- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 7. Earnings per Share
CFA Practice Question
How are stock options treated when diluted earnings per share is computed?
A. Stock options are considered only if they are dilutive.
B. Stock options are considered only if they were exercised.
C. Stock options are considered only if they are antidilutive.
Explanation: Stock warrants and options are only considered if they dilute the earnings available to common shareholders.
User Contributed Comments 3
| User | Comment |
|---|---|
| swift | won't stock options always be dilutive? if they are exercised its because x < average price? |
| monteleone | They will only be dilutive if they will add to the number of shares outstanding. The options could possibly be converted into other "securities" |
| rrichmondo | If they could be converted into other securities, why would they be called 'stock' options ? |