On January 1, 2014, WXY Had Stock Warrants Outstanding to Purchase

question 102

Multiple Choice

On January 1, 2014, WXY had stock warrants outstanding to purchase 6,000 shares at an option price of $10.The common shares' market price was $15 the entire year.The firm has 200,000 common shares outstanding at the end of the year.The effect of the warrants on EPS is to:

• A)Affect the diluted EPS calculation, but not the basic EPS calculation.
• B)Increase the denominator of all EPS calculations by 4,000 shares.
• C)Increase the denominator of all EPS calculations by 6,000 shares.
• D)Have no potentially dilutive effect on the EPS calculation.
• E)Increase the denominator of all EPS calculations by 2,000 shares.

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Definitions:

Audition

The sense of hearing; the process by which sound waves are detected and interpreted by the brain.

Sensory Interaction

The process by which multiple sensory modalities interact to influence perception and behavior, such as how taste and smell combine to create flavor.

Serial Processing

A cognitive process in which the brain analyzes information in a sequential, step-by-step manner.

Top-Down Processing

A cognitive process that emphasizes the importance of conceptual knowledge, expectations, and memories in making interpretations and decisions, starting with generalities before moving to specifics.