The Wall Street Journal Weekly Quiz
Covering front-page articles from July 11 – 15 2005
Professor Guide with Summaries Summer 2005 Issue #7
Developed by: Scott R. Homan Ph.D., Purdue University
Questions 1 – 12 from The First Section, Section A
A Battle Breaks Out Over Sports Rights In Videogame World
By NICK WINGFIELD
July 11, 2005; Page A1
http://online.wsj.com/article/0,,SB112104106428281776,00.html
Take-Two Interactive Software Inc. is known for the violent street fights in its "Grand
Theft Auto" videogames. Last year, it set off a fight in the real world.
Take-Two cut a deal to market an underperforming series of sports videogames named
after ESPN, the sports channel. Then it jolted the game world by setting a price of just
$20, less than half the going rate. It was a direct challenge to Electronic Arts Inc., the
biggest videogame maker, for whom sports is a crucial franchise.
EA hit back hard. In December it negotiated an exclusive right to make videogames that
use National Football League teams and players, knocking Take-Two and everyone else
out of that game for five years. A month later, after the right to use the ESPN logo and
sportscasters in videogames went on the block, EA signed a 15-year exclusive license for
those, too.
EA agreed to unprecedented prices in nailing down these deals: more than $400 million
for the NFL rights and $800 million for ESPN's the following month. Since then, game
publishers have committed hundreds of millions of dollars more in a bidding frenzy for
baseball and basketball rights, in many cases doubling what leagues previously received,
according to people close to the leagues.
The competition shows how valuable sports has become in videogames, as sports games
move into the mainstream of the entertainment industry. Sports videogames accounted
for $1.3 billion of the $7.3 billion total of U.S. videogame retail sales last year, according
to researcher NPD Group Inc.
And for leagues, teams and players, fees from game publishers are an increasingly
important source of revenue. At the National Basketball Association, for instance, games
are the second biggest licensing item after apparel, providing a quarter of license fees, the
NBA says.
Promotional benefits may be greater still. Many sports executives believe that
videogames are vital for involving the youngest fans in pro sports, as television audiences
stagnate. U.S. households tuning in to NFL games are about flat over 10 years -- higher
on cable but lower on broadcast television. Over the same period, annual sales of EA's
Madden football videogame have more than quadrupled.
A sports videogame that catches on is like an annuity. The maker can release an updated
version just before each new season, and hard-core fans will shell out $50 or so for the
disc to have the latest roster of players. "You can put three more drops of perspiration on
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 1 of 21
a forehead" of a player "and you've got $50," says Carl Yankowski, chief executive of
publisher Majesco Entertainment Co.
But the bidding wars may squeeze profits for some publishers by loading them with more
costs for rights. Meanwhile, they face another increased cost: writing games for new
consoles due out in a few months from Nintendo Co., Sony Corp. and Microsoft Corp.
Creating a game for the new formats may cost $20 million or more, say industry
executives, double the cost of developing a game for current machines.
1. Sports video games accounted for ____ of the 7.3 billion video game industry.
a. 1.3 million
b. 5 billion
c. 1.3 billion Correct
d. 200 million
2. Electronic Arts, Inc. paid over $800 million for the rights to use which logo?
a. NBA
b. CSPAN
c. ESPN Correct
d. NRA
U.S. Struggles for Drugs to Counter Biological Threats
By BERNARD WYSOCKI JR.
July 11, 2005; Page A1
http://online.wsj.com/article/0,,SB112104418506581821,00.html
Almost four years after anthrax attacks hit the U.S., a $5.6 billion federal program
designed to produce new vaccines and drugs to counter biological threats is struggling,
leaving the nation behind in efforts to build a promised defensive stockpile.
Big drug and biotechnology companies largely have shunned the program, known as
Project BioShield and overseen by the Department of Health and Human Services, amid
concerns over legal liability, high costs and limited potential for profit. That has left the
government highly dependent on fragile, little-known biotech companies -- which all too
often are run on a shoestring budget and dependent on government orders simply to stay
in business. Some of those companies, meanwhile, complain that HHS has slowed
progress by changing procurement requirements, delaying putting contracts out for bid
and giving vague instructions.
The upshot: A year after President Bush signed Project BioShield into law, only one big
contract has been awarded -- $878 million for a novel anthrax vaccine -- and none of that
money has been disbursed. A few smaller contracts have been handed out, but others for
promising vaccines and drugs have stalled in the federal health bureaucracy.
In recent testimony before Congress, top HHS officials have touted progress in building
stockpiles of smallpox vaccine and said that "major strides" have been made toward
building antibiotic reserves against anthrax, plague and tularemia. But officials also say
they are carrying out a very challenging task.
"We wish we were further along," says William Raub, deputy assistant secretary of HHS,
in an interview. "This is really hard stuff."
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WSJ Professor Guide: Page 2 of 21
The Bush administration has said producing and stockpiling antidotes to anthrax is
among its top priorities, but some critics on Capitol Hill say the nation remains
unprepared. In October 2001, anthrax turned up in a Senate office building, mail facilities
and offices, eventually killing five people. The investigation into the source of the
anthrax attacks continues, but the trail has gone cold, federal officials say.
Even before Congress passed BioShield last July, the government had stepped up its
funding of research into infectious diseases, especially those that could be turned into
terrorist-type weapons. The Bush administration's biodefense budget for fiscal 2005 is
about $7.6 billion, which is 18 times greater than the budget of four years ago.
BioShield, whose funds are to be distributed over 10 years, is aimed at creating nextgeneration drugs and vaccines, rather than simply stockpiling readily available off-theshelf products. In outlining the project in his 2003 State of the Union address, President
Bush noted that many treatments to meet the threat of terrorist attack had improved little
in decades. Smallpox vaccines, the president said, aren't much different than those given
to the public in the 1960s, while there has been vast improvement in other parts of the
biomedical field, such as better detection and therapeutics to combat heart disease.
In 2000, the Defense Science Board, an advisory panel to the Pentagon, identified 57
diagnostics, therapeutics or vaccines that were needed to respond to a range of diseases or
potential biological weapons. Industry experts note that in almost every case, not enough
has been produced or made available.
Despite that shortfall, big pharmaceutical companies have been all but absent from
bidding and the grant-getting under BioShield. Michael Friedman, chief medical officer
for biomedical preparedness at PhRMA, the drug-industry trade group, warned that this
could happen during House testimony on the BioShield legislation in 2003.
"It is necessary to recognize scientific, legal and economic impediments to the research
and development of biodefense products," he said at the time. He noted that
manufacturers could be "exposed to devastating product-liability suits." In addition, he
cautioned, "The decision to divert resources from the research and development of
medicines for serious illnesses like heart disease can be financially risky, especially when
a countermeasure may never be purchased or used."
