Green and Go has 180,000 shares of stock outstanding with a current market value of $48 a share. You own 22,500 of those shares. Next month, the election will be held to select four new members to the board of directors. The firm uses a cumulative voting system. How much additional money do you need to spend to guarantee that you will be elected to the board assuming that everyone else votes for one of the other candidates? Select one: O a. C. $960,048 O b. B. $648,048 O c. E. $1,728,048 O d. A. $552,048 O e. D. $1,080,048
Green and Go has 180,000 shares of stock outstanding with a current market value of $48 a share. You own 22,500 of those shares. Next month, the election will be held to select four new members to the board of directors. The firm uses a cumulative voting system. How much additional money do you need to spend to guarantee that you will be elected to the board assuming that everyone else votes for one of the other candidates? Select one: O a. C. $960,048 O b. B. $648,048 O c. E. $1,728,048 O d. A. $552,048 O e. D. $1,080,048
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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5.
Transcribed Image Text:### Cumulative Voting in Board Elections: A Practical Problem
**Scenario:**
Green and Go has a total of 180,000 shares of stock outstanding. The current market value per share is $48. As a shareholder, you own 22,500 of these shares. An upcoming election will take place to select four new board members, and the firm utilizes a cumulative voting system.
**Objective:**
Determine the additional funds required to ensure election to the board, assuming all other votes go towards other candidates.
**Cumulative Voting System:**
In a cumulative voting system, shareholders allocate their votes based on the number of shares they own multiplied by the number of board members to be elected. This allows them to allocate multiple votes to a single candidate if desired.
**Problem:**
To guarantee your election to the board, calculate the number of shares needed considering the number of shares you currently own.
**Options:**
Select the required additional amount to spend:
- a. $960,048
- b. $648,048
- c. $1,728,048
- d. $552,048
- e. $1,080,048
**Instructions for Resolution:**
Analyze your current share position, utilize the cumulative voting strategy effectively, and compute costs based on share price to ensure your goal of board representation is met.
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