Consider a three-tier pyramid and a single operating company.Assume that 51% of the votes confer control at each tier.What is the minimum percentage ownership (approximately)at the highest level in the pyramid that will enable control of the operating company?

Question

Quizplus · Accepted Answer

Assuming that the operating company is at the bottom of the pyramid, to have control of the operating company, one needs to have 51% ownership at each tier. Therefore, to have 51% ownership at the second tier, one needs to have at least 51% * 51%, which is approximately 26%. Similarly, to have 51% ownership at the third tier, one needs to have at least 51% * 51% * 51%, which is approximately 13%. Therefore, the minimum percentage ownership at the highest level in the pyramid that will enable control of the operating company is approximately 13% to 26%. The answer option closest to this range is D, which is 26%.

Consider a Three-Tier Pyramid and a Single Operating Company