3. The $5.6 billion federal program designed to produce new vaccines and drugs
to counter biological threats is called _______________.
a. BioShield Correct
b. BioDefense
c. Defense Science
d. PhRMA
4. In 2000, an advisory panel to the Pentagon, identified ______ diagnostics,
therapeutics or vaccines that were needed to respond to a range of diseases or
potential biological weapons.
a. 27
b. 37
c. 47
d. 57 Correct
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 3 of 21
Once a Bellwether, Ann Taylor Fights Its Stodgy Image
By AMY MERRICK
July 12, 2005; Page A1
http://online.wsj.com/article/0,,SB112113223375783015,00.html
NEW YORK -- AnnTaylor Stores Corp., the women's clothing retailer, has a hit with
Ann Taylor Loft, a chain it started 10 years ago to sell lower-priced casual clothes. And
that has Kay Krill, the company's chief-executive-to-be, in a bind.
Ann Taylor, the company's flagship chain, was once a retailing bellwether, selling many
women their first suits as they entered the work force. But today, Ann Taylor Loft is
booming while the original namesake flounders. Ms. Krill, 50 years old, rose to her
current position by overseeing Loft's rapid rise. Now she must restore Ann Taylor while
keeping it out of competition with its sibling.
That won't be easy. With $827 million in annual sales and 375 stores, Loft outsold Ann
Taylor for the first time in August. Last year, Loft's sales jumped more than 40%, while
Ann Taylor's slipped 1.5%. Loft's moderately priced, casually stylish clothes are
particularly appealing to many working women who have grown disenchanted with the
ever-changing look of Ann Taylor -- sometimes too tight and trendy, other times too
bland.
As she prepares to take over as CEO for the whole company on Oct. 1, Ms. Krill is
sweating over similarities and differences in the two brands' catalogs, trying to ease staff
frustrations on the Ann Taylor side, and refereeing when both divisions want to stock a
similar design. When both recently proposed selling velour jackets and pants, she let Loft
go ahead and told Ann Taylor to switch to cashmere, which is more expensive and
luxurious.
The retailer wants shoppers to think of Ann Taylor as polished and sophisticated, while it
aims Loft at women who want a more fashionable and casual look. In practice, that
means formal suits and little black cocktail dresses at Ann Taylor, while Loft leans
toward styles like strapless cotton dresses and trendy cropped cardigans. Prices, on
average, are 30% higher at Ann Taylor. Dressed in a black jacket, black cashmere
sweater, black dress slacks and pearls in an interview at her Times Square headquarters,
Ms. Krill herself looks more like an Ann Taylor customer than a Loft shopper. Already,
Ann Taylor says it is seeing better success with newer lines -- while Loft sales fell below
executives' expectations this past spring.
Ms. Krill's company is one of a growing number of specialty retailers wrestling with how
to keep a founding brand fresh without cannibalizing a newcomer. After opening
thousands of stores, these retailers concluded their big-name brands couldn't grow
endlessly. They launched new chains that aim at profitable niches but risk dividing their
core customer base into narrower and narrower slices.
After letting its Gap and cheaper Old Navy brands crowd one another, Gap Inc. now
takes pains to keep them distinct. It aims Gap stores at shoppers in their 20s and 30s,
while Old Navy targets teens and moms shopping for families. This fall Gap will open
yet another chain, Forth & Towne, for baby-boomer women. Abercrombie & Fitch Co.,
the young-adult brand, has opened Hollister for high-school students and Ruehl for
twenty-somethings. Polo Ralph Lauren Corp., American Eagle Outfitters Inc. and Chico's
Inc. are developing or rolling out new chains.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 4 of 21
Ann Taylor was founded in 1954 by Richard Liebeskind, who opened a women's clothing
store in New Haven, Conn. His father, a dress wholesaler, gave him the rights to his bestselling dress, called the "Ann Taylor." The name came from a company tradition of
giving styles women's names, but officials don't know if there was a real "Ann." The
store was geared toward busy, social women who wanted versatile clothes so they didn't
have to change outfits from day to evening.
5. Ann Taylor Loft specializes in ____________________.
a. formal wear
b. moderately priced casual wear Correct
c. Bohemian clothing
d. power business suits
6. Prices at Ann Taylor are on average ________ than Ann Taylor Loft.
a. 20 % lower
b. 30 % higher Correct
c. 15 % higher
d. 25 % lower
Identity Theft Moves Online, Crime Rings Mimic Big Business
By CASSELL BRYAN-LOW
July 13, 2005; Page A1
http://online.wsj.com/article/0,,SB112121800278184116,00.html
At 19 years old, Douglas Cade Havard was honing counterfeiting skills he learned in
online chat rooms, making fake IDs in Texas for underage college students who wanted
to drink alcohol. By the age of 21, Mr. Havard had moved to England and parlayed those
skills to a lucrative position at Carderplanet.com, one of the biggest multinational online
networks trafficking in stolen personal data. Having reached a senior rank in the largely
Russian and Eastern European organization, he was driving a $57,000 Mercedes and
spending hundreds of dollars on champagne at clubs and casinos.
Now 22, Mr. Havard is in a Leeds prison cell, having pleaded guilty to charges of fraud
and money laundering. The Carderplanet network has been shut down.
As other similar groups thrive and proliferate, Mr. Havard's case provides a rare insight
into the underground marketplace for stolen information, a surging white-collar crime of
the 21st century. It affects as many as 10 million Americans at a price tag of $55 billion
to American business and individuals, according to industry and government studies.
While banks typically compensate customers for fraudulent losses, victims can spend
hundreds of hours repairing the havoc wreaked on their personal records and finances and
often end up paying legal fees to do so. Sometimes, ID-theft victims are forced to pay off
the debt racked up in their name by fraudsters. In the most insidious cases, they are
arrested for crimes committed by the person who stole their identity.
Most identity theft still occurs offline, through stolen cards or rings of rogue waiters and
shop clerks in cahoots with credit-card forgers. But as Carderplanet shows, the Web
offers criminals more efficient tools to harvest personal data and to communicate easily
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 5 of 21
with large groups on multiple continents. The big change behind the expansion of identity
theft, law-enforcement agencies say, is the growth of online scams.
Police are finding well-run, hierarchical groups that are structured like businesses. With
names such as Carderplanet, Darkprofits and Shadowcrew, these sites act as online
bazaars for stolen personal information. The sites are often password-protected and ask
new members to prove their criminal credentials by offering samples of stolen data.
Shadowcrew members stole more than $4 million between August 2002 and October
2004, according to an indictment of 19 of the site's members returned last October by a
federal grand jury in Newark, N.J. The organization comprised some 4,000 members who
traded at least 1.5 million stolen credit-card numbers, the indictment says.
