Exercise 1-8

When we compute the diluted earnings per share, under the treasury stock method for stock options, if the exercise price of the options exceeds the average market price, then:

A. we present both diluted earnings per share and basic earnings per share.

B. we present only diluted earnings per share, but not basic earnings per share.

C. the number of shares assumed issued will be greater than the number of shares assumed reacquired.

D. the number of shares assumed issued will be smaller than the number of shares assumed reacquired.