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Answers to AMA Member Challenge
March 2008

Bank of America and Chevron will replace Altria Group and Honeywell International on what 111-year-old, 30-member U.S. stock benchmark, in its first member change since 2004?

• Forbes 100
• Fortune 500
• Dow Jones Industrial Average
• National Stock Exchange

Correct answer: Dow Jones Industrial Average.  Experts say Altria’s departure was prompted by its spinoff of Kraft Foods and the planned divestiture of its overseas tobacco unit. The addition of Chevron, the country’s #2 fuel producer, reflects the growing importance of energy companies in the U.S. stock market. The Dow is the oldest benchmark for U.S. stocks.

2. Which fast food chain has enjoyed a whopping success with gut-busting delights including the 1,000 calorie “Stacker” and the “Enormous Omelet Sandwich”?

• Bob’s Big Boy
• Burger King
• Boston Market
• Belly Deli

Correct answer: Burger King.  The company has posted 16 consecutive quarters of growth in same-store sales by luring its target demographic—18–24-year-old males—on he-man-sized offerings (the “Stacker” contains up to four meat patties) and by forging sponsorships with Nascar and the NFL.

3. If no Democratic presidential nominee emerges during primary season, the party’s 796 superdelegates will play a critical role at their August convention. What’s so super about superdelegates?

• They are free to vote as they wish
• Each of their votes counts 10-fold
• They don’t have to register to vote
• Their names remain secret

Correct answer: They are free to vote as they wish. According to the New York Times, the superdelegates include all Democratic governors and members of Congress, plus other prominent party members. Superdelegates were created in 1982 to increase party insiders’ influence in the nomination process.

4. Which popular Sunnyvale, CA-based Internet company has so far spurned Microsoft’s $44.6 billion purchase bid?

• SearchMe
• Lexis Nexis
• Google
• Yahoo

Correct answer: Yahoo. This is the first time Microsoft has made an unsolicited offer for a company, and its representatives have stated that they may consider a hostile takeover of Yahoo. Microsoft’s bid was 62% percent more than Yahoo's stock price the day before the bid became public.

5. To ease some Americans’ tax burden, President Bush signed the Tax Increase Prevention Act of 2007, commonly known as the “A.M.T. patch.” What does A.M.T. stand for?

• Alternative Minimum Tax
• Arbitrary Malfeasance Tax
• Adjusted Methodical Tax
• Ancillary Maintenance Tax

Correct answer: Alternative Minimum Tax.  The Alternative Minimum Tax was originally introduced to ensure that wealthy Americans pay taxes. However, because A.M.T. brackets and exemptions are not annually adjusted for inflation, many people of moderate means end up paying the tax. According to the New York Times, the A.M.T. patch will benefit an estimated 20 million Americans.