The organizations often are dominated by Eastern European and Russian members. With
their abundance of technical skills and dearth of jobs, police say, those countries provide
a rich breeding ground for identity thieves. One of Carderplanet's founders was an
accomplished Ukrainian hacker who went by the online alias "Script," a law-enforcement
official says. As with many of its peers, the Carderplanet site was mainly in Russian but
had a dedicated forum for English speakers.
One English speaker was Mr. Havard. He was arrested in Leeds in June 2004 after
allegedly stealing millions of dollars from bank accounts in the United Kingdom and the
U.S. The charges against him have been detailed in hearings in the Leeds Crown Court,
where Mr. Havard recently pleaded guilty. Last month, he was sentenced by a British
judge to six years in prison. His U.K. lawyer, Graham Parkin, says Mr. Havard "accepts
his role."
7. Identity theft is said to affect more than
a. 5 million
b. 200,000
c. 10 million Correct
d. 50 million
_________ Americans.
8. Carderplanet and Shadowcrew are examples of ___________.
a. illegal video games
b. on-line support groups for victims of identity theft
c. watch lists for known counterfeiters
d. on-line sites that act as bazaars for stolen personal information Correct
Ebbers Is Sentenced to 25 Years For $11 Billion WorldCom Fraud
By DIONNE SEARCEY, SHAWN YOUNG and KARA SCANNELL
July 14, 2005; Page A1
http://online.wsj.com/article/0,,SB112126001526184427,00.html
Bernard J. Ebbers, the 63-year-old founder and former chief executive of WorldCom Inc.,
was sentenced to 25 years in prison for orchestrating the biggest corporate accounting
fraud in U.S. history.
Mr. Ebbers hung his head as Judge Barbara Jones sentenced him yesterday in U.S.
District Court in Manhattan for fraud, conspiracy and making false filings. His shoulders
shook as his lawyers and prosecutors discussed details.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 6 of 21
At the end of the hearing, when he rose from the defense table, his eyes were red, his face
sober. His wife, Kristie Ebbers, rushed into his arms, and the couple embraced for several
minutes. Both cried softly.
The former CEO is to report to prison on Oct. 12. Judge Jones said she would
recommend that he serve his time at the low-security portion of a federal prison in Yazoo
City, Miss., close to his home. There is no parole in the federal system, though convicts
can cut their sentences by up to 15% for good behavior.
"I recognize this sentence is likely to be a life sentence," said Judge Jones. "But I find a
sentence of anything less would not reflect the seriousness of this crime."
Mr. Ebbers, dressed in a dark suit and light blue tie, didn't speak to reporters after his
sentencing. When asked by Judge Jones if he had anything to say, he indicated, in barely
audible tones, that he didn't.
The sentence for Mr. Ebbers's conviction in the $11 billion fraud at WorldCom is the
harshest yet given to an executive convicted in the recent wave of high-profile corporate
scandals. That made it a key win for federal prosecutors in their push to crack down on
corporate crime.
Yet the government also suffered a setback yesterday when prosecutors decided not to
retry another former CEO, HealthSouth Corp. founder Richard M. Scrushy, on perjury
charges that were dismissed before he was acquitted earlier this month on 36 other
criminal counts.
In punishing Mr. Ebbers, Judge Jones said she believed federal guidelines called for a
sentence of 30 years to life. But she cited Mr. Ebbers's charitable work in handing him 25
years.
Outside the courtroom, Reid Weingarten of Steptoe & Johnson LLP, the lead defense
attorney for Mr. Ebbers said, "I think an innocent man got sentenced today. Bernie
Ebbers was transformed into a symbol, a distorted picture of corporate corruption."
9. Bernard J. Ebbers, the 63-year-old founder and former chief executive of
WorldCom Inc., was sentenced to __________________ years in prison for
orchestrating the biggest corporate accounting fraud in U.S. history.
a. 5
b. 15
c. 25 Correct
d. 35
10. The dollar value of the fraud associated with Mr. Ebbers's conviction is ____.
a. 1 billion
b. 11 billion Correct
c. 11 million
d. 1 million
To Sell Their Drugs, Companies Increasingly Rely on Doctors
By SCOTT HENSLEY and BARBARA MARTINEZ
July 15, 2005; Page A1
http://online.wsj.com/article/0,,SB112138815452186385,00.htm
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 7 of 21
NEW YORK -- On a recent Wednesday evening, neurologist Lawrence Newman spoke
to a dozen doctors in a private alcove off the soaring dining room of Guastavino's and
made the case that migraine headaches are seriously underdiagnosed.
Migraine treatment "should be bread and butter for primary-care doctors," he told
attendees at the midtown Manhattan restaurant. While patients might say they're having a
sinus headache, there's a good chance it's actually a migraine and can be treated with a
migraine drug, Dr. Newman said.
It was a message friendly to migraine-drug makers, and no wonder: The sponsor of the
talk was GlaxoSmithKline PLC, maker of the best-selling migraine pill Imitrex. Glaxo
picked up the tab for dinner, paid Dr. Newman a fee, supplied some of his slides, and
scattered Imitrex notepads on the table.
Drug makers have seized upon an effective tool for getting their message across to
doctors: other doctors.
Across the U.S., thousands of doctors such as Dr. Newman, an associate professor of
clinical neurology at Albert Einstein College of Medicine, have signed up as part-time
lecturers for drug companies. At small meetings, often over lunch or dinner, these
physician-pitchmen tell their peers about diseases and the drugs to treat them, often
pocketing $750 or more from the sponsor. Dr. Newman declined to discuss his fee.
In 2004, 237,000 meetings and talks sponsored by pharmaceutical companies featured
doctors as speakers, compared with 134,000 meetings led by company sales
representatives, according to market researcher Verispan LLC of Yardley, Pa. In 1998,
events featuring sales reps and physicians were about equal at just over 60,000 each,
Verispan says.
11. An effective tool drug makers have seized upon for getting their message
across to doctors is ________________.
a. pharmacist
b. other doctors Correct
c. nurses
d. TV advertisements
12. In 2004, ______________ meetings and talks sponsored by pharmaceutical
companies featured doctors as speakers, compared with 134,000 meetings led by
company sales representatives.
a. 137,000
b. 237,000 Correct
c. 337,000
d. 437,000
Questions 13 – 17 from Marketplace, Section B
Now, Complaints of Brand-Name 'Piracy' Go Both Ways
By JOEL MILLMAN
July 11, 2005; Page B1
http://online.wsj.com/article/0,,SB112104443755081828,00.html
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 8 of 21
On a hot summer day, families strolling in plazas from Tijuana to Cancún often stop at
stalls selling La Michoacana ice-cream bars, a brand synonymous with frozen treats in
Mexico for decades. These days, identical-looking bars are for sale in the U.S., too, and
are being scooped up by Mexican immigrants longing for a taste of home.
