Question

Question 2:Voting Right A shareholder has a majority of 2,000 common shares who will be able to elect 4 from 8 directors. How many common shares of this shareholder is able to elect 4 from 8 directors? Please show the supportive calculation

Question :3 Stock Return (calculate the pre-tax and after-tax holding period return. Investors buys 30 shares of stock priced at $80 and sell the stock 6 months later for $95 after collecting a $0.50 dividend per share. What is the investors’ pre-tax and after-tax holding period return? Instruction: Please show the supportive calculation and brief explanation.

Answer 1

Question-2.

-Shareholders can vote in two different ways-

1.Straight voting or statutory voting

2.Cumulative voting.

-Straight voting, commonly known as statutory voting, is a corporate voting system that may be used to elect directors or to vote on important matters (e.g., voting on auditors, mergers and acquisitions opportunities, etc.). In the context of electing a director, each share is usually entitled to one vote per director seat.

-Cumulative voting is the procedure followed when electing a company's directors. Typically, each shareholder is entitled to one vote per share multiplied by the number of directors to be elected. This is a process sometimes known as proportional voting. Cumulative voting is advantageous for individual investors because they can apply all of their votes to one candidate.

# If straight voting Choosed-

-Statutory voting is a corporate voting procedure in which each shareholder is entitled to one vote per share and votes must be divided evenly among the candidates or issues being voted on.

-2000 shares are there and 4 directors to be choosed. Hence the share holder can vote maximum 2000 vote per director.

Director	Maximin vote per director
1	2000
2	2000
3	2000
4	2000

-Share holder cannot vote more than 2000 votes to a single director.

#If Cumulative Voting Choosed-

- Under Cumulative Voting  each shareholder is entitled to one vote per share multiplied by the number of directors to be elected.

-2000 share are there and 4 directors to be choosen. Hence the share holder has 2000*4 = 8000 votes. He can vote this in any proportion he want. Suppose he want to give 50:30:15:5 proportion.

Director	Proportion	Votes
1	50%	4000
2	30%	2400
3	15%	1200
4	5%	400
	Total	8000 votes

-----------------------------------------------------------------------------------------------------------------------

Question-3

-Holding period return is the total return received from holding an asset or portfolio of assets over a period of time, known as the holding period, generally expressed as a percentage. Holding period return is calculated on the basis of total returns from the asset or portfolio (income plus changes in value). It is particularly useful for comparing returns between investments held for different periods of time.

# Before tax Holding Period Return-

- Before tax Holding Period Return=

=

=

= 19.375%

# After Tax Holding Period return-

- After tax Holding Period Return=

Let tax on short term capital gain = 15% and dividend is exempted from tax.

Cost of the shares(A)	=30*80 =$2400
Sales Value of the shares(B)	=30*$95 = $2850
Short term capital gain(B-A)	$450
Tax on gain	=$450*15% = $67.5
Ending value received after tax	=$2850-$67.5 =$2782.5

After tax Holding period return = = 16.5625%