Khloe owns 18 percent of KLK Clothing that has a total of 139,000 shares of stock outstanding.
E) 8,051 shares
Answer: A
Explanation: Number of shares required = (0.5 × 48,300) + 1 = 24,151 shares
Difficulty: 3 Hard
Section: 6.5 Some Features of Common and Preferred Stocks
Topic: Shareholder voting Bloom’s: Level 3 Apply AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
85) Khloe owns 18 percent of KLK Clothing that has a total of 139,000 shares of stock outstanding. Each share receives one vote for each open seat on the board. The next election will select three new directors. The market price per share is $31. How much does Khloe need to spend, if any, to guarantee her election to the board if the firm has a cumulative voting policy
and no one else votes for her? A) $301,661
B) $278,248
C) $660,749
D) $700,648
E) $421,049
Answer: A
Explanation: Total number of shares needed = [139,000 / (3 + 1)] + 1 = 34,751 shares
Additional shares needed = 34,751 − (0.18 × 139,000) = 9,731 shares
Additional investment needed = 9,731 × $31 = $301,661
Difficulty: 3 Hard
Section: 6.5 Some Features of Common and Preferred Stocks
Topic: Shareholder voting Bloom’s: Level 4 Analyze AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
86) Denver Machinery has 140,800 shares of stock outstanding, and each share receives one vote for each open seat on the board of directors. There are five open seats at this time. How many shares must you control to guarantee your personal election to the board if the firm uses cumulative voting?
A) 17,001 shares B) 28,001 shares C) 28,160 shares D) 23,468 shares E) 19,251 shares Answer: D
Explanation: Number of shares required = [140,800 / (5 + 1)] + 1 = 23,468 shares
Difficulty: 3 Hard
Section: 6.5 Some Features of Common and Preferred Stocks
Topic: Shareholder voting Bloom’s: Level 3 Apply AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