In both cases, the bars' packaging and design are nearly the same. That's raising a crossborder dispute.
La Michoacana of Mexico, the originators of the brand, say it has never sold its product
in the U.S. and has never authorized anyone to use their well-known logo, a girl in a pink
dress holding an ice-cream cone. "It's robbery," says Alejandro Andrade, an executive at
Industrias Alto SA, of Tocumbo, Mexico, the Mexican firm that markets the La
Michoacana brand. (La Michoacana means "the girl from Michoacán," a state on
Mexico's Pacific coast.) Mr. Andrade says he has registered the name and logo with
Mexico's intellectual property agency, but not with U.S. authorities
La Michoacana is not alone. With the explosive growth of immigration in the U.S., many
old-country firms are discovering that their brands are being appropriated here. It may be
unethical for a U.S. company to use a brand developed by a foreign firm outside the U.S.,
but U.S. law doesn't make it illegal -- unless the original brand has registered its
trademark here. "Brands are trademarks, and trademark rights only extend as far as the
jurisdiction in which they are obtained," says Beth Goldman, an intellectual property
specialist at the law firm of Heller Ehrman in San Francisco.
For years, complaints of piracy were a one-way street: U.S. and European makers of
clothing and computer software pressed trade officials to crack down on companies in
developing nations that used their brand names. But now the complaints are going both
ways. John M. Mings, a trademark attorney at Houston's Fulbright & Jaworski, says in
2001 he represented Costa Rica's biggest dairy, La Cooperativa de Productores de Leche
Dos Pinos R.L., in a successful effort to stop a New York firm run by entrepreneurs from
El Salvador from registering the Dos Pinos name with U.S. trademark authorities for a
line of milk products.
In the case of the Mexican ice-cream bars, the U.S. treats are produced by a Mexican
immigrant, Ignacio Gutierrez, whose company, Paleterias La Michoacana Inc., is located
in Modesto, Calif. The company disputes the Mexican company's rights to the brand's
name and logo in both the U.S. and Mexico.
Paleterias La Michoacana's Web site does seem to confuse the two companies. Even
though the California company was founded in Modesto in 1991, the site says, "La
Michoacana is a family company founded in Tocumbo, Michoacán in the 1940's. Since
then, we've continued to make premium ice cream, fruit bars, and drinks that give the
flavor and tradition of Mexico." Despite making the Tocumbo connection, the company
says it isn't claiming to be part of the original family, only that it produces its ice cream in
a typical Mexican style. "We just chose a name we knew Mexican people would know,"
says Patricia Gutierrez, who works as a secretary at Paleterias La Michoacana and is
married to Mr. Gutierrez.
Paleterias La Michoacana ships its version of the ice cream to supermarkets and
convenience stores around the U.S. and also supplies La Michoacana snack carts -basically freezer boxes mounted on bicycles. According to U.S. federal records, Mr.
Gutierrez applied for a trademark for his product in 2003, which his Mexican rivals didn't
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 9 of 21
contest. The trademark is scheduled to take effect this year. The U.S. company says it
trademarked the name after other companies tried using it, too.
13. La Michoacana means "_______ from Michoacán," a state on Mexico's
Pacific coast.)
a. the boy
b. the girl Correct
c. the cow
d. the goat
Working Fewer Hours Is Hard for Most CEOs, But Some Find a Way
July 12, 2005; Page B1
By CAROL HYMOWITZ
http://online.wsj.com/article/0,,SB112112134804482690,00.html
Larry Ellison, chief executive of Oracle, rejects a management model he thinks too many
chief executives follow of being "weak kings with strong dukes." Under this model, he
says, CEOs allow business unit heads "to run their own show as long as they make their
profit numbers." The CEOs may not know what's really going on in Japan or Chicago, he
argues, and "it isn't terribly efficient since not everyone is following centralized
processes."
But Mr. Ellison doesn't want to be the king at court all the time, either. Since completing
his bitterly fought $10.6 billion takeover of PeopleSoft, Oracle's largest acquisition ever,
earlier this year, he has cut his work hours to 40 to 50 a week from about 80. "I decided
this [much work] is crazy," says the billionaire software maker, who delegates more dayto-day responsibilities to his three co-presidents and devotes more time to sailboat racing,
his medical foundation and other interests.
In an age when executives sleep with their BlackBerrys on their night stands so they can
respond to email 24/7, cutting back at work isn't always feasible. It certainly isn't an
option for newly named CEOs, such as Mark Hurd at Hewlett-Packard and John Mack at
Morgan Stanley, who must fashion new corporate strategies or overcome internal culture
wars.
Even veteran CEOs at solidly performing companies have trouble getting off the work
treadmill or don't want to admit they have, afraid they may be judged uncommitted by
investors or may send employees the message that they, too, can work less. "There's a
relentlessness to being a CEO these days," says Niko Canner, managing partner of New
York consultant Katzenbach Partners. "Still, a few savvier heads of companies worry
about the emotional and physical sustainability" of their schedules and wonder "what
things they need to do for themselves to stay focused, energized and inspiring."
Michael Eskew, CEO of United Parcel Service, has told some colleagues that ideally he'd
like to divide his time into five parts, spending 20% with employees, 20% with
customers, 20% with investors, 20% on civic activities and 20% on self-renewal.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 10 of 21
"Unfortunately it hasn't worked out as well as he'd like when it comes to time for himself
to learn new things," says Ken Sternad, vice president, public relations. Still, Mr. Eskew,
who has diversified UPS from a package-delivery to a broader services company, tells his
managers that achieving balance is an important part of leadership. "He says, 'You should
take your job seriously, your family seriously and your community seriously, but just
don't take yourself too seriously,' " says Mr. Sternad.
14. Larry Ellison, chief executive of Oracle, has cut his work hours to _____ a
week from about 80.
a. 20 to 30
b. 30 to 40
c. 40 to 50 Correct
d. 50 to 60
Toyota's Chief Bets on Hybrids, Squeezing Rivals
By JATHON SAPSFORD
July 13, 2005; Page B1
http://online.wsj.com/article/0,,SB112120280355383723,00.html
TOYOTA CITY, Japan -- Toyota Motor Corp., fast on its way to challenging General
Motors Corp. as the world's biggest car maker, is betting it can turn a costly,
environmentally friendly technology into a significant new source of profit while turning
up the heat on struggling U.S. competitors.
