CFA Practice Question

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CFA Practice Question

A complex capital structure, for purposes of determining disclosure of diluted EPS, is distinguished from a simple capital structure by the ______.

A. company's use of antidilutive securities
B. company having preferred stock outstanding
C. company having issued warrants, convertible securities, or options
Correct Answer: C

A complex structure contains potentially dilutive securities such as options warrants or convertible securities. A simple capital structure contains only common stock and non-convertible securities, and no potentially dilutive securities.

User Contributed Comments 2

User Comment
johntan1979 How is preferred stock not potentially dilutive?
johntan1979 Ok, got the answer in the next question's answer. Preferred stock is only dilutive if it is convertible.
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