A Subsidiary Has Dilutive Securities Outstanding That Include Convertible Bonds

question 7

Multiple Choice

A subsidiary has dilutive securities outstanding that include convertible bonds payable.The bonds are convertible into the parent's common stock.When calculating consolidated diluted earnings per share,the convertible bonds will affect

• A)the numerator of consolidated diluted EPS only.
• B)the denominator of consolidated diluted EPS only.
• C)the numerator and denominator of consolidated diluted EPS.
• D)None of the above will be affected.

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Definitions:

Required Rate

The minimum return an investor is willing to accept when investing in a project, taking into account the risk level of the investment.

Annual Dividend

The total amount of money paid by a company to its shareholders in the form of dividends over a year.

Gross Domestic Product

A measure of the economic output of a country, calculated as the total value of all goods and services produced within the country's borders in a specific time period.

Market Value

The current price at which an asset or service can be bought or sold, determined by supply and demand.