If Convertible Bonds Were Issued at a Discount, When Computing

question 3

Multiple Choice

If convertible bonds were issued at a discount, when computing diluted EPS, the amortization of the bond discount:

• A) Will have no effect.
• B) Will decrease the numerator.
• C) Will increase the numerator.
• D) May increase or decrease the numerator, depending on the amortization method used.

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Definitions:

Multiple Products

Refers to a range of different items or SKUs that a company produces or sells.

Postponement

A strategy in logistics and supply chain management that delays product customization until customer orders are received, to reduce inventory and improve responsiveness.

Overall Profits

The total financial gains made by a company after all expenses and costs have been subtracted from total revenues.

Single Product

Refers to a business or production strategy focusing on the manufacture or sale of only one type of product.