Series 7 Exam Question 11: Answer and Explanation

Question: 11

Johnny Investor owns 2,000 shares of common stock of a company. The company has four vacancies on the board of directors. If the voting is cumulative, the investor may vote in any of the following ways EXCEPT

• A. 2,000 votes for each of the four open positions
• B. 4,000 votes each for two of the four open positions
• C. 5,000 votes for one of the four open positions and 3,000 votes for another of the open positions
• D. 3,000 votes for three of the four open positions

Correct Answer: D

Explanation:

D. Under cumulative voting rules, this investor would have a total of 8,000 votes 2,000 shares × 4 vacancies), which can be voted in any way he sees fit. Answers A, B, and C are all possible but answer D would require Johnny to have 9,000 votes (3,000 votes × 3 candidates), which he doesn't have.