campaign: Don L.

Blankenship.

Mr. Blankenship isn't a politician. He is the chief executive of a publicly traded company, coal giant Massey Energy Co. Over the past two years he has poured $6 million of his own money into political advertising campaigns, battling Democratic judges and fighting high taxes.

His goal: To eliminate the plaintiff-friendly verdicts and tax burdens that he says make

West Virginia a bad place to do business. "It's something that hundreds of thousands of

West Virginians would like to do: Fight back against a government that is causing them to have less opportunity than they would like to have," says Mr. Blankenship, 55 years old. "I have a willingness to spend enough money to make the changes that need to be made."

Some critics say Mr. Blankenship's campaigns have more to do with Massey Energy's interests than West Virginia's. He stepped up his political involvement shortly after

Massey lost a $50 million jury verdict in August 2002. It was accused of improperly forcing a smaller company out of business. The Richmond, Va., company is preparing to appeal the verdict to the state Supreme Court, whose five judges are elected by state voters.

Massey, the largest coal producer in West Virginia and the fourth largest producer in the country by revenue, behind No. 1 Peabody Energy Corp. of St. Louis, also has had repeated battles with state officials over safety and environmental issues. In recent weeks, four workers have died at Massey-owned mines in West Virginia, two of them in a fire on Jan. 21.

It is rare for someone to become so politically active while simultaneously running a big publicly traded company. Mr. Blankenship personally oversees his media campaigns, including writing ads and designing polls. He discusses politics as a frequent guest on a popular statewide radio talk show and attacks officials in speeches. He denies that his efforts are aimed at helping Massey's bottom line and says he has no ambition to run for office himself.

His efforts are breathing new life into the state's Republican Party and leading Democrats to push for stricter campaign-finance laws. Mr. Blankenship has helped elect the only

Republican on the state Supreme Court and lower the state's food tax to 5% from 6%.

His campaigns also have focused attention on the problems of a state whose median household income is $32,589 versus the national median of $44,473. The long-term decline of coal, despite a recent rebound, has hit West Virginia hard. The state has struggled to attract high-paying industries.

To augment its weak revenue from income and property taxes, West Virginia has levied sales taxes on food, gas and other items. Some critics say the taxes encourage West

Virginians to cross into Kentucky and Ohio to shop, as those states either don't have such taxes or have lower rates. Meanwhile, West Virginia has gained a reputation as an expensive place to do business because of some plaintiff-friendly court cases. Last year, the state Supreme Court ruled that a woman who wrote a check that bounced to her car-


insurance company still deserved coverage after an accident because the company failed to notify her within 10 days that her policy was rescinded.

Mr. Blankenship has seized on these issues, crafting populist messages that link the state's policies to pocketbook issues such as the shortage of good-paying jobs. The state's political shift has helped him. While West Virginia long has been a stronghold for labor and the Democratic Party, it also is socially conservative. Democrats dominate both houses of the Legislature, but Republicans have made inroads there and President Bush won here in 2000 and 2004.

One of the state's few big employers is Massey, which had revenue of $2.2 billion last year and employs about 4,300 West Virginians. Relations between Massey and the state have long been uneasy. The company recently reached a $1.4 million settlement over alleged environmental violations.

More than 13 people, including some contract employees, have died while working at

Massey-owned mines in the past five years. In 2001, a report commissioned by then-Gov.

Bob Wise said the company's accident record "would be among the highest" if contract workers were included. The report said Massey's official safety record was improved because some accidents involving contractors weren't reported under Massey's name.

Mr. Blankenship says the company's safety record is among the best in what is known as a dangerous industry and calls the number of fatalities "better than average when you consider we have 5,700 people" companywide.

Raised in Mingo County, W.Va., by a single mother in a house without indoor plumbing,

Mr. Blankenship says his views were shaped at an early age as he watched his mother struggle against the state's high taxes at the gas station and grocery store she ran.

Mr. Blankenship often speaks about his upbringing. During a recent talk to students at

West Virginia University College of Law, Mr. Blankenship used a PowerPoint presentation to burnish his rags-to-riches image and make his case that he is fighting for the little guy.

"This gives you a look into where I came from and why I might take some of the positions I take," he said, as pictures flashed by of his mother's gas station and Mr.

Blankenship on his motorcycle and his ranch. He says his primary residence still is in

Mingo County and he has the same friends and hobbies he did when he was poor.

Mr. Blankenship received a bachelor's degree in accounting from Marshall University in

Huntington, W.Va., and in 1982 joined a Massey subsidiary. He worked his way up the ranks and became the first non-Massey family member to be president of the company in

1990. In 2000, he helped spin Massey out from Fluor Corp., which had bought the coal company's parent in 1981.

3. Massey Energy is the largest _______ in West Virginia and the fourth largest producer in the country by revenue, behind # 1 Peabody Energy Corp of St. Louis. a. wind farm b. oil company c. coal producer Correct d. natural gas facility

4. One of West Virginia’s few big employers is Massey, which had revenue of $2.2 billion last year and employs about _____ West Virginians.


a. 4,300 Correct b. 5,400 c. 6,200 d. 7,500

In India, Women Work to Preserve the Craft of Lace

By ELLEN BYRON


KANYAKUMARI, India -- In a small town at the country's southern tip, 10 women sit on wooden benches, bowed over their sewing work. Dressed in brightly colored saris, most of them pin jasmine blossoms in their hair each day before coming to work. Shutters are kept closed to prevent the strong ocean breeze from blowing dust into the carefully swept room.

Their work requires a particularly difficult technique, following a fine pattern by pulling needle and thread through layers of cloth. When the design is finished, the pattern and cloth are pulled away, leaving a delicate piece of lace. One 45-centimeter piece of needle lace takes the women here about 200 hours to create. They earn as much as 3,000 rupees, or $68, a month.

Here in southern India, the historic craft of lace is making an unlikely last stand.

Centuries after its heyday in Europe, lacemaking is all but over as commercial handiwork, done only in few developing countries and by a handful of European artisans.

Though lace has little to do with Indian customs and isn't usually found in Indian homes, lacemaking is a livelihood for hundreds of women here. The craft has been handed down since the mid-19th century, when missionary nuns from Belgium and elsewhere in

Europe brought lace here.

"Everything else is made by machines, which is why we must sure this art survives," says

Aruna Seth, a 60-year-old exporter who is working with Indian lacemakers to keep their tradition alive.

For generations, handmade lace was a flourishing industry in Europe, employing hundreds of thousands of workers. From the 16th century through the 18th century, lace was a coveted luxury, rivaling fine jewelry. Many royal coffers nearly went bankrupt satisfying kings' and queens' appetite for it. Lacemakers spied on rivals' new designs, and governments implemented bans on lace imports to protect their industries.

Though long an aristocratic indulgence, lace filtered down to a wider populace through the Victorian Age, where it became an aspiration symbol of a new middle class. It appeared on shawls, tablecloths, wedding garb, sleeve ruffles, underwear and nightclothes, according to lace historian Santina Levey. Lace also spread through the

U.S., with settlers who imported it from England, then later produced it on their own.

But as lacemaking machines became increasingly sophisticated in the Industrial Age, handmade work became more rare in the West.

India's lacemaking tradition started as a way to help young women earn a living, when nuns from Europe began arriving in India as missionaries. Lace had long been a form of sustenance for women of the church and charity institutions: It was wholesome toil at a time when women were discouraged from working outside the home. There were


no costly materials involved -- just thread, bobbins and needles. Moreover, making lace requires extremely hygienic conditions; dirt or dust is ruinous. So the occupation was thought to promote cleanliness, virtue and good health.

The nuns in India taught poor women -- though only unmarried or widowed ones -- to make lace and other fine embroideries that would be shipped overseas. Even as the popularity of lace declined throughout the 20th century, lacemaking continued to provide women with a livelihood in rural pockets of India.

Ms. Seth, a college-educated native of Calcutta, wants to keep that going. The bulk of her export business, based in Chennai, India's fourth-largest city, is in selling brightly colored silk tablecloths, pillow covers and napkins with embroidery. Ms. Seth, who has been in business for around 20 years, has sales of about $16,000 a year. She now spends most of her time pursuing lace opportunities, hoping to see the craft endure.

She first learned of India's lace heritage 15 years ago, when a client asked whether she could supply some pieces. While she says she was skeptical whether anyone in India could match the sophistication of European handiwork, she began searching and stumbled upon a life-changing discovery: a handful of convents where women had been making lace for generations.

Ms. Seth says she was stunned by the ability of the lacemakers she met -- and saw an opportunity in the fact that only unmarried women were allowed to work at the convents.

Realizing there was a wealth of trained lacemakers in the area, out of work only because they had married, she decided to put them back in a job.

