Khloe owns 18 percent of KLK Clothing that has a total of 139,000 shares of stock outstanding.

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