"You read a book and I read the newspaper."
Translation:Tu leggi un libro ed io leggo il giornale.
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I did a quick google and came up with this. This rule comes from avoidance of cacophony because "ed" sounds better preceding a word that begins with an "e" most of the time; however, it appears that either can work one just sounds better.
http://answers.yahoo.com/question/index?qid=20110808121905AA2THC8
The duolingo explaination for "e" vs. "ed" says both are right and it's a matter of preference, but that you should prefer to avoid cacophony, so don't say 'e io', you should say "ed io". HOWEVER, the question here says 'mark all correct translations' and if you mark both 'e' and 'ed' you get the correct answer :)
Good luck, I know sometimes these little rules are tricky, and the computer interpretation of your answers can be a little off at times. Be patient and keep trodding forward!