For consumers, the push at Toyota will mean an expanding choice of hybrid vehicles,
which combine gasoline engines with electric motors to boost power and improve fuel
efficiency. For rivals, Toyota's growing sales clout may leave little option but to devote
more resources to hybrids themselves.
Toyota has generated a great deal of buzz with its hybrids, particularly as gasoline prices
have risen. Its hot-selling Prius -- an egg-shaped vehicle that gets 60 miles per gallon in
start-and-stop driving -- has appealed to technology enthusiasts. But now, Toyota is
rolling out a second generation of hybrids, from luxury sedans to sport-utility vehicles, all
aimed at bringing the technology into the mainstream for those willing to pay a premium.
Even a hybrid version of its mass-market Camry sedan is in the works.
"This is now a core technology for us," said Katsuaki Watanabe, who became Toyota's
president last month, in an interview at company headquarters here.
Toyota's expanded environmental strategy comes as U.S.-based car makers are mired in
problems, including rising health-care costs for unionized workers and retirees, and steep
rebates and other deals they seem to need to entice buyers. Their borrowing costs have
gone up since credit-rating agencies said earlier this year that both GM and Ford Motor
Co.'s debt was no longer investment grade. Toyota, meantime, has enough cash reserves
to cover the $7 billion it plans to spend on research and development this year without
incurring any debt.
Detroit car makers, for the most part, haven't pursued hybrids as avidly as have Toyota
and Honda Motor Co., another Japanese maker. GM initially said it wouldn't make
hybrids and instead would research a technology that uses exotic fuel cells, which create
their own electricity. But the biggest car maker has since said it will produce hybrids in a
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 11 of 21
partnership with DaimlerChrysler AG, which had also hesitated to push the technology.
Today, Ford sells hybrid versions of two sport-utility vehicles and GM offers a hybrid
version of its Silverado pickup.
15. Cars that combine gasoline engines with electric motors to boost power and
improve fuel efficiency are called __________________________.
a. environmental vehicles
b. hybrid vehicles Correct
c. utility vehicles
d. technology vehicles
Go Ahead, Ask: White House Chats Online
By CHRISTOPHER COOPER
July 14, 2005; Page B1
http://online.wsj.com/article/0,,SB112130692096085437,00.html
Hunched over a computer in hunt-and-peck mode, Health and Human Services Secretary
Mike Leavitt was under pressure: the clock was running, the questions were piling up and
even White House cyber-statements demand perfection. "How do you spell diabetes?" he
asked.
Mr. Leavitt was hosting "Ask the White House," an online interactive forum that is the
Bush administration's nod to transparency in the electronic age. On
www.whitehouse.gov1, government officials answer real-time questions on subjects both
monumental and picayune. Though President Bush won't use email out of fear of
inquisitors riffling through his correspondence, the administration needs to get its
message out. So when Mr. Bush outlined Medicare changes from a podium in
Washington last month, Mr. Leavitt provided details a few hours later.
In the forum's two-year existence, questions have run from the trivial ("Is the White
House like the television show?") to the bizarre ("How much does Canada weigh?").
Viewers were told by NASA Administrator Sean O'Keefe that the Apollo moon missions
weren't faked. After a female writer asked if he was single, Gordon Johndroe, spokesman
for Laura Bush, said the first lady occasionally points out pretty women to him because
he's a bachelor. "I think she is following the President's lead in being a matchmaker," he
wrote. "I'll let you know if any of them work out."
Zoe from Pearl River, N.Y., asked White House usher Gary Walters if he'd ever seen a
ghost in the mansion (possibly). And in the wake of the Iraq invasion, Chief of Staff
Andy Card was asked to confirm whether Saudi Arabia's leader had seen an advance
copy of the war plan. "Not true!" Mr. Card said.
But Ask the White House is also used to prop up the flagging items on Mr. Bush's
agenda. In June, topics included Social Security, free trade with Latin America, energy,
Iraq and the spiraling cost of health care.
The questions for Mr. Leavitt were both businesslike and politically sophisticated.
Claudia in Washington asked, "Under Medicaid I pay $1.00 for my prescriptions. Will
that change?"
Some Americans will certainly pay more; Mr. Leavitt labored over a politic response for
several minutes. "Claudia, there will be a minimal co-pay associated with most plans, but
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 12 of 21
there will be a maximum limit for those on Medicaid," the secretary typed. After aides
policed the answer for grammar mistakes, Mr. Leavitt hit the button.
"This reminds me of when I used to do talk radio -- a little bit Oprah and a little bit
substance," the former Utah governor said.
16. The Bush administration's online interactive forum that is nod to transparency
in the electronic age is called ______________________.
a. A little bit Oprah
b. Will that change?
c. Is it true?
d. Ask the White House Correct
How Gift Cards Helped Trip Up Wal-Mart Aide
By ANN ZIMMERMAN and JAMES BANDLER
July 15, 2005; Page B1
http://online.wsj.com/article/0,,SB112139324657186539,00.html
Contact lenses, a $100 gift card and an alert Wal-Mart Stores Inc. employee helped
trigger the forced resignation this year of Thomas M. Coughlin, the discounter's former
No. 2 executive, according to a new chronology of events Wal-Mart filed yesterday with
the Labor Department.
Wal-Mart has accused Mr. Coughlin, a former vice chairman, of stealing as much as
$500,000 from the giant retailer in the form of bogus expenses and reimbursements along
with the unauthorized use of gift cards. The high-profile case is being probed by the U.S.
Attorney in Fort Smith, Ark. Mr. Coughlin, through his lawyers, has denied wrongdoing.
Yesterday's filing by Wal-Mart was an attempt to refute a claim by Jared Bowen, a
former company vice president, that he was unjustly fired after blowing the whistle on
Mr. Coughlin's alleged wrongdoing. In a letter to Labor Department officials from one of
its outside lawyers -- Eugene Scalia, son of Supreme Court Justice Antonin Scalia -- WalMart said Mr. Bowen wasn't a whistleblower and, in fact, helped Mr. Coughlin
misappropriate funds.
Instead, Wal-Mart said yesterday, Mr. Coughlin was caught after a different employee
blew the whistle.
According to Wal-Mart's account, Mr. Coughlin in May 2004 asked Mr. Bowen for 51
Wal-Mart gift cards, each with a value of $100. He said they would be given to that year's
"All-Stars," who were generally lower-level employees recognized for superior
performance.
Wal-Mart said Mr. Coughlin used the gift cards himself at Wal-Mart stores and Sam's
Club outlets, at one point spending $1,000 toward three 12-gauge shotguns. A company
spokeswoman said Wal-Mart was able to track all the purchases, saying Mr. Coughlin
also used the cards to buy puppy chow, a Celine Dion compact disc, Stolichnaya vodka,
wine, a $319 fishing license, a rifle case and a $3.54 Polish sausage.
