In Applying the Treasury Stock Method to Determine the Dilutive

question 35

Multiple Choice

In applying the treasury stock method to determine the dilutive effect of stock options and warrants, the proceeds assumed to be received upon exercise of the options and warrants

• A) are used to calculate the number of common shares repurchased at the average market price, when computing diluted earnings per share.
• B) are added, net of tax, to the numerator of the calculation for diluted earnings per share.
• C) are disregarded in the computation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common stock.
• D) none of these.

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Definitions:

Rule of Reason

A legal doctrine used in antitrust law, determining the legality of a business practice based on its overall reasonableness and its impact on competition.

American Tobacco

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Labor unions are organized groups of workers that aim to protect and advance their members' interests through collective bargaining with employers.

Antitrust Enforcement

The regulation and legal processes initiated by governments to prevent or reduce anti-competitive practices and promote fair competition among firms.