A Firm with Securities Outstanding That Holders Can Convert Into

question 182

Multiple Choice

A firm with securities outstanding that holders can convert into, or exchange for, shares of common stock may report two earnings-per-share amounts:

• A)primary and diluted earnings per share.
• B)basic and diluted earnings per share.
• C)primary and secondary earnings per share.
• D)basic and secondary earnings per share.
• E)primary and decreased earnings per share.

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Definitions:

Short Run

The short run is a period in economics where at least one factor of production is fixed, limiting the adjustments a firm can make to its inputs.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it shows the cost of producing one more unit of output.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability of the firm to adjust production.

Competitive Firm

A business operating in a market where it has little to no influence over the price of its product or service due to competition.