a. A company has two open seats, Seat A and Seat B, on its board of directors. There are six candidates vying for these 2 positions. There will be a single election to determine the winner of both open seats. As the owner of 10,000 shares of stock, you will receive one vote per share for each open seat. You decide to cast all 20,000 of your votes for a single candidate.

(i) What is this type of voting called?

(ii) With this type of voting, suppose the company has 1.2 million shares outstanding, how many more shares must you buy to be assured of earning a seat on the board?

b. Discuss the static trade-off theory and the pecking order theory of capital structure. What are the main differences between these two theories?