Which of the Following Is True for a fiRm with Positive

question 22

Multiple Choice

Which of the following is true for a firm with positive earnings?

• A) When bonds are converted into shares of stock, earnings per share increases.
• B) When warrants are exercised, earnings per share increases.
• C) The number of shares of stock outstanding will decrease with either convertible bonds or warrants.
• D) Exercise of warrants and conversion of bonds will always result in a decrease in the price of the stock.
• E) Fully diluted earnings per share with either warrants or convertible bonds will be lower than earnings per share based only on shares presently outstanding.

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Definitions:

Predictable Demand

The level of product or service consumption that can be forecasted with a high degree of accuracy based on historical data and market analysis.

Working Capital

The amount of available capital that a company can readily use for day-to-day operations, calculated as current assets minus current liabilities.

Stockouts

Occurs when an item is not in stock and cannot be provided to the customer, leading to lost sales or customer dissatisfaction.

Basilic Vein

A large vein on the inner side of the upper arm and forearm, often used for intravenous injections or blood sampling.