Digistore,Inc

question 37

Multiple Choice

Digistore,Inc. ,had 400,000 shares of $20 par common stock and 40,000 shares of $100 par,6% cumulative,convertible preferred stock outstanding for the entire year ended December 31,2014.Each share of the preferred stock is convertible into 5 shares of common stock.Digistore's net income for 2014 was $1,680,000.For the year ended December 31,2014,the diluted earnings per share is

• A) $2.40.
• B) $2.80.
• C) $3.60.
• D) $4.20.

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Definitions:

Repurchase Agreements

Short-term borrowing for dealers in government securities, where the dealer sells the government securities to investors, usually on an overnight basis, with an agreement to buy them back.

Counterparty

The other organization or party involved in a financial transaction, opposite to the primary party initiating the transaction.

Futures Contract

A formal contract to purchase or sell a specific financial asset or commodity at an agreed-upon price on a future date.

Credit Risk

The risk of loss due to a borrower's inability to make payments on any type of debt.