QUESTION: 45

Stockholders' privilege to subscribe to new issues of voting stock, usually the common stock or securities convertible into voting stock, usually the common stock or securities convertible into voting stock, before such offerings are made to non stockholders. This is called:

A privileged subscription right
A preemptive right
Non-disclosure status
Pre-offering status

Answer(s): A,B

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QUESTION: 46

If there are five directors to be elected, and 500 shares are outstanding and voting for the election of directors, the minimum number of shares necessary to elect one director would be
84 shares. Proof: 84 shares time five directors to be elected equals 420 votes, all cast for one director. Assuming the rest of the stock (416 shares) votes en bloc as the majority, such total of 2, 080 votes distributed among five directors would be 416 votes each. Therefore, individual representing the minority and receiving its 420votes is sure to get one of the places on the board, the majority getting the other four places. The minority in this example must be sure to vote all of its 420 votes for one director; if it distributed the 420 votes among two, it obviously would not win any places on the board. Cumulative voting, move over, requires a majority of the stock to be able to elect a majority of the board. In the above example, five directors, shares are necessary, or a majority of the shares total.

200, 400
150, 300
251, 500
249, 500

Answer(s): C

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QUESTION: 47

If the language of the relevant agreements indicates that minority block of stock will be valued on a controlling ownership interest level of value, a full lack of control discount will not apply to the transactions to which the provision is applicable. For example:

The agreement may say that the subject shares will be valued "on an enterprise basis" or as "a per share portion of the over all company value."
A lack of control discount must be applicable to over all business value
Lack of control discount may not be inflated due to influences of ownership control
Some of the benefits of ownership control are lost due to public disclosure

Answer(s): D

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QUESTION: 48

1+ premium
This is a formula for:

Converting a control premium
Identifying a total of shareholders
Converting a control premium to a market based premium
Converting a control premium to an implied minority discount

Answer(s): D

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