### CFA Practice Question

There are 534 practice questions for this study session.

### CFA Practice Question

BWT Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding at the beginning of the year.

• 6.125% convertible bond, convertible into 33 shares of common stock. Issue price \$1,000, 100 bonds outstanding.
• 6.25% convertible preferred stock, \$100 par, 3,710 shares outstanding. Convertible into 3.3 shares of common stock, issue price \$100.
• 8% convertible preferred stock, \$100 par, 5,604 shares outstanding. Convertible into 5 common shares, issue price \$80.
• 12,380 warrants are outstanding with an exercise price of \$40. Each warrant is convertible into 1 share of common stock.
• Average market price of common stock is \$53.00 per share. Common shares outstanding at the beginning of the year were 45,888.
• Net income for the period was \$200,000 while the tax rate was 40%.

What was the after-tax interest charge?
A. \$2,021
B. \$3,675
C. \$2,450
Explanation: (100 bonds)(\$61.25 interest per bond) = \$6,125 interest paid (\$6,125)(1-.4) = \$3,675 interest