SIE TOP Exam Guide Questions and CORRECT Answers

Voting Rights - Holders of common stock have ______ _______, which allow them to exercise control by electing the board of directors and voting on corporate policy. This contrasts with holders of preferred stock, who typically do not have voting rights. Statutory Voting Rights - allows a shareholder to vote one time per share for each seat on the board of directors. For example, if an investor owns 100 shares of common stock and there are three board seats to be filled, they can cast up to 100 votes for each of the three seats. Cumulative Voting Rights - allows the shareholder to pool their votes together and allocate them as desired. For example, the shareholder above can aggregate all of their votes - 300 total (100 votes x 3 seats) and allocate them however they choose (e.g. they could cast all 300 votes for one candidate or cast 200 for one candidate and the remaining 100 votes for another). Benefits the small investor.