17. Contact lenses, ______________________ and an alert employee helped
trigger Wal-Mart’s former No. 2 executive.
a. a $100 gift card Correct
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 13 of 21
b. a camera
c. a news reporter
d. a small child
Questions 18 – 22 from Money & Investing, Section C
Stocks Stand Up to Terror
By E.S. BROWNING
July 11, 2005; Page C1
http://online.wsj.com/article/0,,SB112082964293580749,00.html
Investors live with concern that a terrorist attack will tank the stock market. But a look at
some of the past century's biggest terrorist attacks shows that has rarely happened.
The trend could be seen in the surprisingly rapid U.S. stock recovery after the terrorist
attacks in London last Thursday. More broadly, an analysis of market reaction following
15 different terrorist acts going back to 1920 suggests that, while terrorism may be a
generalized cause of fear, it has rarely been a major mover of markets.
Terror fears unquestionably have made investors more conservative, helping to explain
the surprising popularity of investments such as bonds, real estate and gold. Investors
react most strongly to events that they think will have a lasting impact on markets or the
economy, such as the Sept. 11, 2001, attacks and they have learned to shrug off others.
"The attacks in London were horrific, to be sure, but their market impact is likely to be
short-lived because the events are not likely to have a sustained impact on economic
conditions, monetary policies or capital flows, anywhere," wrote Bob Prince of moneymanagement firm Bridgewater Associates in a report to clients.
The data indicate that, even immediately following a terrorist event, the Dow Jones
Industrial Average has tended to rise.
On the first day that stocks traded following each of the 15 attacks, the Dow industrials
finished up eight times, including last Thursday, and down seven. By the end of the fifth
trading day after the other 14 attacks, it also was more likely to be up. After about a year,
the Dow was down in only four instances, and the average change was a gain of more
than 13%, according to the analysis, conducted for The Wall Street Journal by Ned Davis
Research in Venice, Fla.
18. An analysis of market reaction following 15 different terrorist acts going back
to 1920 suggests that terrorism _____________________________________.
a. has always been a major mover of markets
b. rarely has been a major mover of markets Correct
c. has always been a minor mover of markets
d. usually has been a minor mover of markets
Re-evaluating Revaluation
By CRAIG KARMIN
July 12, 2005; Page C1
http://online.wsj.com/article/0,,SB112112105044082683,00.html
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 14 of 21
Beijing officials have made it clear they will revalue the yuan only when it's in China's
best interests. Now, some economists are suggesting that time may have passed. The
trouble could start if investors begin to think that way, too.
China's economy is expected to grow another 8% to 9% this year. But by several
measures it's cooling from white-hot to red, and may soon be merely hot. Import growth
has slowed, capital spending is flagging and the rising costs of commodities and other
raw materials are eating into Chinese corporate profits. Foreign direct investment, on an
annualized basis, fell in the four months through May for the first time since 2000. Even
exports appear to have gone flat in the second quarter, something that hasn't happened in
four years.
CLSA, a Hong Kong-based brokerage firm, now puts 2006 China GDP growth at 6% to
7%. That's on par with its forecasts for India -- and about half the rate at which China
grew during some quarters in the early 1990s.
Signs of a moderating Chinese economy may do little to ease pressure from Washington,
where officials contend the yuan has been kept artificially low, unfairly aiding Chinese
exporters. Beijing would like to avoid a trade war with the U.S. But given China's
employment concerns, revaluing the currency doesn't seem in China's best interests. A
stronger yuan could eat away at China's competitiveness and aggravate any slowdown.
19. Washington, officials contend the yuan has been kept artificially _________.
a. low Correct
b. high
c. in a state of flux
d. competitive
On Judgment Day, Assessing Ebbers's Impact
By DIONNE SEARCEY
July 13, 2005; Page C1
http://online.wsj.com/article/0,,SB112118868036683476,00.html
As WorldCom founder Bernard J. Ebbers faces sentencing today in what could be the
final chapter in the criminal case of the U.S.'s largest-ever corporate-accounting fraud, he
leaves behind an industry that has never quite recovered. U.S. District Judge Barbara
Jones could sentence Mr. Ebbers to as many as 85 years in prison. That would amount to
life sentence for the 63-year-old, who was convicted in March of fraud, conspiracy and
making false filings with regulators in the $11 billion scandal.
Yesterday, the judge denied Mr. Ebbers's request for a new trial. Mr. Ebbers's attorneys
wouldn't comment on his sentencing hearing but have asked the court for leniency, citing
what they say are his serious heart problems, among other factors.
Watching from the sidelines will be investors who collectively have lost billions of
dollars, former WorldCom employees who were surprised to learn they were associated
with a scandal and former executives who once competed with the company now called
MCI Inc. and say their companies suffered because of the fraud.
Former AT&T Corp. Chief Executive C. Michael Armstrong, for example, remembers
gathering his executives for quarterly meetings in 2000 to discuss the huge profit margins
WorldCom was reporting. He was baffled that his company couldn't match those results.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 15 of 21
"I couldn't figure out, nor could my team, how in the hell they could lead the industry in
pricing down and in producing strong margins," Mr. Armstrong recalls.
At the time, analysts called AT&T sluggish compared with WorldCom, and AT&T's
stock plummeted. The company laid off employees and made other strategic decisions -all based on what turned out to be WorldCom's phony numbers, Mr. Armstrong says.
What Mr. Armstrong didn't know back then was that Mr. Ebbers was falsely boosting
WorldCom's profit by booking operating expenses as capital spending, a much more
favorable treatment because capital spending is deducted from earnings in small pieces
over time. Mr. Armstrong later learned -- after WorldCom was forced to restate its
earnings -- that AT&T had actually outperformed its rival in some instances.
"I can't tell you how frustrating it was," Mr. Armstrong says.
To be sure, at the time the fraud came to light in 2002, segments of the industry already
were in severe straits. Long-distance revenues were plummeting, driven in part by the
overbuilding of fiber-optic networks; the technology bubble had burst, taking out telecom
with it; and the market was still reeling from the terrorist attacks of Sept. 11, 2001.
Executives at another competitor, Sprint Corp., were equally mystified. William Esrey,
chief executive of Sprint from 1985 to 2003, remembers meeting after meeting at which
the company's top executives labored over WorldCom's performance.
"We would talk to suppliers and manufacturers looking at different angles: How could
they be so profitable? Was there something in their architectural network cutting their
costs?" Mr. Esrey recalls. "It never dawned on us the base of their pricing was fraud."
