Thi thử VSTEP – 10 Bài Reading Test 4 Part 1

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

Directions:In this section of the test, you will read FOUR different passages, each followed by 10 questions about it. For questions 1-40, you are to choose the best answer A, B, C or D, to each question. Then, on your answer sheet, find the number of the question and fill in the space that corresponds to the letter of the answer you have chosen. Answer all questions following a passage on the basis of what is stated or implied in that passage.

You have 60 minutes to answer all the questions, including the time to transfer your answers to the answer sheet.

PASSAGE 1
Questions 1-10

Never before have so many people packed into cities – places such as Los Angeles, Istanbul, Tokyo, and Lima – that are regularly affected by earthquakes. Located near the edge of Earth’s huge, shifting plates, these cities face the risk of death and economic disaster from large quakes – and from the tsunamis, fires, and other destruction they often cause. We understand earthquakes better than we did a century ago. Now, scientists would like to predict them, but is this possible?

In Japan, government scientists say they have an answer to the question. [A] “We believe that earthquake prediction is possible.” says Koshun Yamaoka, a scientist at the Earthquake Research Institute at the University of Tokyo. Earthquakes follow a pattern; they have observable signs, Yamaoka believes. In fact, Japan has already predicted where its next great earthquake will be: Tokai, a region along the Pacific coast about 160 kilometers (100 miles) southwest of Tokyo. Here, two plate boundaries have generated huge earthquakes every 100 to 150 years. And it could be a massive quake. The section along Tokai hasn’t had a major quake since 1854. The theory is that strain is building up in this region, and that it’s time for this zone to reduce its stress. Unfortunately, this is more a forecast than a prediction. It’s one thing to say that an earthquake is likely to happen in a high-risk area. It’s another to predict exactly where and when the quake will occur.

The desire for a precise prediction of time and place has led to another theory: the idea of “pre-slip.” Naoyuki Kato, a scientist at the Earthquake Research Institute, says his laboratory experiments show that before a fault in the Earth’s crust finally breaks and causes an earthquake, it slips just a little. If we candetectthese early slips taking place deep in the Earth’s crust, we may be able to predict the next big quake.

Clues in the Desert
Scientists working in Parkfield, California, in the U.S. are also trying to see if predicting earthquakes is possible. They’ve chosen the town of Parkfield not only because the San Andreas Fault runs through it but because it’s known for having earthquakes quite regularly – approximately every 22 years. In the late 1980s, scientists in Parkfield decided to study the fault to see if there were any warning signs prior to a quake. [B] Todo this, they drilled deep into the fault and set up equipment to register activity. Then they waited for the quake. [C]

Year after year, nothing happened. When a quake did finally hit on September 28, 2004, it was years off schedule, but most disappointing was the lack of warning signs. Scientistsreviewedthe data but could find no evidence of anything unusual preceding the September 28th quake. It led many to believe that perhaps earthquakes really are random events. Instead of giving up, though, scientists in Parkfield dug deeper into the ground. By late summer 2005, they had reached the fault’s final depth of three kilometers (two miles), where they continued collecting data, hoping to find a clue.

[D]. In an article published in the July 2008 journalNature, the researchers in Parkfield claimed to have detected small changes in the fault shortly before an earthquake hit. What had they noticed? Just before a quake, the cracks in the fault had widened slightly. Scientists registered the first changes ten hours before an earthquake of 3.0 on the Richter scale hit: they identified identical signs two hours before a 1.0 quake – demonstrating that perhaps the “preslip” theory is correct. In other words, it may in fact be possible to predict an earthquake.

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]

PASSAGE 2
Questions 11-20

As different countries have different currencies of money, an international market exists for these currencies. “Exchange rates” refers to the formulas used to determine how much any one country’s currency can be bought or sold for relative to another country’s currency. Some currencies, including the U.S. dollar, the European euro, and the Japanese yen, are consideredstandardcurrencies, so the prices of other less-popular currencies are often expressed by exchange rates compared to them. Exchange rates are determined primarily by the movement of the markets, which means that when there is more demand for one particular currency, the price ofthat currencywill go up, and when there is less demand for a currency, the price of that currency will go down.

Because exchange ratesfluctuate, companies that do business internationally need to be mindful of the way they structure purchases and sales and what currency they use. For example, if an American company is selling something to a Japanese company, both companies need to think carefully about whether the sale should be transacted in U.S. dollars or Japanese yen (or some other currency entirely). It can be very costly for a company to make the wrong decision. In general, the company whose currency is being used for the transaction bears less risk than the company which is converting their currency for the sale. So if the two companies agree that the Japanese company will pay the U.S. company 500,000 U.S. dollars, the U.S. company will still receive that sum whether the exchange rate for yen to U.S. dollars goes up or down. In contrast, the Japanese company has to buy U.S. dollars to pay the bill.

The risks of doing transactions across currencies is called exposure. There are three types of exposure companies doing business internationally must contend with. The first, translation exposure, is simply a matter of the risk involved in converting one currency to another and how that is reflected in a company’s statement of profits and losses. For example, a company that sells many of its products in U.S. dollars but has to report its earnings to shareholders in Euros will look like it has made less money simply because the dollar is weaker than the euro.

The second type of exposure, transaction exposure, is described in the example above of the Japanese company and the American company making a sale. Transaction exposure is really a time problem. Between the time you agree to the deal and the time you have to pay for or receive money for the deal, what will happen to the exchange rate?

The third type of exposure is called economic exposure. [A] This refers to the decisions a company makes about how to structure their business to take advantage of exchange rates. [B] For instance, a company that sells its products in a country with a stronger currency but manufactures them in a country with a weaker currency benefits from the exchange rates on both sides of the transaction. [C] However, there is always the risk that the stronger currency will get weaker, which means the sales revenue will go down or the weaker currency will get stronger, which in turn means that the manufacturing costs will go up. [D]