QuestionJune 24, 2025

A firm has four open positions on its board of directors. How many shares do you need to own to guarantee your own election to the board if the firm has 387,500 shares of stock outstanding and uses cumulative voting?Each share is granted one vote. Multiple Choice 33.334 shares 70.501 shares 96,876 6,876 shares 77501 shares 75.251 shares

A firm has four open positions on its board of directors. How many shares do you need to own to guarantee your own election to the board if the firm has 387,500 shares of stock outstanding and uses cumulative voting?Each share is granted one vote. Multiple Choice 33.334 shares 70.501 shares 96,876 6,876 shares 77501 shares 75.251 shares
A firm has four open positions on its board of directors. How many shares do you need to own to guarantee your own election to the board if the firm has 387,500
shares of stock outstanding and uses cumulative voting?Each share is granted one vote.
Multiple Choice
33.334 shares
70.501 shares
96,876 6,876 shares
77501 shares
75.251 shares

Solution
4.3(246 votes)

Answer

77,501 shares Explanation 1. Determine the number of votes needed To guarantee election, you need more than 1/(n+1) of the total shares, where n is the number of open positions. Here, n = 4. 2. Calculate the minimum shares required The formula for the minimum shares needed is \left(\frac{Total\ Shares}{n+1}\right) + 1. Substitute the values: \left(\frac{387,500}{5}\right) + 1 = 77,501.

Explanation

1. Determine the number of votes needed<br /> To guarantee election, you need more than 1/(n+1) of the total shares, where n is the number of open positions. Here, $n = 4$.<br /><br />2. Calculate the minimum shares required<br /> The formula for the minimum shares needed is $\left(\frac{Total\ Shares}{n+1}\right) + 1$. Substitute the values: $\left(\frac{387,500}{5}\right) + 1 = 77,501$.
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