Telecom investors also point to the spate of mergers the industry has seen over the last 18
months as fallout from the fraud committed at WorldCom and its aftermath, as companies
acquire or put themselves up for sale in an effort to regain their footing.
Legal experts say the judge could consider the industrywide impact when sentencing Mr.
Ebbers. So far prosecutors have focused on the losses suffered by investors after
WorldCom saw its peak stock value of $180 billion evaporate.
In a sentencing memo to the judge, federal prosecutor David Anders wrote that Mr.
Ebbers's conduct "caused literally tens of thousands or more of innocent shareholders to
suffer billions of dollars in losses."
The anger over Mr. Ebbers's fraud is displayed in several dozen letters to Judge Jones,
some of them handwritten, from WorldCom shareholders begging for a stiff sentence.
20. Several dozen of the letters to Judge Jones from WorldCom shareholders have
asked her to deliver _________ to Mr. Ebbers.
a. a light jail sentence
b. a stiff jail sentence Correct
c. a pardon
d. no jail sentence
All Shook Up
By JUSTIN LAHART
July 14, 2005; Page C1
http://online.wsj.com/article/0,,SB112129969888085261,00.html
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 16 of 21
American shoppers have a reputation for having as much self-control as Elvis Presley,
but monthly sales figures suggest they have regular bouts of thrift.
One month, it seems, they rush madly to malls and car lots, the next they linger at home.
There are always ready reasons for each swing (usually it is the weather when it comes to
stores, incentives when it comes to cars), but that sales will be volatile seems generally
accepted.
In this era of hair-trigger trading, such choppiness causes all sorts of fits on Wall Street.
A weak retail-sales report, like last month's report on May sales, causes all sorts of handwringing on how the economy is on the outs. A strong reading, as today's June report
from the Commerce Department looks likely to be, portends a new era of growth.
Many portfolio managers dare not do what normally might be seen as wise -- wait it out
for another month or two to see if a trend is really in place -- because they are afraid the
stock market will get away from them. Nevermind that about the only way the market has
gotten away from anyone lately is if he bet too heavily on a down trend or an up trend.
The Dow Jones Industrial Average now is around where it was in the beginning of 2004.
21. The Dow Jones Industrial Average now is around where it was in the
beginning of 2004.
a. 1991
b. 2001
c. 1984
d. 2004 Correct
Canada Welcomes China's Cash
By DENNIS K. BERMAN and MARK HEINZL
July 15, 2005; Page C1
http://online.wsj.com/article/0,,SB112137112379485976,00.html
TORONTO -- State-run Chinese companies have come to Canada's resource-rich
wilderness with checkbooks in hand, hoping to grab hold of stores of oil, copper, and zinc
buried here.
That hasn't fazed Canada's minister of industry, David Emerson. "It certainly has not
been something that has got me on red alert," says the country's top economic official, of
China's recent spate of natural resources investments. "No pun intended."
The mood is far more wary in the U.S. capital, where members of Congress are deploying
legal and rhetorical barriers to stop Chinese state-controlled Cnooc Ltd.'s US$18.5 billion
bid for oil company Unocal Corp., which has an existing US$16.8 billion deal with U.S.based Chevron Corp.
As Washington stokes anti-Chinese sentiment, Canada's hospitality serves as a
counterexample. The view partly reflects the role of natural resources in Canada's
economy, which weigh heavily in the nation's exports.
But it also shows a clear political and economic choice to embrace China as its power
expands in Asia and across the Pacific. "We don't feel you can have it both ways," says
Pierre Gratton, spokesman for the Mining Association of Canada. "We can't support
Canadian investment in China and say no to Chinese investment in Canada."
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 17 of 21
Canada's trade with China has about doubled since 2000 to more than C$30 billion, or
about US$25 billion, last year, according to Canadian-government statistics. That's made
China Canada's second-largest trading partner, though the total is still a fraction of the
C$557 billion of trade between Canada and the U.S. last year.
While China's exports to Canada far outstrip imports, natural-resources goods ranging
from forest products to nickel and other ores helped Canadian exports to China jump 40%
to C$6.7 billion last year from 2003. Canada, which still sends the vast majority of its
exports to the U.S., is eager to boost exports to China and other big developing nations.
Still, the prospect of China buying into Canada has caused some carping, particularly
when state-owned China Minmetals Corp. was negotiating a C$6 billion bid for mining
giant Noranda Inc., which is now called Falconbridge Ltd. The deal talks broke down
earlier this year.
Before talks collapsed, Minmetals officials visited Noranda operations in Canadian
provinces Ontario and Quebec, as well as in Chile, Peru, and Norway, Noranda
spokesman Denis Couture said. He and several Noranda executives studied Mandarin,
and Noranda officials were in China recently to attend mining conferences.
22. According to Canadian-government statistics, last year Canada's secondlargest trading partner was ___________________________.
a. Norway
b. China Correct
c. Quebec
d. Peru
Questions 23 – 25 from Personal Journal, Section D
Stopping Diabetes Before It Happens
By BETSY MCKAY
July 12, 2005; Page D1
http://online.wsj.com/article/0,,SB112112216327082716,00.html
In the war against diabetes, researchers and doctors are focusing on a new line of defense:
identifying cases of so-called prediabetes, and preventing those people from ever
developing the actual disease.
Fueled by data that show weight loss and drug treatment can halt the progression toward
diabetes, health experts are working on ways to make early screening and intervention a
routine practice. Researchers at Emory University School of Medicine and the University
of Michigan are developing tests to quickly identify those most at risk. And the
Department of Health and Human Services, along with a nonprofit health-care group, is
funding a pilot program in five states to identify and treat prediabetics. The aim is to
create a protocol for prevention that could become a national standard.
More than 18 million Americans currently have diabetes, a leading cause of heart disease,
kidney failure, amputations and blindness, according to the Centers for Disease Control
and Prevention. Some 95% of those cases are Type 2 adult-onset diabetes, largely
brought on by lifestyle issues such as obesity.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 18 of 21
But as many as 41 million additional adults suffer from prediabetes, a condition in which
their blood-sugar levels are elevated enough to greatly increase their risk of developing
diabetes, federal health officials say. Those who are overweight or have high cholesterol
are likely candidates for prediabetes, as are people with a family history of diabetes,
among other risk factors. African-Americans, Latinos, Native Americans and some
Asians are also at increased risk. Most never have any idea they may be headed toward a
serious illness because there are no symptoms, but at least half go on to develop the fullblown disease.
