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CFA Level 1 Question of the Week - Corporate Finance

Which one of the following statements is least accurate regarding shareholder rights?

CFA Level 1 Question of the Week - Corporate Finance 11 votes

A. Shareholders cannot vote without attending meetings.
72% 8 votes
B. Cumulative voting gives small shareholders more rights.
0% 0 votes
C. Shareholders do not like takeover defenses.
27% 3 votes


  • The correct answer is A.

    Shareholders can vote without attending meetings. Shareholders may vote at a meeting by attending in person but, in fact, most shareholders vote by "proxy" without being present in person.

    Options B is correct. Cumulative voting is a type of voting system that helps strengthen the ability of minority shareholders to elect a director. This method allows shareholders to cast all of their votes for a single nominee for the board of directors when the company has multiple openings on its board. 

    Option C is correct. Takeovers benefit investors but threaten incumbent, inefficient management. As such, takeover defenses are not well perceived by shareholders.

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