Which of the Following Statements Is False Regarding Diluted Earnings

question 87

Multiple Choice

Which of the following statements is false regarding diluted earnings per share?

• A)Reporting diluted earnings per share is required by GAAP when potentially significant dilution of EPS exists.
• B)Diluted earnings per share can be used to reflect the extent of potential share dilution.
• C)Diluted earnings per share is not reported by some companies.
• D)Diluted earnings per share is always the same as basic earnings per share.

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Definitions:

Nonsystematic Standard Deviation

A measure of the dispersion of returns on an investment due to factors specific to an individual asset or company, not the market.

Equally-Weighted Portfolio

An investment portfolio in which each asset is invested in with an equal amount of capital, providing diversification and reducing risk.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Security Market Line

A line drawn on a graph that shows the relationship between risk and the expected return of the market, used in the capital asset pricing model to determine a security's risk premium.