CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following statements regarding basic and diluted EPS is (are) FALSE?

I. Antidilutive securities decrease EPS if they are exercised or converted.
II. A simple capital structure contains no potentially dilutive securities.
III. Dilutive securities decrease EPS if they are exercised or converted to common stock.
IV. When using the treasury stock method, always use average price rather than ending share price.
A. I only
B. I and III
C. II, III and IV
Explanation: Antidilutive securities increase EPS if exercised or converted to common stock.

User Contributed Comments 3

User Comment
myanmar dilutive sec. decreases eps while antidilutive sec. increases eps, right?
prachirp very much
neokamjain dilutive sec. does not necessarily decrease EPS... it can increase too depending on its impact on earnings and equity. I think option 3 is ambigious.
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