1. Mosby Corp. has convertible bonds and convertible preferred stock outstanding all year. Basic earning per share is $4.56. The earnings per incremental share of common stock is $1.99 for the convertible preferred stock and $2.50 for the convertible bonds.

a) the treasury stock approach should be used to calculate earnings per share

b) the convertible bonds are more dilutive than the convertible preferred stock

c) the convertible preferred stock is more dilutive than the convertible bonds

d) the convertible preferred stock and the convertible bonds are both anti-dilutive

2. Match the following terms with the appropriate definitions

a) Nonparticipating preferred stock

b) Stock dividend

c) Employee stock option plan

d) Legal capital

[ Choose ] That portion of corporate capital required by statute to be retained in the business for protection of creditors A form of compensation that creates additional paid in capital on the balance sheet. A dividend that decreases retained earnings and increases contributed capital Stock that is limited to a specified dividend rate per year.