Question
A firm has basic earnings per share of $1.90. If the tax rate is 30%, which of the following securities would be dilutive? (Circle the
A firm has basic earnings per share of $1.90. If the tax rate is 30%, which of the following securities would be dilutive? (Circle the best answer.) a. Convertible 5% bonds, issued at par, with each $1,000 bond convertible into 20 shares of common stock. b. Convertible 6% bonds, issued at par, with each $1,000 bond convertible into 20 shares of common stock. c. Cumulative convertible 4%, $100 par, preferred stock, issued at par, with each preferred share convertible into two shares of common stock. d. Cumulative convertible 3%, $100 par, preferred stock, issued at par, with each preferred share convertible into one share of common stock. e. Cumulative 7%, $50 par preferred stock.
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