23. As many as _____________ additional adults suffer from pre-diabetes, a
condition in which their blood-sugar levels are elevated enough to greatly
increase their risk of developing diabetes, federal health officials say.
a. 11 million
b. 21 million
c. 31 million
d. 41 million Correct
All Real-Estate Meltdowns Are Local: Sidestepping the Five Biggest Risks
By JONATHAN CLEMENTS
July 13, 2005; Page D1
http://online.wsj.com/article/0,,SB112121203595583949,00.html
Want to make sure your home doesn't turn into a house of horrors? Here are the key risks
in today's overheated housing market -- and how you can protect yourself.
• Borrowing heavily. Tell your friends you are buying stocks with borrowed money, and
they will look at you like you're crazy. Tell them you purchased a $500,000 home with
5% or 10% down, and you will be showered with congratulations.
SMR Research calculates that, among home buyers who took out a mortgage in 2003,
61.4% borrowed more than 80% of the purchase price, sometimes taking out two separate
loans. By the first half of 2004, the latest figure available, that number was up to 70.6% -and today it is likely even higher.
"If we hit a spot where home prices cease rising or rise at a slower place, the high loanto-value people will remain high loan-to-value," says Stuart Feldstein, president of SMR,
a financial-services market-research firm in Hackettstown, N.J. "That tends to correlate
with a high rate of defaults."
Today's leverage is especially worrisome given the steep rise in property prices over the
past five years. If prices turn lower, those who made modest down payments could see
their home equity wiped out, and might even be underwater.
The good news is, even if falling prices obliterate your equity, your mortgage lender can't
insist that you immediately repay your loan. The bad news is, you may have to repay the
loan anyway, because you have to relocate.
• Bad move. According to the National Association of Realtors, homeowners typically
sell after six years. If you're buying in today's hottest markets, plan on staying put for at
least that long, so you can ride out any market dips and build up some equity with your
monthly mortgage payments.
What if you suddenly have to move -- and prices have stagnated since your purchase? If
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 19 of 21
you had borrowed 95% initially, you could walk away with next to nothing once you
figure in lawyer fees, moving costs and the 5% or 6% selling commission.
To avoid ending up as a renter again, consider making extra principal payments on your
current mortgage or building up an emergency reserve, so you have enough money for
your next house down payment.
• Problems adjusting. Last year, as folks struggled to afford increasingly expensive
homes, 35% opted for various types of adjustable-rate mortgages. That compares with
18% in 2003, according to the Federal Housing Finance Board in Washington. ARMs
offer a lower initial rate than traditional fixed-rate loans.
Now, however, these borrowers face rising monthly payments as short-term interest rates
climb and their mortgage's low "introductory" rate disappears. Homeowners with
interest-only mortgages face an additional hit, as their mortgage's interest-only period
ends and accelerated principal payments kick in.
Indeed, even if interest rates stay fairly low, some borrowers could find themselves in a
nasty financial squeeze. Suppose you took out a $300,000, 30-year "hybrid" mortgage for
which the rate is fixed at 5% for the first five years but adjusts thereafter.
Your initial monthly payment would be $1,610. But in the sixth year, your rate leaps to
8%. Result: Your monthly payment would soar 32% to $2,126, according to the
adjustable-rate mortgage calculator at www.dinkytown.net.
24. Last year, as folks struggled to afford increasingly expensive homes, 35%
opted for various types of ______________________.
a. fixed-rate mortgages
b. high-rate mortgages
c. low-rate mortgages
d. adjustable-rate mortgages Correct
Maternity Leave for the CEO: Women Balance Pregnancy And Staying in Charge
By SUE SHELLENBARGER
July 14, 2005; Page D1
http://online.wsj.com/article/0,,SB112129016232185000,00.html
In 1992, Lawrence Perlman, then CEO of information-services firm Ceridian, gave a
speech titled, "A Pregnant CEO: In Whose Lifetime?"
After 13 years, the answer is emerging: In ours.
In a sign of career progress by a new generation of working mothers, a few heads of
sizeable businesses are balancing pregnancy and new motherhood at the top. To be sure,
expectant execs aren't running General Motors or other big public companies. Mr.
Perlman, now chairman of media-rating concern Arbitron, says he had hoped for more by
now. Nevertheless, these pregnant CEOs' stories bear some lessons.
In struggling to maintain leadership amid pending motherhood, they're developing new
strategies. Some change the way they lead, emphasizing substance over style. They also
buck some stereotypes: Among the CEOs I interviewed, none have husbands who quit
work to be stay-at-home dads. And all strive to maintain parenting roles after the baby is
born, working often from home, cooking family dinners often, or setting schedules that
get them home by 6 p.m.
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 20 of 21
When Karen Bressler, CEO of AGAR Supply, a family-owned food supplier in Taunton,
Mass., with $442 million in revenue, told her senior staffers a few weeks ago that she is
pregnant, they were shocked. Now, Ms. Bressler, who has increased Agar's revenue more
than 50% since taking the reins in 2001, is working to reassure the company's 300-plus
employees "that I'm not going anywhere. I'm not dying. Just because I'm having a baby
doesn't mean I'm falling off the face of the earth."
Ms. Bressler knows what she's in for. She also has a daughter, 12, and rose through the
ranks from management training while struggling to keep a sitter or racing through traffic
to get to the day-care center before it closed. Throughout, she has continued cooking
family dinners several times a week.
In some ways that has made her a tougher CEO. Rather than giving in to employees'
requests for time off or other accommodations, a "politically correct" stance, Ms. Bressler
says, she puts the company first. "I'm sympathetic, because I understand the problem. But
I'm also a CEO," and she draws the line on making exceptions that she feels may
jeopardize fairness or productivity.
Like other CEO moms, Ms. Bressler won't take much of a maternity leave. After "a few
weeks," she says, she'll split her time between the office and working at home with
mobile-office technology.
Christy Bieber Orris has made her two maternity leaves as CEO of family-owned ATEK
Manufacturing almost seamless. Anticipating the challenges, Ms. Orris, Boulder, Colo.,
who has more than doubled ATEK's revenue since 2000 to $67 million, actually stepped
up business travel during her pregnancy.
When her first baby was born three months before she finalized a big acquisition, her
authority as an executive allowed her to organize her schedule to suit her needs. On one
hand, childbirth and infant care "forced me to delegate," she says; she quit traveling for
six months and handed many duties to her No. 2, Kay Phillips. But she also continued to
work, from home. Her customers didn't even know she'd had her baby until she told them
by phone a few weeks later. One replied, " 'You're kidding! You didn't even say anything
-- you just kind of continued on,' " she says.
25. In a sign of career progress by a new generation, a few heads of sizeable
businesses are balancing ________ and work at the top.
a. recreation
b. golf
c. motherhood Correct
d. college classes
© Copyright 2005 Dow Jones & Company, Inc. All rights reserved.
WSJ Professor Guide: Page 21 of 21