Today, Ms. Seth draws on the skill of about 120 women in this rural region, both inside convents and in four units she founded, which employ women regardless of marital status. The tip of India is ideal for lacemaking, she says, because it experiences two monsoon seasons a year -- guaranteeing plenty of dust-free months. It also gives the women a way to earn money when the heavy rain prevents other family members from doing field work, working in rice paddies or picking mangoes, jackfruit, coconut and bananas.

Bommie Isaac, 24 years old, smiles when her supervisor calls her the best lacemaker at the Immaculate Heart of Mary convent in the town of Kanyakumari. Ms. Isaac, who has been making lace since she was 15, helps support her mother, three brothers and two sisters still living at home. Her father died of rheumatism 13 years ago.

Ms. Isaac is frustrated that work shelling and roasting cashews at a nearby factory pays more than lacemaking. "I feel such a rare skill should be worth more money," she says. "I know that not everyone can make this lace."

Maintaining a steady stream of business has become increasingly difficult. Despite a global boom in the luxury market, Ms. Seth says consumers seem ambivalent about the value of handmade craftsmanship. Even though lace has come back in fashion -- last month's Vogue listed lace as one of the top trends for spring -- she worries more than ever that she is up against the same foe that toppled handmade lacemaking across Europe a century ago: machines.

David Forster, owner of Léron Inc., a couture linen boutique on New York's Madison

Avenue, says his lace business is half what it was 10 years ago. The hassle of hand washing and ironing delicate handmade lace doesn't appeal to modern households, he says.


His shop, which has carried Ms. Seth's lace for about 12 years, still carries a few pieces from her lacemakers, which he says are among the finest quality in the world. His inventory of Ms. Seth's lace includes a linen guest towel trimmed with lace that retails for

$75, a set of six cocktail napkins with lace trim priced at $325 and a lace luncheon set, which includes 12 placemats and 12 napkins, for $3,400.

Despite the workmanship, "the days of handmade lace are numbered," says Mr. Forster.

"It's hard for people in our culture to understand the level of skill and dedication it takes to make something like this."

In the global economy, Ms. Seth faces competition. Most of her products are sold to retailers, who usually more than double the wholesale prices she charges, which range from $14 to $74, depending on the piece. She says clients have told her they can get handmade lace less expensively from places such as China and Vietnam. She says she won't cut her workers' wages, but continues to tout what she sees as the higher quality of their craftsmanship and materials.

Lace is still made by hand in other countries. Rose Delahaye has lived for years throughout Asia with her husband, a Belgian diplomat. During her travels, she has seen handmade lace sold in China, India, Vietnam, Indonesia, the Philippines, Thailand and

Sri Lanka, among other locales.

During trips home to her native Belgium, she saw European-made lace being sold in tourist shops. But for the most part, she says, "now people in Europe only make lace as a hobby."

Herself a skilled lacemaker, Ms. Delahaye concedes that even she has found it sometimes difficult to distinguish lace made by machine. "If I can't tell the difference, how can a tourist who knows nothing about lace?"

Last year, Ms. Seth enlisted the help of Victoria D'Angelo, a U.S.-based specialist in home-textile marketing. They have been developing variations on classic lace designs, including lace as framed art, table decorations with beading, satin and silk, and items aimed at the Christian market, such as Bible covers, bookmarks and lace crosses.

"The challenge is finding a market for handmade lace -- it's shrinking, but it exists," says

Ms. Seth. "We just have to find it."

The December 2004 tsunami redoubled her efforts. Waves washed away one of her lacemaking units, located in a beachfront building in the village of Colachal. Because the waves hit on a Sunday, the women weren't at work, but Ms. Seth still had rebuilding to do. Last spring, she founded a charitable trust to build a permanent, self-sustaining lacemaking center that would also provide training.

Using about $14,000 of her own money, Ms. Seth bought a building site in a southern village called Kalluvilai, so women from five nearby villages could easily travel there.

The land, about 200 meters back from the main road, means the women and their lace will have limited dust and noise exposure, and its lush vegetation will help shield the building from the sun. A nearby bank will allow women to deposit earnings rather than take it back to family members who may misuse it, a common problem for poor women who earn their own money, Ms. Seth says.

Mary Angel Maria Arputham is one of the lacemakers who worked in the center destroyed by the tsunami. When her husband suffered a paralyzing fall seven years ago at his job picking coconuts, she needed a way to support her five children. For the mostly poor, uneducated women in the region, the options were few: making brooms from


coconut husks and selling them along the road, or working in hot, smoke-filled cashew factories.

Instead, Ms. Arputham turned to lacemaking. After a year of training, she mastered the designs made by her unit. Her monthly wage of about $18 formed the main source of her family's income.

Eventually, it took her just a few days of quickly weaving and braiding nearly 100 long, fine threads wound on bobbins to make enough lace trim for a linen handkerchief. "Every time it feels good to finish a piece," she says. "You feel proud and happy -- I never thought I could do this, but now I can."

Since the tsunami hit, Ms. Arputham makes lace from her home and says she is grateful for a job. The local fishing industry was slowed by locals' unwillingness to eat fish for many weeks after the tsunami, believing fish were feeding on people who were washed away. Prawns were also shunned. About an hour before the wave hit, locals say the beach was covered with prawns scrambling from the water. The sight attracted hordes of village children, who hoped to snatch extra food for their families. They were among the first victims of the catastrophic waves, locals say.

After seven years of lacemaking, the 48-year-old Ms. Arputham says her eyes are weakening, so she usually works outdoors where the light is best. Keeping the snowwhite thread looking pristine is difficult: She must shoo roaming chickens from beneath her work table, and every time she senses a strong breeze she stops to cover her lace with a wool cloth to protect it from dust. Not once has she delivered flawed or soiled lace, says

Mohan Perinpa Muthu, Ms. Seth's local manager.

When Sister Deleela Gnanamma arrived at the Immaculate Heart of Mary convent five years ago, 45 young women made needle lace there. Now just 10 remain. She wants to employ more, but she doesn't have enough orders from Ms. Seth and other clients to do so: Her last order was fulfilled last March.

This worries her, not just because so many women need jobs, but also because she has been frequently told by clients that the 10 women she employs are the only women left in

India still making this type of needle lace. "It's become a beautiful tradition here, and it should continue," she says.

Rosemary Yeshudas, 57, teaches lacemaking to newcomers at Ms. Seth's units. Over the

46 years she has been making lace, she has never seen the number of orders dwindle this much, she says. As she watched one day from the center of the workroom, 13 women, seated around the periphery, worked in quiet concentration. The only noise aside from the occasional call of a rooster is the patter of hundreds of bobbins falling softly against pillowed work surfaces.

"Before, if you could learn lace you would have a skill, and job, for the rest of your life," says Ms. Yesudhas. "But if the orders keep decreasing, this art, and job, will die."

5. One 45-centimeter piece of needle lace takes KANYAKUMARI, India women about

______to create. a. 20 minutes b. 120 minutes c. 20 hours d. 200 hours Correct


6. Lace making is a good career because_______. a. it pays better than the cashew factories b. it provides a way to earn money when the heavy rain prevents other family members from doing field work Correct c. there is a huge market for hand-made lace d. All of the above

Retail Sales Surge 2.3%, Underlining Economy's Health

By CHRISTOPHER CONKEY


Consumers went on a post holiday shopping spree in January, a strong sign of economic vigor that increases the likelihood the Federal Reserve will keep raising short-term interest rates.

The Commerce Department said yesterday that retail sales surged a seasonally adjusted

2.3% in January from December, largely because of gift-card redemptions and abnormally mild winter weather. The January jump followed a tepid 0.4% rise in

December. January sales were up 8.8% from a year earlier.

Coming after an earlier report that employers added nearly 200,000 jobs in January and pushed the unemployment rate down to 4.7%, the retail-sales report was cheered as evidence that the economy has roared back from a fourth-quarter lull. "It wipes out the weakness we saw in preceding months," said Peter Hooper, chief U.S. economist at

Deutsche Bank. "We were expecting the fourth-quarter slowdown was transitory. This confirms that."

Reflecting such optimism, as well as a decline in oil prices, investors sent the Dow Jones

Industrial Average surging 136.07 points, or 1.3%, yesterday to close at 11028.39 -- its best one-day gain since late October. ( See related article

1

.)

Many economists had anticipated a strong increase in retail sales after the weak showing of December, especially in light of earlier reports of strong auto sales in January, but few expected such robust growth. Even excluding the 2.9% increase in sales of motor vehicles and parts and a 5.5% rise in gasoline-station sales driven by higher pump prices, the remainder of January retail sales -- everything from department stores to bars -- were up 1.8% from December, when such sales rose just 0.3%.

"It was extraordinary," said Rosalind Wells, chief economist at the National Retail

Federation, a trade group.

