Reading passage 1

A. IT IS a year since the investment-banking industry committed reputational suicide by paying bumper bonuses just a few months after the worst financial crisis in living memory. That move helped destroy investment bankers credibility with the public and many politicians. Outside finance, even red-blooded capitalists cringed in embarrassment. Bonuses were paid from profits buoyed by public subsidieseither directly through bailouts or by central-bank interventions and implicit government guarantees. They also were paid at the expense of rebuilding capital buffers. In 2009 the typical firms wage bill was equivalent to between a quarter and half of its core capital. Investment banks, it seemed, were not being run in the interests of the economy or even of their owners, but for their staff. It was financial mutiny. B. Now banks are once again working out how much they should pay their people. Amazingly since 2009 there have been no political keel-haulings, just a few whips of the lash. Faced with an angry public, some governments have agreed to tax banks borrowing to recoup some of the subsidy they get. Britain imposed a one-off tax on bonuses that should raise at least 2.5 billion ($4 billion), more than the 550m originally expected. America restricted pay at firms that still have TARP bail-out funds. C. Regulators, meanwhile, have obsessed about the structure of bankers pay. In June American supervisors issued guidelines that said bosses should not incentivise employees to blow up their firmsa management insight worthy of the Springfield nuclear-power plant. The European Union is finalising rules that will apply next year. Banks say they have already changed their ways. A recent report by the Institute of International Finance, a lobbying group, and Oliver Wyman, a consulting firm, found that three-quarters of firms asked said they now took risk into account when calculating bonuses, and that 39% of banks aggregate bonus pools was in the form of deferred compensation, not cash. D. How useful all this is remains to be seen. Managers at Lehman Brothers and Bear Stearns owned lots of shares, just as the corporate-governance police said they should, yet ran their firms aground. And there is a strong sense that regulators have answered the subordinate question (how should bankers be paid?) while ignoring the one that matters most to people: how much should they be paid? E. Policymakers doubtless hoped (again) that banks would show some restraint this year. They also probably guessed that new regulations would squeeze profits, limiting the amount available for traders to spend on provocatively expensive dessert wines. Encouragingly, there is some evidence this has happened. Most observers reckon the industrys revenue could fall by up to a fifth in 2010 as the exceptional market conditions that

followed the bail-outs have faded. Some banks are reacting. Goldman Sachss compensation bill in the third quarter was $3.8 billion, down by 28% compared with the same period in 2009. But the overall picture is less convincing. For five leading firms in America and Europe that have so far reported third-quarter results, overall compensation fell by 17%, to $18 billion, compared with the same quarter in 2009 (see chart). F. Some firms that did badly still booked pay costs that pushed their investment-banking units into the redmost notably UBS. Its chief financial officer was brutally honest to analysts. We are a living example of a bank that experimented with not paying people and it didnt come off very well in 2008. And as a consequence we know that we are bound to pay people, to some extent, regardless of the performance of the bank. More marginal firms, including Nomura (which bought bits of Lehman Brothers), seem to struggle to make decent returns in any conditions. G. Huw van Steenis, an analyst at Morgan Stanley, says that since investment banks are now relying more on client businesses and less on trading on their own account, revenues have become more volatile. Areas such as interest-rate swaps and foreign-exchange trading incur large fixed costs. Banks with lower market shares may struggle to produce profits during weak quarters, which makes it more important that they can control pay. The flow monster firms with high market shares may be more resilient. Yet even the really big firms are paying staff a lot but barely making acceptable profits on their newly enlarged capital bases Goldmans return on equity (ROE) was 10% in the third quarter. Deutsche Bank, which has relatively low capital ratios (something that should flatter ROE), managed 13% on an underlying pre-tax basis. Source: The Economist Questions You should spend about 20 minutes on Questions 1 to 14 which are based on Reading Passage 1 Questions 1 to 7 The new Reading Passage 1 has seven i. paragraphs A calculations. G. From the list of headings below, choose the most suitable heading for each ii. Problems with pay costs. paragraph. Write the appropriate numbers I ixThe in boxes 1 7 on your answer sheet. iii. bare shares. iv. v. vi. vii. viii. ix. Investment bankers credibility. Fostering widespread materialism. The structure of bankers pay. The new regulations. More on client businesses. Philanthropy among the country's ultra-rich.

1 2 3 4 5 6 7

Paragraph Paragraph Paragraph Paragraph Paragraph Paragraph Paragraph

A B C D E F G

Questions 8 10 Choose the correct letters, A, B, C or D Write your answers in boxes 8 10 on your answer sheet. 8 Pay costs pushed their investment-banking units into A. B. C. D. 9 A. B. C. D. 10 A. B. C. D. Cash. The red. Minor losses. Loans. Most observers reckon the industrys revenue could fall by up to a fifth in 2009. 2010. 2008. 2011. Regulators, meanwhile, have obsessed about the structure of Investment. The banking services. Bankers pay. International market.

