CFA Practice Question

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CFA Practice Question

Which of the following statements is (are) true?

I. In simple capital structures, only basic EPS is calculated.
II. In complex capital structures, basic EPS and diluted EPS are both calculated.
III. The purpose of dual presentation is to demonstrate the effect of any conversion on the EPS figure.
Correct Answer: I, II and III

All of the statements are true. The reason for requiring the second EPS number (diluted EPS) is to demonstrate the effect of any possible conversion on EPS. The first EPS number (basic EPS) demonstrates EPS without any possible conversion as a basis for comparison.

User Contributed Comments 4

User Comment
Inaganti6 Now only if the exam asked questions as easy as this.
choas69 40 practice questions only for this LOS, if you finish the 5200 awaiting for you then you have a high chance of passing the exam and only passing.
sjugeli Can we say "any conversion" when it does not demonstrate effect of antidilutive conversions?
Konstantis I agree with you sjugeli
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