7. The Commerce Department said yesterday that retail sales surged a seasonally adjusted

________ in January from December, largely because of gift-card redemptions and abnormally mild winter weather. a. 1.3% b. 2.3% Correct c. 3.3% d. 4.3%


8. Coming after an earlier report that employers added nearly __________ jobs in

January and pushed the unemployment rate down to 4.7%, the retail-sales report was cheered as evidence that the economy has roared back from a fourth-quarter lull. a. 100,000 b. 200,000 Correct c. 2,000,000 d. 2,500,000

Blunt-Talking Bernanke Warns of Inflation Risks

By GREG IP


WASHINGTON -- Making his debut before Congress as Federal Reserve chairman, Ben

Bernanke demonstrated continuity with Alan Greenspan's interest-rate policies but broke with his predecessor's style.

Mr. Bernanke told Congress yesterday that inflation still is at risk of quickening because of high energy prices and economic overheating. He thus endorsed the thinking of the

Fed at its last meeting, headed by Mr. Greenspan, and suggested the string of rates increases begun under Mr. Greenspan's leadership in June 2004, isn't over.

But his succinct and often blunt answers to questions from members of the House

Financial Services Committee and his refusal to comment on many politically contentious issues signaled a stylistic break with Mr. Greenspan, who often spoke opaquely about monetary policy and lucidly about almost everything else.

Markets expect the Fed, at its next meeting on March 27 and March 28, to raise its shortterm interest rate target, now 4.5%, by a quarter of a percentage point, and put high odds on another increase on May 10.

Mr. Bernanke's testimony didn't alter expectations yesterday. Bonds rose, particularly long-term Treasurys, while stocks, after bouncing around during Mr. Bernanke's testimony, rose 30.58 points to close at 11058.97, the highest close since June 2001, after climbing 136 points Tuesday.

Mr. Bernanke didn't explicitly say more rate increases are likely. Rather, he said, the Fed must "make ongoing, provisional judgments about the risks to both inflation and growth."

That means Fed moves at its next meeting could hinge on information released in coming weeks.

In a statement after its last meeting, on Jan. 31, the Fed warned of potential risks from inflation and said more rate increases "may be needed." Mr. Bernanke, who didn't attend that meeting, endorsed that statement yesterday.

He said one risk is that higher energy prices could work their way into other costs.

Another, he said, is "that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately -- in the absence of countervailing monetary policy action -- to further upward pressure on inflation."

Some economists saw the warnings of potential economic overheating as more pointed than recent Fed statements. "New ground was broken," said Bruce Kasman, head of economic research at J.P. Morgan Chase. ( See more reactions from economists.

6

)


With the unemployment rate down to 4.7%, many economists believe the economy is operating at full capacity and that growth in gross domestic product much above 3% would strain capacity and risk a wage-price spiral. Growth this quarter is expected to top a 4% annualized rate. This week, the Commerce Department reported strong retail-sales growth for January, after an earlier report that employers added 193,000 jobs that month.

9. New Federal Reserve chairman, Ben Bernanke, differs from Allen Greenspan in what ways? a. his succinct and often blunt answers to questions from members of the House Financial

Services Committee b. his refusal to comment on many politically contentious issues c. he spoke opaquely about monetary policy d. Both a & b Correct

10. Markets expect the Fed, at its next meeting on March 27 and March 28, to

_____________ its short-term interest rate target, now 4.5%. a. stabilize b. double c. lower d. raise Correct

Carl Icahn Abandons Plan To Control Time Warner

By MATTHEW KARNITSCHNIG

February 16, 2006 4:31 p.m.; Page A1 http://online.wsj.com/article/SB114010945965176010.html

Carl Icahn has given up plans to take control of Time Warner Inc. amid signs that there could be a settlement with the company.

If the investor goes through with plans to field a slate, which may come soon, it would include only five candidates, according to several people familiar with his plans. Time

Warner's board has 14 members so a slate of that size wouldn't be enough to give Mr.

Icahn control. He had previously said he would put up a full slate. Mr. Icahn's proposed slate for Time Warner's board is: Alan Weber, former chairman of U.S. Trust; Doug

Bergeron, an executive with VeriFone; Peter Clapman, a former executive with TIAA-

CREF; Dale Hanson, the former chief executive of giant pension fund Calpers and Frank

Biondi, a veteran entertainment executive. He will nominate Mr. Biondi to be chairman of Time Warner.

Late last year, the dissident financier started a proxy fight aimed at taking control of the world's biggest media company by revenue and market capitalization. Mr. Icahn and his allies argued that Time Warner was undervalued and had been mismanaged.

The campaign culminated earlier this month with the release of a lengthy report by

Lazard Freres & Co., Mr. Icahn's investment bank, calling for the company to be broken up. But in recent days, amid signs that the effort to take control of the board was losing steam, Mr. Icahn has softened his position.


A number of major investors told Mr. Icahn that while they shared his view that the company needed to do more to improve its stock price, which has languished, they didn't believe that the breakup plan he is pushing is the solution, according to people familiar with the discussions. They also complained that his campaign had been disruptive to management.

After announcing his campaign in August, Mr. Icahn took an often tough tone with the company, regularly lobbing taunts in the direction of Chief Executive Richard Parsons, whom he suggested wasn't fit for the job. In recent days, he has been more conciliatory.

Mr. Icahn's antics in past proxy fights are legendary. Yet he also has shown a preference to seek a settlement with target companies.

11. Late last year, the dissident financier, _____________, started a proxy fight aimed at taking control of the world's biggest media company by revenue and market capitalization. a. Peter Clapman b. Dale Hanson c. Alan Weber d. Carl Icahn Correct

12. Time Warner's board of directors has _______ members. a. 4 b. 10 c. 14 Correct d. 140

Questions 13 – 17 from Marketplace

Rewarding Competitors Over Collaborators No Longer Makes Sense

By CAROL HYMOWITZ

February 13, 2006; Page B1 http://online.wsj.com/article/SB113978688843971964.html

Managers have been raised on the mantra that to advance they must outperform fellow managers. Those who wrest the most productivity from employees and get the best financial results are generally rewarded with raises and promotions.

But that formula is out of date, and adhering to it can undermine corporate goals. In today's global, knowledge-based economy, businesses need managers who share information and talent and work across business units and divisions to create and sell a mix of products and services. The challenge for top executives is persuading ambitious managers that their career success depends on collaboration -- not competition -- with peers.

13. The challenge for top executives is persuading ambitious managers that their career success depends on collaboration – not_________ – with peers. a. ambition b. efficiency


c. productivity d. competition Correct

Olympic TV Ads Go for the Emotional Gold

By SUZANNE VRANICA


If advertising on the Super Bowl is an all-or-nothing Hail Mary pass, advertising on the

Olympics is more like a cross-country ski race -- quieter and all about endurance.

Visa USA, for instance, is using NBC's broadcast of the Turin Winter Games, which opened Friday, to introduce an ad campaign and its first new ad slogan in 20 years.

Among the spots is one featuring vignettes of people enjoying significant, and not-sosignificant moments from life, such as getting married, eating a massive sandwich and skydiving. The spot illustrates the credit-card company's new "Life takes Visa" tagline, which replaces "Visa it's everywhere you need to be."

This ad wouldn't have worked on Super Bowl Sunday, when consumers are looking for a quick laugh, Visa says. As a result, the credit-card giant, a longtime advertiser during the big game, benched itself during this year's National Football League championship.

"Super Bowl ads [tend] to be a quick hit with lots of humor and entertainment, that is what people are looking for," says Susanne Lyons, chief marketing officer of Visa.

"Olympic spots tend to be bigger, more dramatic. It's less about humor and more about connecting with emotions."

Sprint Nextel Corp., for instance, ran a Super Bowl ad portraying a man demonstrating the "crime deterrent" feature of his cellphone by hurling it at his buddy's face. On the

Olympics, Sprint has aired a spot with more genteel humor: It features former skiing champion Jonny Moseley using his walkie-talkie for help after he falls through the snow.

Creative experts say that while the Super Bowl lasts only four hours, requiring advertisers to surprise viewers to get their attention, the Olympics' two-week time frame allows marketers to run ads that take time to digest. "Your ads don't have to scream," says Gerry

Graf, executive creative director at Omnicom Group Inc.'s TBWA\Chiat\Day.

Ratings for the Turin games so far have been choppy. Viewership for the Friday night opening ceremony was down as much as 49% compared with the 2002 Winter Games in

Salt Lake City, according to Nielsen Media Research. Olympics held in the U.S. tend to attract more domestic viewers than those held outside the country, however. Compared with the last Winter Olympics held outside the U.S., the 1998 games in Nagano, Japan, ratings were up 15% on Saturday night compared with the same night of the 1998 games but down 24% on Sunday night. An NBC spokesman says "we are exactly where we were projecting to be with the ratings." He attributed the drop on Sunday to the fact that the Nagano games on Sunday showed figure skating, a popular event.

NBC, which paid $614 million for the TV rights to the Turin games, estimates it will generate about $900 million in ad revenue from them, says Mike McCarley, a spokesman for NBC Sports. Production costs run about $100 million.

