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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