In Applying the Treasury Stock Method of Computing Diluted Earnings

question 64

Multiple Choice

In applying the treasury stock method of computing diluted earnings per share, when is it appropriate to use the average market price of common stock during the year as the assumed repurchase price?

• A) Always
• B) Never
• C) When the average market price is higher than the exercise price
• D) When the average market price is lower than the exercise price

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Definitions:

Pharynx

A muscular tube that serves as a pathway for the movement of food from the mouth to the esophagus and for air from the nose and mouth to the larynx.

Integumentary System

The bodily system consisting of the skin, hair, nails, and exocrine glands; it protects the body from external damage and regulates temperature.

Lymphatic System

A network of vessels, tissues, and organs that helps to maintain fluid balance, protect against pathogens, and support the immune system.

Nervous System

The part of an organism that coordinates its actions by transmitting signals to and from different parts of its body.