NBC, which has sold out most of its Olympic ad time, charged as much as $700,000 for a

30-second spot on prime-time events -- a fraction of the $2.5 million that Super Bowl ad prices reached this year. But unlike the Super Bowl, when many advertisers buy just one


or two spots, most Olympics advertisers buy ad packages that include ads appearing throughout the 17 days of Olympic broadcasts.

Allstate Corp.'s chief marketing officer, Joe Tripodi, says the Olympics produces "far more engagement" by viewers than other TV programs. "It's not like they are seeing an old episode of 'Seinfeld' for the third time. They are more focused and watching more closely."

The insurance company is one of several marketers with ads that tug on viewers' heartstrings. Its Olympic ad puts a cheerful spin on a car wreck, showing a middle-aged couple taking a spin on ice skates while their car gets crushed by falling snow.

14. The major differences between ads for the Super Bowl and the Olympic Games are: a. length of the ad and style of humor used b. the amount of money spent c. use of surprise rather than emotional engagement d. all of the above Correct

In Contest, Players Vie to Position a Site Atop a Google Search

By LEE GOMES


Remember how your parents used to tell you that when you encounter people you don't like, you should just ignore them? This story will help to show why that's true.

John Scott is a member of the occasionally shadowy fraternity of "search engine optimizers," or SEOs. These folks are paid to boost a site's ranking in search engines like

Google, a maneuver that is likely to pull in more visitors and thus, in many cases, more business. Depending on whom you talk to, SEOs are either the Saint Bernards of the

Web, helping to rescue lost sites, or glorified spammers.

Mr. Scott, who runs a Web site where SEOs gather to discuss their calling, is the sort of person who is considered brashly plain-spoken by friends and annoying by detractors.

Back in December, he announced that he would be sponsoring a contest. Four weeks later, he said, he would be announcing a nonsense phrase. The contest winner -- and the recipient of $4,000 -- would be the Web site listed first by Google for people searching for the phrase on May 15. There was one catch: The Web site had to mention Mr. Scott's business.

Enter Greg Boser, Mike Grehan and Todd Friesen, other SEOs who, mainly by virtue of previous online arguments, fall in the category of "John Scott detractors." They decided to have a little fun with the contest and change the rules. They would pay even more money to the winning site, but only if it mentioned the blog of Matt Cutts, who oversees

Google's search engines, rather than Mr. Scott's business.

The attempt by the three to hijack the contest only called more attention to it, resulting in back-and-forth smash-mouth comments on SEO Web sites for many weeks. When the time came for Mr. Scott to announce the search term, what might otherwise have been a neglected publicity stunt was the talk of SEO-dom.

The phrase, announced by Mr. Scott Jan. 15, was "v7ndotcom elursrebmem," which is the name of his business, plus the words "members rule" spelled backward. Within


minutes of the phrase's unveiling, domains containing all major permutations were registered. Within a few days, Google was already reporting tens of thousands of links.

Last week, the figure exceeded three million links, more than the ones for Junichiro

Koizumi, the prime minister of Japan.

Visit any Web site where SEOs gather to discuss their trade, and you'll find arguments about the contest. One of the points of disagreement is what, if anything, the event actually proves. Mr. Scott says it exposes holes in the way search engines rank pages; others say the techniques being used in the contest have long been known to -- and discounted by -- Google and the other big engines. "This is so 2004," remarked another industry veteran. (It so happens that 2004 was the year of the Internet's first big SEO contest, when the phrase that paid was "nigritude ultramarine." The victor wasn't an SEO, though, but a blogger, Anil Dash, who simply asked other bloggers to link to him.)

It is unclear how many people are actively trying to win the current contest, but there are many, attracted by the prize money and the chance to win bragging rights. The top spot changes hands daily, even hourly.

Jim Westergren, a 24-year-old SEO in Sweden, has been the leader for many of the past few days. In an interview, he explained some of his tactics -- or as many as he was willing to share -- for getting links. (As they ply their trade, SEOs are known to employ a mix of "white hat," or licit, and "black hat," or highly questionable, methods.)

Mr. Westergren says that he uses as his base of operations an older Web page he controls, because they are given more weight by Google than newer pages. He has swapped links with other SEOs he's friendly with, and he has paid hundreds of dollars for links from some pages that are ranked highly by Google.

Mr. Westergren says he will go only as far as using "gray hat" methods, including purchasing links. But he says that being a front-runner makes you a target for the black hatters. They might, for instance, "promote" your site via the sort of spam that Google is known to frown upon. The end result of that, says Mr. Westergren, is that your site could be demoted.

Like the Internet, the contest is international. There is, for instance, the "Taggle Team," a loosely affiliated network of 20 mostly anonymous French SEOs, some of whom display black hats atop their Web pages.

Several other groups are trying to win the contest by soliciting links via an entirely different route: aligning themselves with charity groups and promising to donate the prize money. SEOs grouse about that tactic, saying it makes the contest a test of heart-string tugging rather than the hand-to-hand combat of SEO-dom.

There are still four months to go in all this, and, as they say on TV, only time will tell how it will turn out.

Google's Mr. Cutts said in an interview on an SEO Webcast that he is keeping an eye on the contest. Mr. Scott said the contest is already the biggest in SEO history. His antagonists said they are sorry they ever got involved. And Mr. Westergren? He said, "If you link to me in your article, that would be very nice."

15. SEOs, which stands for "search engine optimizers", are paid to___________, a maneuver that is likely to pull in more visitors and thus, in many cases, more business.

a. wear black hats b. boost a site's ranking in search engines like Google Correct


c. organize silly contests d. promote John Scott’s business

Ethical Breaches Pose Dilemma for Boards: When to Fire a CEO?

By ERIN WHITE and THADDEUS HERRICK


An admission that the chief executive officer of RadioShack Corp. misrepresented his academic credentials highlights a dilemma for corporate directors in the post-Enron,

Sarbanes-Oxley world: What type of ethical breach requires dumping a top executive?

Last night, after two days of sticking by David Edmondson, RadioShack directors said they will retain outside counsel to investigate the matter and advise them on what to do.

The board acted in response to a statement from Mr. Edmondson in which he admitted he had "clearly misstated my academic record."

Both the board's statement and Mr. Edmondson's were contained in a news release issued by the company late yesterday.

Mr. Edmondson said that he believed he had received a ThG diploma, and not a bachelor's of science degree, as he previously claimed. But the 46-year-old CEO also acknowledged he couldn't document the ThG diploma, typically a certificate with fewer requirements than a bachelor's degree. Questions about Mr. Edmondson's academic credentials were first raised Tuesday in an article in the Fort Worth Star-Telegram.

Mr. Edmondson is also awaiting trial on a charge of driving while intoxicated. It is his third DWI charge in 17 years; the first two didn't result in convictions, although one, in

July of 2000, resulted in deferred adjudication probation. The board and Mr. Edmondson didn't address the DWI charge in their statements.

Governance experts say revelations of ethical lapses put directors in a difficult position.

Such breaches require a swift response, but expressions of doubt over a top executive's tenure can send shares plummeting. So board responses to alleged ethical missteps often remain opaque, even in an era of supposedly greater transparency.

"The board has to balance two things," says David Nadler, chairman of Mercer Delta

Consulting, which advises CEOs and boards. Directors have a responsibility "to really look into anything that might reek of malfeasance or inappropriate conduct. At the same time, the board has to have courage and not get stampeded into a decision." Some ethical lapses that once may have been overlooked now can topple CEOs. Boeing Co. directors last year ousted former CEO Harry Stonecipher after they learned he was conducting an affair with an employee and had sent inappropriate email. In 2002, the chief financial officer of Veritas Software Corp. resigned after directors learned he had lied about having an M.B.A. from Stanford University.

Directors may justifiably worry, governance experts say, that such incidents can suggest broader problems with integrity, honesty and judgment. If an executive isn't truthful about his academic credentials, directors may worry that "you can't trust any report to the board or investors," says Jeffrey Sonnenfeld, senior associate dean at Yale University's

School of Management.

Another vexing problem in such instances: If a board ignores a CEO's ethical misdeed, what message does that send to the other employees? Subordinates either infer the


company doesn't take ethical breaches seriously, or think that top executives treat themselves differently than other employees.

Even in the post-Enron world, misstating academic credentials isn't always fatal. In 2002, eyecare company Bausch & Lomb Inc. rescinded a bonus for CEO Ronald Zarrella after learning his biography incorrectly claimed he had an M.B.A. But it refused his offer to resign. In a letter to Mr. Zarrella, the board said it considered the misrepresentation a

"serious matter," but said directors "continue to believe you are the right person to carry on the resurgence of the company." Mr. Zarrella remains CEO.

Some lapses escape detection by directors even at a time of heightened ethical scrutiny.

