Your fiRm Is Converting from Cumulative Voting to Straight Voting

question 224

Multiple Choice

Your firm is converting from cumulative voting to straight voting. You currently own the minimum number of shares needed to assure yourself a seat on the board in any election under cumulative
Voting. How many more shares must you purchase in order to assure yourself a seat under straight
Voting? Assume there are a total of 500,000 shares outstanding and that three directors go up for
Election at a time.

• A) 0
• B) 25,000
• C) 125,000
• D) 250,000
• E) 250,001

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Definitions:

Fisher Formula

An equation used in economics and finance that describes the relationship between nominal interest rates, real interest rates, and the inflation rate.

Real Rate

is the interest rate adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.

Interest Rate Risk

The potential for investment value fluctuations due to changes in the prevailing interest rates.

Maturity

The specified time at which the principal amount of a bond, loan, or other financial instrument is due to be paid in full.