Given the Following Convertible Securities, Determine the Appropriate Ranking to Determine

question 40

Multiple Choice

Given the following convertible securities, determine the appropriate ranking to determine their impact on diluted earnings per share calculations:
(1) 10% convertible preferred stock with dividends of $7,000 declared during the year and shares convertible into 2,500 common shares
(2) 6% convertible bonds with interest expense (net of taxes) of $8,000 and convertible into 3,500 common shares
(3) 8% convertible bonds with interest expense (net of taxes) of $5,000 and convertible into 1,600 common shares

• A) 1, 2, 3
• B) 3, 1, 2
• C) 2, 1, 3
• D) 1, 3, 2

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Definitions:

Sadism

A psychological condition where individuals derive pleasure from inflicting pain or suffering on others.

Chauvinism

An exaggerated or aggressive patriotism or blind enthusiasm for military glory; alternatively, it can refer to biased devotion to any cause, group, or gender.

Cardinal Trait

A personality trait that is so pervasive and dominant in a person's life that it influences nearly every aspect of their behavior.

Repetitive Physical Actions

Behaviors or activities that involve the continuous repetition of the same motion or set of motions, often associated with skill learning or stress reduction.