James Minder resigned shortly after being named chairman of gun maker Smith &

Wesson Holding Corp. in 2004 when it was learned that he had spent time in prison in the

1950s and '60s for an armed-robbery spree and an attempted prison escape. Mr. Minder confessed his past to directors after getting a call from a reporter.

At RadioShack, Thomas Plaskett, presiding director and chairman of the company's corporate-governance committee, had said in an interview Tuesday that the board was standing behind Mr. Edmondson, but added: "You always reassess things. Nothing is final until the door is closed."

In his statement last night, Mr. Edmondson apologized to RadioShack's board and employees and said he would cooperate with the investigation. "I love my work at

RadioShack and am eager to increase shareholder value moving forward," he said.

RadioShack, a Fort Worth, Texas, consumer-electronics retailer, had earlier declined to make Mr. Edmondson available and efforts to reach him independently were unsuccessful.

RadioShack's code of conduct says the company takes ethical violations seriously. In a message preceding the company's Code of Ethics, Mr. Edmondson himself wrote that

"The integrity, reputation and profitability of Radio Shack are ultimately dependent upon the individual actions of each employee." He added that Radio Shack's Code of Conduct, part of the Code of Ethics, provides clear guidelines to " 'do the right thing, even when no one is watching.' "

Failure to abide by the Code of Ethics or the law, he writes, "will lead to disciplinary measures appropriate to the violation, up to and including dismissal and prosecution, if appropriate."

In his résumé, Mr. Edmondson had claimed he had a bachelor's degree from Pacific

Coast Baptist College in San Dimas, Calif, the Star-Telegram reported. But the college never offered degrees in psychology, according to the newspaper. Pacific Coast Baptist

College relocated to Oklahoma City in 1998 and renamed itself Heartland Baptist Bible

College.

Even before last night's statements, RadioShack had changed Mr. Edmondson's corporate biography to remove the reference to a psychology degree. The psychology degree was also listed in a November 2004 news release from Advanced Micro Devices Inc. announcing his appointment to the board there. AMD declined to comment.

The allegations come as RadioShack is preparing for an annual investor conference today. The company's financial results have disappointed lately. RadioShack said in

December that it wouldn't meet its full-year earnings forecast of $2.14 to $2.24 a share because of lower-than-expected wireless sales. Since Mr. Edmondson was named CEO on May 19, 2005, shares have fallen 19% to $21.27.


16. Radio Shack’s CEO David Edmonson is under investigation for what ethical violation? a. misrepresenting his academic credentials Correct b. infidelity with a co-worker c. armed robbery d. shoplifting batteries and an Ipod

News Corp. Goal: Make MySpace Safer for Teens

By JULIA ANGWIN and BRIAN STEINBERG


When News Corp. bought the social-networking Web site MySpace.com last July, the media company got two surprises, one good and one bad.

The good part: The site, where teens and twenty-somethings post pages about themselves and communicate with friends, already was popular, but it suddenly took off. In the last six months of 2005, MySpace's monthly traffic nearly doubled to 36 million users, making it the eighth-most-visited Web site in January, according to comScore Media

Metrix. News Corp. Chairman Rupert Murdoch declared it the centerpiece of his new

Internet strategy of attracting a large audience in a bid to bypass portals such as Yahoo

Inc. and Microsoft Corp.'s MSN in advertising revenue.

The bad part: MySpace has become the focus of criticism from authorities, teachers and parents that children are exposed to risqué content and are preyed upon by sexual predators who meet them on the site. Such episodes aren't unique to MySpace, but the site stands out because of its size -- 54 million registered users, with about 19% of monthly users under 17, according to comScore.

In response, News Corp. is scrambling to make MySpace a safer place for young people.

News Corp. plans to appoint a "safety czar" to oversee the site, launch an education campaign that may include letters to schools and public-service announcements to encourage children not to reveal their contact information. It also is considering limiting access to certain groups, such as "swingers," to those over 18; blocking search terms that predators could use to locate kids; and encouraging users between 14 and 16 to make their profiles "private," meaning they can only be viewed by people they already know.

"We're going to take some pretty dramatic steps to provide industry-leading safety," says

Ross Levinsohn, president of News Corp.'s Fox Interactive Media unit, which includes

MySpace.

It is a delicate operation for News Corp. because the media group wants to retain

MySpace's cool factor. Like other Web sites, MySpace owes its success largely to its freewheeling nature. If the site feels too supervised, teenagers could leave in droves.

"MySpace was the first one to allow users to customize their pages any way they wanted," says Parry Aftab, a cybersecurity lawyer who advises MySpace. "That's why

MySpace took off like it did."


17. In the last six months of 2005, MySpace's monthly traffic nearly doubled to _______ users, making it the eighth-most-visited Web site in January, according to comScore

Media Metrix. a. 36,000 b. 360,000 c. 36,000,000 Correct d. 3,600,000

Questions 18 – 23 from Money & Investing

Beating College Tuition Costs

By RON LIEBER


You don't often get a chance to lock in today's price for something you won't use for 20 years.

It's possible, however, with college tuition -- but it's not a no-brainer, even though it became more attractive this week.

Many states, including Florida, Illinois and Michigan, offer a prepaid version of the

"529" college-savings plans. Basically, it lets you pay today's price to cover all or part of future tuition, even if the kids are in diapers. The states manage the money, and when the kids finally enroll, they won't have to pay more money, no matter how much costs have risen.

Most states have "investment" 529 plans, too. There, you invest money in, say, a mutual fund, then later withdraw it to pay any higher-education costs. Both plans hold out the promise of no federal tax on gains.

On Wednesday, President Bush signed a bill requiring prepaid 529s be treated the same way as investment 529s for calculating federal financial aid. (Previously, more money could be counted from prepaids toward your ability to pay.)

Whether you're eligible for aid or not, prepaid plans have drawbacks. The tuition guarantee likely applies only to state universities. And what if your kid doesn't go to college? You can get your money out, but your appreciation isn't tied to the stock market; it will generally, at best, only match tuition increases during the years you saved.

Some states, like Washington, also charge a premium: To buy a year of tuition now to use later, you pay 20% more than the current charge at the priciest public university. Program

Director Betty Lochner says it helps keep the plan solvent; indeed, states like Texas and

Ohio have run into financial problems with their prepaid plans and barred new participants.

Many people prefer choosing their own 529 investments, hoping that their returns will exceed the annual tuition increases (which are, in effect, the "return" on premium-free prepaid 529s). In the 1990s, this would have worked.

But we may not see another run like that for a while, if ever. Also, investment 529s haven't been around long enough to know much about what an average 18-year return


looks like. Given that the prudent diversify out of equities years before college starts, it's possible the average won't top high single digits.

And guess what? Those high single digits -- which aren't guaranteed -- aren't that much higher than the 5.7% and 6.9% by which the College Board says that private and public tuition has gone up in the past decade. (The S&P 500 was up 8% annually). That makes the prepaid plans, with their promise to cover that increase, more enticing.

Does your kid have eyes on Stanford or Smith? Those schools, and over 250 others, now have their own guaranteed prepaid plan, the Independent 529. The catch: Gains are capped at 2% per year if your kid doesn't attend (or get in to) one of the schools and you withdraw the money.

Because it's all but impossible to know where toddlers might want to matriculate, here's one strategy: Start with investment 529s. Then, perhaps in the early teen years -- when you might have a better read on their potential -- consider locking in the price by rolling some money into prepaid plans that don't charge outrageous premiums.

18. Many states, including Florida, Illinois and Michigan, offer a prepaid version of the______ college-savings plans.

a. Independent 529 b. 529 Correct c. 401k d. 409

Enron Trial Pace Slowed by Efforts of the Defense

By JOHN R. EMSHWILLER

February 13, 2006; Page C1 http://online.wsj.com/article/SB113980347288072253.html

HOUSTON -- The business trial of the century is starting to feel like it could last that long.

The slower-than-expected early pace of the fraud trial of former Enron Corp. executives

Kenneth Lay and Jeffrey Skilling has been largely because of the defense's lengthy crossexamination of the government's leadoff witness. The questioning of Enron's former investor-relations chief, Mark Koenig, grinds into a third week starting today. When the trial began on Jan. 30, Judge Sim Lake told prospective jurors that he figured it would last four months or less. At the current pace, it could last much longer.

The pace has strategic implications for both sides.

The government has sought to present a quick, straightforward and simple case: Messrs.

Lay and Skilling allegedly lied and profited from their lies. The defense has incentive to slow things down to undercut the prosecution's notion of simplicity, emphasizing the complexity of Enron's operations and the nuances of the defendants' public statements.

That could help the two men in the dock, but if the jurors start to blame the Skilling-Lay team for unduly slowing down the proceedings, it could backfire.

It is worth the risk, says Mark Biros, a former federal prosecutor now in private practice in Washington. Studies show jurors often make up their minds by the time prosecutors finish presenting their case and before defense attorneys begin theirs. So, a defendant benefits "if he can put a portion of his story into the government's case," Mr. Biros says.


