Consider a firm that has dual-class shares with 250 million Class A shares (having 1 vote each) and 75 million nonlisted Class B shares having 8 votes each.The shares are otherwise identical.If one requires 51 percent of the votes to control the firm, what number of Class B shares must one control?

Question

Quizplus · Accepted Answer

The total number of votes is calculated as follows:
250 million Class A shares x 1 vote each = 250 million votes
75 million Class B shares x 8 votes each = 600 million votes

Therefore, the total number of votes is 850 million.

To control the firm, one needs 51% of the votes, which equals 433.5 million votes (51% of 850 million).

Since each Class B share has 8 votes, to get 433.5 million votes, one needs to control 54.2 million Class B shares.
(433.5 million votes needed / 8 votes per Class B share = 54.2 million Class B shares needed to control the firm.)

Therefore, the correct answer is C.

Consider a Firm That Has Dual-Class Shares with 250 Million