Questions 11 14 Complete each of the following statements (questions 11 14) with the best endings A G from the box below Write the appropriate letters A G in boxes 11 14 on your answer sheet. 11 UBSs chief financial officer was brutally 12 The flow monster firms with high market shares 13 Goldman Sachss compensation bill in the third quarter was

14

Banks are once again working out

A Practically impossible. B Honest to analysts. C How much they should pay their people. D May be more resilient. E $3.8 billion, down by 28%. F Warren Buffett and Bill Gates. Reading passage 2 A. On January 6 an asteroid-spotting telescope at White Sands Missile Range in New Mexico detected a new and unusual object in the night sky. Towing a streaky debris tail, the object was classified as a comet, although its orbit belied a different origin. Visible comets generally have elongated orbits that carry them into Earth's neighborhood from the colder outer reaches of the solar system, but the newfound body had a neat, nearly circular orbit in the Asteroid Belt [the green ring in the video below], between the orbits of Mars and Jupiter. B. Within weeks, a group of astronomers had secured time on the Hubble Space Telescope to get a better look at the curious object, dubbed P/2010 A2, which appeared not to be a comet at all but a previously undiscovered asteroid that had somehow spewed its own debris into a comet-mimicking tail. C. Now two groups have used those Hubble photographs, as well as observations from ground-based telescopes and the European Space Agency's comet-chasing Rosetta spacecraft, to confirm that P/2010 A2 is indeed an asteroid that was disrupted, quite possibly by a collision with a smaller asteroid. The disruption appears to have occurred in early 2009, which is remarkably recent in terms of the evolution of the solar system. The two groups reported their findings in the October 14 issue of Nature. (Scientific American is part of Nature Publishing Group.) D. "I knew that this was an object the likes of which we hadn't seen before," says David Jewitt, a co-author of one of the new papers and an astronomer at the University of California, Los Angeles. "This is the first time we've seen an asteroid in the act of disrupting." Using Hubble, Jewitt and his colleagues watched the nucleus and tail of P/2010 A2 evolve over several months, from January to May 2010. Tracking the tail's changing position with respect to the nucleus, the researchers estimated that the disruption of the parent asteroid must have happened in February or March 2009.

E. Jewitt's group concluded that the impact of a small asteroid, just meters across, into the 120-meter nucleus of P/2010 A2 could excavate enough debris from the asteroid to produce the curious tail. But a less violent phenomenon could also be the culprit: The asteroid may have been spun up by the force of the sun, eventually rotating so fast that it began to shed mass. "Like wind blowing onto a propeller, the solar radiation can exert a torque on an asteroid," Jewitt says. He notes that a collision is his "favorite" scenario but that it is not possible to discriminate conclusively between the two causes based on the observations. F. The authors of the other Nature paper on P/2010 A2 also favor the collision scenario. "It's not possible for us to tell whether it was a collision or a spinupwe simply say collision because a collision is much more likely," says Colin Snodgrass, a postdoctoral astronomer at the Max Planck Institute for Solar System Research in KatlenburgLindau, Germany. G. And indeed, the spin-up mechanism is "probably not the most likely scenario," says William Bottke, a planetary scientist at the Southwest Research Institute in Boulder, Colo., who did not participate in the new research, adding that a spinning asteroid would likely produce a disk around its equator. "This is more consistent with a small body impacting and making a crater, throwing debris off the asteroid." Source: Scientific American Questions You should spend about 20 minutes on Questions 15 27 which are based on Reading Passage 2 Questions 15 19 Do the following statements agree with the information given in Reading Passage 2? In boxes 15 -19 in your answer sheet write TRUE if the statement agrees with the information FALSE if the statement contradicts the information NOT GIVEN if there is no information on this 15. 16. 17. 18. 19. life in An unusual object was detected in the sky on July 6. Scientists have a clear picture of the object that they saw. The Hubble telescope has been used to find the detail of the object. The project was conducted by the USSR scientists. Humans are in continuous search for such objects and if they have them.

Question 20 23 Look at the following persons or places (questions 20 23) and the list of statements below.

Match each person or place to the correct statement. Write the correct letter A G in boxes 1 4 on your answer sheet. 20. Colin Snodgrass 21. William Bottke 22. David Jewitt 23. European Space Agency A Situated in KatlenburgLindau, Germany. B A postdoctoral astronomer at the Max Planck Institute for Solar System Research. C The spin-up mechanism is probably not the most likely scenario. D An astronomer at the University of California. Questions 24 27 Complete the following statements with the correct alternative from the box. Write the correct letter A F in boxes 24 27 on your answer sheet. 24. The impact of a small asteroid could excavate enough debris 25. Towing a streaky debris tail, 26. Two groups have used those Hubble photographs, as well as 27. A group of astronomers had secured time on the Hubble Space Telescope to

A Observations from ground-based telescopes. B The object was classified as a comet. C The object was classified as asteroid. D Get better pictures of the object. E Get a better look at the curious object.

