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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?
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CFA Level 1 Question of the Week - Corporate Finance 8 votes

A. Shareholders cannot vote without attending meetings.
62% 5 votes
B. Cumulative voting gives small shareholders more rights.
0% 0 votes
C. Shareholders do not like takeover defenses.
37% 3 votes

Comments

  • 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.

    AnalystPrep
    CFA Question Bank, Video Lessons, and Study Notes can be found at https://analystprep.com 
    Register today for 120 free practice questions and 10 hours of video
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