Already, prosecutors and the judge have expressed frustration with the pace of Mr.

Koenig's questioning. "It's unfair to the government and it's disruptive to our presentation of the evidence," prosecutor Kathryn Ruemmler told Judge Lake on

Wednesday, outside the jury's presence.

Judge Lake told Mr. Lay's lead defense attorney, Michael Ramsey, to cut in half the six hours of video and audio he planned to play while questioning Mr. Koenig. Mr.

Skilling's lead lawyer, Daniel Petrocelli, previously had played other tapes as part of his more than three days of Koenig cross-examination. In a move that could help speed things up down the road, Judge Lake had already ordered that any given tape could be played in its entirety only once.

Mr. Petrocelli says that the playing of the tapes at this point was necessitated by the government's attempt to give a selective and distorted overview of the case through its first witness. With most of the tapes to be aired during Mr. Koenig's testimony, "clearly I expect the pace will pick up," says Mr. Petrocelli, who believes the trial can still be completed in about four months.

The tapes contained presentations to Wall Street analysts and others during the nearly two years before Enron collapsed into bankruptcy proceedings in December 2001.

Defense attorneys complained that the government, in its questioning of Mr. Koenig over the course of two-plus days, had presented only out-of-context snippets to bolster the contention that Messrs. Skilling and Lay lied to investors about Enron's financial and business conditions. They argued that a fuller airing of the tapes would present a different picture.

While the tapes bolster the notion that Enron was a large and complex company, it isn't clear how much they help the defendants. Jurors heard Messrs. Skilling and Lay talk about some of Enron's problems, but they also heard the two men make glowing statements about the company's health and prospects only months before its collapse.

Defense attorneys argue that Enron was a vibrant company victimized by unjustified panic in late 2001. But jurors might give a darker interpretation to all the upbeat statements from the only two chief executives Enron ever had.

A lengthy taped review of Enron's happier days wasn't part of the government's plans.

Before the trial, prosecutors worried about the trial getting bogged down in the minutiae of Enron's vast operations. In December, they scored a major gain on this front when the case's third defendant, Enron's former chief accounting officer, Richard Causey, agreed to plead guilty. That meant the government wouldn't have to go nearly as deeply into

Enron's accounting thickets.

Instead, prosecutors could paint a simpler case against Mr. Lay and Mr. Skilling: As

Enron's chairman and president, respectively, they knew of troubles inside the company but illegally hid those problems from the public while personally reaping tens of millions of dollars in pay and stock profits.

The recent pace is a stark contrast to the Enron trial's start. Judge Lake, known as a nononsense judge who keeps a strict schedule, made good on his promise to complete jury selection in a day. Opening arguments took another day. The presentation of evidence began immediately with Mr. Koenig. He already had pleaded guilty to an Enron-related crime and agreed to cooperate with the government in a bid for a lenient sentence.


19. The questioning of Enron's former investor-relations chief, Mark Koenig, grinds into a ________ starting today. a. second week b. third week Correct c. second month d. third month

Buying Power

By JUSTIN LAHART


This is the year the American consumer is supposed to slow down. Judging from January, it hasn't happened yet.

Economists polled by Dow Jones Newswires and CNBC reckon today's retail-sales report from the Commerce Department will show sales increased by 0.8% in January from

December. Some of that gain comes from strong automobile sales -- take those away, and economists estimate sales were up 0.7%. On both counts, that's better than December, when total sales were up 0.7% and nonauto sales were up 0.2%. o after a dismal fourth quarter -- in which consumers spent at the slowest pace since 2001

-- it looks like spending is getting back on a steadier path. But there are reasons for caution.

For starters, one reason January was a strong month for auto sales was high fleet sales to businesses and government offices. Since most of those sales are arranged directly by wholesalers, economists at Lehman Brothers point out, they won't count in the retail-sale box score. Moreover, while Ford Motor and General Motors break out fleet sales (at both companies they accounted for nearly 40% of total sales), other auto companies do not.

The upshot: Auto sales might not come in as strong as economists have penciled in.

Another factor was holiday gift cards. It was a good month for merchandisers, with sales generally coming in ahead of analysts' estimates. A big part of the strength was the continued growth in gift cards. The government counts spending from gift cards when they're actually used, rather than when they're purchased by gift givers. This pushes into

January sales that might have otherwise been made during December.

The gift-card effect may be exaggerated by "seasonal adjustments" made by the

Commerce Department. These adjustments, meant to smooth out monthly sales data, assume January's sales will be paltry next to December's. As a result, a small bump to

January's sales level could be magnified in the seasonally adjusted numbers that get reported.

Warm weather probably boosted sales, but a recent Northeast snowstorm shows how fleeting that can be. Higher gasoline prices also boosted sales -- but that meant less money spent other places. In short, the headline today will say don't count out consumers, but the details will muddy the water.

20. Two products that were helpful in boosting retail sales for the month of January: a. snowboots and gasoline b. designer clothing and Ipods


c. automobiles and holiday gift cards Correct d. Starbucks coffee and CD’s

Revenge of the Retirees May Cut Pay at Lucent

By SARA SILVER


In recent years, Lucent Technologies Inc.'s retirees have seen many of their benefits cut.

Now they are fighting back -- proposing to rein in the compensation of the executives doing the cutting.

Lucent's shareholders today are voting on a proposal to restrict the pay of the top brass.

The proxy proposal, which was put forward by retirees, would make 75% of executive stock grants dependent on the telecom-equipment maker's performance. It is partly a reaction to last year's sharp increase in the bonus of Lucent's chief executive, Patricia F.

Russo.

It isn't just happening at Lucent. Retirees from a range of companies including Verizon

Communications Inc., General Electric Co., International Business Machines Corp.,

Prudential Financial Inc. and Qwest Communications International Inc. are presenting proposals to restrict executive compensation. The retirees are motivated partly by concerns that the value of their nest eggs can crack when the value of their companies' stocks drops.

"In these years of corporate tumult, which has seen many great companies turn into shells of their former selves, one thing has remained constant -- ever-rising levels of executive and board compensation," said Joanne Raschke, who filed the Lucent proposal. She holds

6,200 shares of stock in Lucent, a legacy of her husband Ken's 36 years with its predecessor companies.

This is actually the second attempt for the Lucent proposal. Last year a similar proposal by retirees received very strong support from shareholders, according to Patrick McGurn of Institutional Shareholder Services, a firm that advises shareholders on corporate proxy votes and is recommending they support this proposal.

Last year's proposal actually received a slim 50.2% majority of votes cast. However, abstentions are routinely counted as "no" votes, which caused the proposal to fail.

Mr. McGurn expects this year's proposal to receive vigorous shareholder support. "The board didn't do anything substantively last year to respond to that vote," Mr. McGurn said. "That will drive strong support for it again this year."

At Lucent, retirees are frustrated by the elimination of a benefit that paid up to a one-year salary to the spouse upon the death of a retired employee, and by lower company contributions for medical-insurance premiums. They have been vigorous critics of CEO

Russo's pay: In 2005, Ms. Russo was awarded a $3.6 million bonus on top of a base salary of $1.2 million, and was granted an additional $8.7 million in restricted stock and options. In 2004, she was awarded a $1.95 million bonus on top of her $1.2 million salary, $4.6 million in restricted stock plus $4.8 million in options. Lucent notes that all of the options remain below the exercise price.

Lucent says that the actions were necessary to return to profitability, and that Ms. Russo's compensation was in part a reward for moving the company into the black in 2004 and


2005. "We believe that our long-term compensation plans are aligned with the interests of shareholders," said Mary Ward, a spokeswoman, adding that half of senior executives' compensation comes from

Lucent shares whose value is based on its operating performance.

Lucent's stock is widely held, and retirees represent only a fraction of overall shareholders. Yesterday the stock closed at $2.83, up six cents, or 2.2%, in 4 p.m. composite trading on the New York

Stock Exchange.

U.S. companies have been retreating from their decades-long practice of offering a wellfunded retirement for long-time employees. Scores of companies have cut health benefits for retirees, and in recent months, General Motors Corp., IBM and Verizon have joined a wave of companies freezing the level of pension benefits for certain employees.

But even as retiree benefits are being cut, compensation for executives has risen: The median compensation for a chief executive officer in a Standard & Poor's 500 company was $6 million in 2004, up more than 13% from 2003, according to the Corporate

Library.

While unions were among the first groups to take to shareholder activism, the retiree groups are largely run by former managers and technical staff, smarting at their diminished voice and the company's often adversarial stance to retiree questions. "We built the company and have been cooperative with them, and we want the dialogue and some answers," said Dick Ciocca, president of the Philadelphia-based National

Association of Prudential Retirees. "Executive compensation was where we could get their attention."