Reading Passage 3 A. SAN FRANCISCOVoters have turned back an effort to suspend California's efforts to tackle climate change, a wide-reaching program ranging from a cap-and-trade market for greenhouse gas emissions to energy efficiency standards for televisions. In 2006 California passed a law the Global Warming Solutions Act (Assembly Bill 32)that pledged the state to reduce its greenhouse gas emission levels back to 1990 levels by 2020. That's reducing to 427 million metric tons of carbon dioxide and other greenhouse gases emitted per year; current emissions in the state

are roughly 525 million metric tons of greenhouse gases and have been projected to exceed 600 million metric tons by 2020 without such efforts. B. The California Air Resources Board developed the program, a set of 70 measures, such as a low-carbon fuel standard, an increase in electricity generated from renewable resources to 33 percent, and a cap-and-trade program for 360 utilities, refineries and other emitting industries. The state released its more than 3,000-page rules for that greenhouse gas permit trading program on October 29. "If I'm under the cap, I make more and more money," explains policy analyst Tiffany Roberts of California's Legislative Analyst's Office. "If I'm over the cap, I pay more and more money." C. The majority of the efforts are simple standards, however, such as a new limit on energy usage for televisions with more than 42-inch screens. "We're down from 450 watts per television to 125 to 200 watts per TV," says Thom Kelly, acting chief deputy director at the California Energy Commission. "We're estimating that we'll save about $700 million a year just in energy costs." D. The low-carbon fuel standard orders providers to reduce the carbon intensity of their fuels by 10 percent by 2020 through efforts such as blending in biofuels that result in less greenhouse gases emitted when burned. That final rule is expected in early 2011, according to transportation expert Daniel Sperling of University of California, Davis, although the board is struggling to understand the greenhouse gas emissions associated with the land both directly and indirectly impacted by growing crops for biofuels. "It really is the single issue sholding back the low-carbon fuel standards," he says. "We've got to figure it out." E. "We have an obligation to the world to deliver clean, reliable, low-cost energy that is hopefully low carbon, too," adds chemical engineer David Rogers, general manager for climate change at Chevron, a Californiabased oil company that did not join efforts to suspend California's climate change initiative. "Maybe we can have the best of both worlds: a price on carbon to create an innovative environment for clean technology in California and keep businesses within state lines and not cause an adverse impact on consumers through radically higher prices for transportation fuels or electricity." F. In large part, that may be because California hopes its efforts will quickly be followed by other states so that it is not the only state raising the cost of burning fossil fuels. Already, New Mexico will attempt to reduce greenhouse gas emissions from energy use in the state by 2 percent per year, and 11 northeastern states have formed a regional cap-and-trade program. That said, it does not appear to improve the prospects for climate change action at a national level. Republican gains in the U.S. Congress suggest climate change and energy will not be addressed in the next two years, and a voluntary national cap-and-trade market for

companies, known as the Chicago Climate Exchange, will expire at the end of this year. G. Then again, it took more than a decade for California's car regulations to be adopted at the national level. That remains the main thing the Obama administration has done to cut greenhouse gas emissions nationally, and it was done via executive ordera method that does not require the congressional ratification. "Washington screwed around and couldn't get it done," says Sperling, who is also a member of the California Air Resources Board that set up the climate change program. "We're going to be adopting [cap-and-trade] in two weeks." Source: Scientific American Questions You should spend about 20 minutes on Questions 28 40 which are based on Reading Passage 3. Questions 28 32 The passage has seven paragraphs labelled AG. Which paragraph contains the following information? Write the correct letter A-G in boxes 28-32 on your answer sheet. NB: You may use any letter more than once. 28. 29. 30. 31. 32. The Global Warming Solutions Act pledged the state to reduce its greenhouse gas emission levels back to 1990 levels by 2020. The final rule is expected in early 2011. The state released its more than 3,000-page rules. The majority of the efforts are simple standards. Current emissions in the state are roughly 525 million metric tons of greenhouse gases.

Questions 33 36 Complete the sentences below with words taken from Reading Passage 3. Use NO MORE THAN TWO WORDS for each answer. Write your answers in boxes 33-36 on your answer sheet.

33. 34. 35. 36.

Voters have turned back an effort to suspend California's efforts to tackle . The states will save about $700 million a year just in . The low-carbon fuel standard orders providers to reduce the carbon intensity of their fuels . Chevron did not join efforts to suspend California's climate .

Questions 37 40 Complete the summary of the paragraphs E G below. Choose NO MORE THAN THREE WORDS for each answer. Write your answers in boxes 37-40 on your answer sheet. All of the companies have an obligation to the world to deliver clean, reliable, low 37 New Mexico will attempt to reduce greenhouse gas emissions from energy use in the state by 38 Republican gains in the U.S. Congress suggest climate change and energy will not be addressed in 39 . it took more than a decade for California's car regulations to be adopted at 40