The Holder of the Following Security Gives an Option to the Issuer

question 2

Multiple Choice

The holder of the following security gives an option to the issuer:

• A) a callable bond
• B) a convertible bond
• C) an employee stock option
• D) a stock
• E) a warrant

---

Definitions:

Return On Equity

A profitability measure that calculates the amount of net income returned as a percentage of shareholders' equity.

Earnings Per Share

A measure of a company's profitability that calculates the portion of a company’s profit allocated to each outstanding share of common stock.

Earnings Per Share

A measure of a company's profitability calculated by dividing its net earnings by the number of outstanding shares.

Price-Earnings Ratio

A valuation ratio for a company calculated by dividing its current share price by its earnings per share, indicating the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company's earnings.