21. Lucent shareholders are voting on a proposal put forth by retirees to ____. a. eliminate a benefit that paid up to a one-year salary to the spouse upon the death of a retired employee b. increase the pay of the top brass executives c. make 75% of executive stock grants dependent on the telecom-equipment maker's performance Correct d. All of the above

Lowering the Bar

By JUSTIN LAHART



The good news today is that everybody expects Dell Inc. to top analysts' estimates when it reports results. The bad news? Everybody expects Dell to top the estimates when it reports results.

Back in the 1990s, when Dell was growing like gangbusters, investors took it as a given that it would beat estimates, because the fast-growing computer company's results tended to be better than investors' already-elevated expectations.

The difference now is that it isn't stellar growth that should help Dell beat estimates when it reports results for its fiscal fourth quarter (which ended Feb. 3). It's analysts' lowered expectations.

When the company reported disappointing third-quarter results in November, it said it expected to earn 40 to 42 cents a share in the fourth quarter on sales of $14.6 billion to

$15 billion. Analysts had already trimmed estimates following an earnings warning from the company a few days earlier, in which it cited weakness in its consumer business.

Even in the context of a tough business environment, Dell's outlook seemed conservative

-- especially since its fourth quarter was a week longer than usual. Still, analysts toed the line. They're looking for earnings of 41 cents a share and sales of about $14.8 billion, according to Reuters Estimates.

Stronger-than-expected quarterly results from rival computer maker Hewlett-Packard after the close yesterday may help to convince investors that Dell should beat estimates handily today. And Brett Gallagher, head of equities for Julius Baer, says Dell's shares are relatively cheap after falling 21% in the past 12 months. Its price-to-earnings ratio is at its lowest level in a decade, notes Mr. Gallagher, who owns shares of the company.

Over the long haul, however, the company faces challenges. While Dell still runs a more efficient business than most other computer makers, and enjoys fatter profit margins, its rivals -- including a revitalized H-P -- are catching up. Over time, those pressures could cut into Dell's earnings and market share. Moreover, home-PC buyers are gravitating to lower-cost models, where profit margins are thin.

That's why Wall Street's infatuation with the stock isn't likely to be revived soon. "You can own Dell, but I wouldn't fall in love with it," says Mr. Gallagher.

22. It isn't stellar growth that should help Dell beat estimates when it reports results for its fiscal fourth quarter, which ended Feb 3. It's analysts'____________. a. heightened expectations b. dismal expectations c. lowered expectations Correct d. exaggerated expectations

Squeeze Play

By JUSTIN LAHART


Today's Producer Price Index will probably be more disconcerting for investors who care about corporate profit margins than it is for investors who worry about inflation.

Economists polled by Dow Jones Newswires and CNBC estimate the headline PPI, which measures the prices businesses are paying for finished goods, such as office


furniture, rose 0.3% in January from its December level. That would put it about 5.8% above its year-ago level -- a big gain fueled largely by higher energy costs.

Further along the supply chain, the price increases have been bigger. Today's report will likely show that prices for crude goods, such as the aluminum that goes into office furniture, were more than 20% higher than they were a year ago.

That means makers of wholesale finished goods are having a hard time passing their high materials costs to customers. Meantime, consumer prices are rising by even less than headline PPI -- economists estimate the January Consumer Price Index, due out

Wednesday, will be about 3.9% higher than it was a year ago.

The good news in this is that there is a chance the Federal Reserve's worries about inflation might be a little bit overdone. If companies can't pass on cost increases, it reduces the risk that price hikes are going to spread like wildfire throughout the economy.

The bad news is that this is also a formula for profit margin pressure, something that hasn't registered with many analysts on Wall Street. Morgan Stanley strategist Henry

McVey notes that Wall Street analysts expect more than 70% of companies in the

Standard & Poor's 500-stock index to see profit margins improve this year.

Analysts can be excused for sounding a happy note about profit margins. For many companies, energy and materials costs are small compared to other expenses such as labor or interest. Because those latter costs haven't been rising by all that much

(especially for companies tapping into cheaper, overseas workers) they're not seeing so much of a pinch.

Yet with materials costs still elevated and pricing power apparently limited, Mr. McVey says some investors are bound to be disappointed. "You have $60 oil, and it's not likely that everyone is going to be a winner," he says.

23. Economists polled by Dow Jones Newswires and CNBC estimate the headline PPI, which measures the prices businesses are paying for finished goods, such as office furniture, ________ in January from its December level. a. rose 1.3% b. rose 0.3% Correct c. fell 0.3% d. fell 1.3%

Questions 24 – 26 from Personal Journal, Section D

When Access Is Denied to Your 401k

By ROBERT GUY MATTHEWS

February 14, 2006; Page D1 http://online.wsj.com/article/SB113988253343073075.html

As worries mount about the security of retirement accounts, some investors are encountering problems getting access to the one type of account that seemed immune from troubles: the 401(k).

Participants in 401(k) plans are protected from their employer's failure because they actually own the assets in their accounts -- unlike employees with traditional pension plans, such as the one run by United Airlines, which the government took control of late


last year. That means they can get access to their funds or take them along when they leave their job.

But a growing number of individuals who had 401(k)s through small companies that are now defunct find that getting control of their money can take years. By statute, if there's no one from the former employer authorized to approve a rollover, the financial-services company that manages the plan cannot release the money -- which means it can take intensive sleuthing and a lot of patience to recover it.

Recognizing the problem, the Labor Department is about to propose new rules that could make the process easier and quicker. The rules, which the department plans to unveil this spring and hopes put into effect by year end, would authorize financial institutions to release the money to workers in such situations.

Without the Labor Department's action, the problem is likely to become more common as more Americans rely on 401(k) and other defined-contribution plans, such as the health savings accounts that President Bush introduced last year. Some 61% of private-sector retirement assets were in defined-contribution plans at the start of 2005, according to the

Employee Benefit Research Institute; 401(k) plans held some $19 trillion.

About 2% of all defined-contribution plans are orphaned every year -- held by a financial institution without an employer representative to oversee the plan. That leaves about

33,000 workers and roughly $850 million in assets in limbo each year. Under the current system, the Labor Department's Employee Benefits Security Administration has to identify a new fiduciary, a costly process that sometimes requires court approval, before workers can get their hands on their own money.

The problem typically affects employees of smaller companies, since a larger company that goes bankrupt is far more likely to have qualified personnel in place to handle administrative duties.

"This is something that our people in the field have been seeing quite a bit," says Ann

Combs, assistant secretary of labor for employee-benefits security. "More small businesses are adopting financial planning, but when they fail, there is no process in place."

The problem is caused by a variety of circumstances -- the death of an owner of a momand-pop operation, a bankruptcy, the sale of a business or the disappearance of the company officer designated as the plan fiduciary. In most cases, under current rules, the

Employee Benefit Security Administration appoints an interim fiduciary to serve until a court approves the appointment of a permanent one. And that is only after there is proof that the plan was indeed abandoned. Depending on the complexity, it can take months or even years for some former employees to get control of their retirement money.

By contrast, federal law is well equipped to help workers with defined-benefit pension plans, which are insured by a federal agency. But those plans are growing scarcer, and a growing fraction of workers with on-the-job retirement plans have the definedcontribution variety.

Last year, software engineer Tarik Kabil wanted to roll over the $5,000 he had in a

401(k) account from an old job. But he ran into trouble when he discovered that his previous employer had gone belly up, a victim of the dot-com bust.

Mr. Kabil says that when he was laid off by the company in 2002, he gave no thought to the status of his 401(k). The subject didn't even cross his mind when the company went out of business a few months later. It wasn't until last spring, when he tried to switch his


account to Charles Schwab & Co., the company used by his current employer, from ING

Groep NV unit ING that he became aware of the issue.

The money was secure: It was growing in an account administered by ING. But there was no one from his old employer to sign off on the rollover, and ING, correctly, said federal rules didn't allow it to give him the money.

Mr. Kabil, 29 years old, says that he spent weeks making phone calls and talking with the

Colorado Labor Department. He then decided to track down some of his former colleagues, who, through a series of emails, found the former chief executive of the defunct company, who then signed the appropriate forms.

The problem is largely bureaucratic. Workers often think of the 401(k) money as their own and don't understand that their accounts are administered by the company offering the retirement plan. So while the money in the plan is indeed theirs, the employee still has to get company approval, for tax, security and legal reasons, before any distributions are made.

Financial institutions that hold the assets for retirement plans generally require a top executive or a designated representative at each company to authorize rollovers destined for new plans. The banks, mutual funds and other financial institutions can't release the

401(k) assets to individuals -- even if they are sure that the workers are who they say they are. The banks technically answer to the employer's plan administrator, not the individual worker.

24. Even though employees with 401k plans are protected because they actually own their assets, problems can arise when _____. a. the employee’s plan administrator cannot be located b the company declares a bankruptcy c. the death of the owner of a “mom & pop” operation d. all of the above Correct

Tough Talk: Effective Ways To Broach Financial Issues With Family Members

By JONATHAN CLEMENTS


Forget losing your job, getting hit with hefty medical expenses or suffering steep stockmarket losses. Often, your biggest financial risk is sitting across the dining-room table.

