Which of the Following Activities Represents an External Benefit

question 16

Multiple Choice

Which of the following activities represents an external benefit?

• A) the decrease in travel time for someone who flies a lot when a new airport is built in their neighbourhood
• B) the increase in the value of property belonging to your neighbours when you hire a landscaper to beautify your front yard
• C) the profits owners get from the building of a new factory
• D) the benefit to a consumer from watching a film on DVD

---

Definitions:

Convertible Bonds

Convertible bonds are fixed-income securities that the holder can convert into a specified number of shares of the issuing company, usually at a pre-determined time.

Basic EPS

A measure of a company's profitability, calculated as net income divided by the number of outstanding shares of common stock; stands for Basic Earnings Per Share.

Diluted EPS

Earnings per share calculated using the potential conversion of dilutive securities, showing the possible decrease in earnings per share if these were converted.

Convertible Bonds

Bonds that can be converted into a predetermined number of shares of the issuing company's stock at certain times during their life, usually at the discretion of the bondholder.