What if your kids rack up heaps of credit-card debt or your elderly parents run through their retirement savings? Like it or not, you will probably bite the bullet -- and bail them out.

Your best defense: make sure it never gets to that point, by teaching your children about money and by keeping tabs on your parents' finances. True, these aren't easy conversations. But a few simple strategies can help.

• Telling tales. Holly Isdale, head of wealth advisory at Lehman Brothers in New York, often coaches clients on how to talk to their children and grandchildren about money.


Her advice: Avoid lectures. "You don't know how good you have it" will elicit rolling of eyes -- and not much else. Instead, Ms. Isdale suggests telling family stories that illustrate key lessons.

"By adopting storytelling as a vehicle, you can teach children the values, decisionmaking and ethics that are important to the family," she says. "Stories are how values and lessons are passed down the generations."

For instance, you could discuss your financial struggles when you first got out of college, so your children will be prepared for lean times when they enter the work force.

Alternatively, if you run a small business, you might talk about how you had to persevere before you were successful.

These stories don't have to be part of some big formal financial discussion. "It shouldn't be, 'Today is Thursday, so we should talk about family history,' " Ms. Isdale says.

"Instead, you should weave the stories into daily life."

Of course, talking about frugality won't help much if you shower your children with money. That's why I would combine storytelling with some enforced budgeting, starting with a toy-and-candy allowance when your kids are age 5 and tacking on a clothing allowance once they are teenagers.

The goal: to make your children feel like they're spending their own money. If your kids are always asking you to buy stuff, their desires will be limitless, because the purchases come at no cost to them. But if they are constrained by an allowance, spending has a very real cost and your kids will be forced to make tough financial choices.

• Asking nicely. A survey by Hartford Financial and Mathew Greenwald & Associates found that, while elderly parents tend to be comfortable talking about their finances, their adult children are often reluctant to bring up the subject.

Given that, it's a whole lot easier if the parents start the conversation, says Maureen

Mohyde, who heads up Hartford's efforts to utilize insights from gerontology, the study of aging, in the insurer's products and communications.

What if your parents are reluctant to discuss their finances? Don't plunge right in, asking how much they are worth and whether they have a will.

As your parents age, their mobility will diminish and they may become forgetful, fueling the sense that they are losing control. If you then pressure them to talk about their finances, they may feel like they're being pushed to surrender even more control -- and they could react badly.

"It's like shouting at the parents, 'You're going to die,' " says Jerrold Lee Shapiro, chairman of the counseling psychology department at Santa Clara University in

California. "The older the parents get, the more vulnerable they feel."

So if you want to talk to your elderly parents about their finances, how should you tackle the topic? Consider these three approaches:

• Ask your parents whether there's anything you can do to help them maintain their independence, suggests Hartford's Ms. Mohyde.

This is a key goal for many retirees, and it will give you a chance to discuss a host of subjects, including whether your parents ought to move, how they feel about assistedliving facilities and whether they have the money to pay for long-term care.


From there, it isn't a huge leap to start talking about how to handle things if your parents become incapacitated, what their wishes are concerning life-prolonging medical procedures and how they have divvied up their estate.

• Talk to your parents about what will happen after the first of them dies. Among older couples, the husband often manages the family's finances.

If he dies first, his wife may be ill-prepared to take over -- and this is likely a big concern for both of them. With any luck, once the conversation gets rolling, it will branch out into other areas of their finances.

• Ask your parents what they would like to achieve with their estate. Maybe they want to leave a sum to their favorite charity or bequeath money directly to the grandchildren.

"Even if they have a strained relationship with their children, the grandparents often have this unconditional love for their grandkids," notes Los Angeles financial adviser Richard

Winer.

Sound like a tricky conversation? "I usually start with the word 'legacy,' " Prof. Shapiro says. "It's a future-oriented notion. What do you want to do with your estate? How would you like to be remembered? A lot of people want to have control over how they're thought about."

25. Good strategies for discussing financial issues with family include: a. shouting at the parents, 'You're going to die!’ b. lectures on "You don't know how good you have it" c. ask your parents whether there's anything you can do to help them maintain their independence Correct d. plunge right in, asking how much they are worth and whether they have a will.

Avoiding the Next Enron: Today's Crop of Soon-to-Be Grads Seeks Job Security

By SUE SHELLENBARGER


You might think college students aren't looking much further into the future than next week's exam, or Friday's beer bash.

You would be wrong. This year, college grads are contemplating something quite different, say campus recruiters and researchers: their future 401(k)s.

As companies begin their next round of campus visits to recruit the undergraduate class of 2006, recruiters say it's clear that the bad news of the past few years -- from Sept. 11 and the tech crash to Enron, layoffs and worries about Social Security's demise -- have shaken this new crop of grads. More than any recruits in memory, they're asking employers for assurances of security, so they don't wind up at the next Enron. And in many cases, amid rising competition for educated workers and declining unemployment, they're getting it: Employers are tailoring pitches and programs to suit them, say recruiters at a dozen big companies, including Boeing, General Electric, Avaya and Intel.


Asked what they expect in their compensation packages, recent grads at 123 universities came up with the most detailed list of long-term benefits in the 11-year history of the poll, from retirement plans to health insurance for dependents -- even though most undergrads don't even have dependents. Claudia Tattanelli, CEO of Universum, the research and consulting firm that conducted the survey of 29,046 undergrads in all fields of study, says: "This generation is really trying to take their future in their own hands, and do something about it," she says. Asked what elements of compensation they value most, college seniors gave health insurance and retirement plans higher priority than vacations, bonuses and stock options.

Although grads are benefiting from the best job market in four years, they learned from watching the tech crash that corporate fortunes can turn -- and campus job offers can be rescinded -- on a dime. And they're enjoying growing leverage with employers. With jobless claims nearing a six-year low amid strong economic conditions, the National

Association of Colleges and Employers says companies expect to hire 14.5% more new college grads this year than last, based on a survey of 250 employers. Steve Canale, manager of recruiting and staffing services for General Electric, says the top 10% of recruits are getting five offers this year, instead of the two they typically received in the past couple of years.

Grads are showing a preference for stable, diversified companies, helping propel such giants as Lockheed Martin and Johnson & Johnson sharply higher in Universum's ratings of grads' "ideal employers" among big corporations in all fields, from consulting and finance to manufacturing and retailing. Martin Slevin, manager, retail recruitment, for

Walgreen Co., says campus recruits are far more interested in his company's 105-year history and 31 straight years of record profits than they were in the past.

"In light of all the corporate scandals like Enron and Worldcom, where people lost all their savings, I wanted to seek out companies that are stable" and will "live up to" benefits promises, says Tiffany Samuels, a recruit from Xavier University, Cincinnati, who turned down two other offers to sign on with Staples.

Catharine Jennings, a senior Staples recruiter, says one recruit "asked me so many questions about 401(k) and savings plans that I had to refer him to a benefits manager.

That's how in-depth the questions were." She adds, "When I got out of college 10 years ago, I was not concerned about my 401(k)."

Surprisingly, grads also find reassurance in a process their parents hate: performance reviews. As part of a generation that started soccer and dance classes as toddlers, recruits are accustomed to organized programs and frequent feedback. They've had "so much programming through school and/or parents, there's an assumption that employers will play that role too," says Rich Hartnett, Boeing's director of global staffing. Will Bass, a senior employment manager at Vanguard Group, adds that grads are "used to having recognition for a job well done."

Allison Keeton, director of college relations for St. Paul Travelers, was startled when one recruit's first comment upon receiving a job offer was to ask how often his performance would be reviewed. Vanguard has begun emphasizing its practice of frequent reviews in its recruiting presentations.

Alex Kushnir, who graduated magna cum laude last month from Cornell University, says he signed on with St. Paul Travelers in Hartford, Conn., partly because while working


there previously as an intern, he saw a young manager in his unit promoted very fast. To him, that proved that "if you work hard, you get rewarded," he says.

Like the previous generation of grads, today's recruits still rate work-life balance as the

No. 1 employer attribute they seek, according to Universum. But "they've taken it a step further," says Davie Huddleston, a recruiting executive at PNC Financial Services Group.

Grads seem to expect flexibility without the career sacrifices that usually come with it.

"This generation is pushing the envelope. They're making us re-think what it takes to be successful," says Laurie Tortorella, a recruiting executive for Intel.

Firms are tailoring their pitches in response. A campus brochure from

PricewaterhouseCoopers features a photo of a young man cartwheeling on a beach with the headline: "Your life. You can bring it with you."

26. Asked what elements of compensation they value most, college seniors gave health insurance and retirement plans higher priority than____________. a. vacations b. bonuses c. stock options d. All of the above Correct


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