TRI reported holding five securities on January 1, 2021. There were no equity related transactions during the year and thus these remained unchanged throughout the year. You are provided the following particulars about the basic EPS plus the incremental effect per share required for the calculation of diluted EPS for each of the five securities are listed below: Adjusted Income ($) Shares Basic EPS $1,659,000 350,000 Security Change In Income Change In Shares Call Options $0 (21,000) Convertible Bonds $147,000 36,750 Convertible Preferred Shares $84,000 42,000 Put Options $0 14,000 Warrants $0 64,000 List all securities, highest to lowest, in the order of potential dilutiveness and assign the appropriate rank for each security. Select one: a. Call Options [R1], Put Options [R1], Warrants [R1], Convertible Bonds [R2], are all potentially dilutive securities; and Convertible Preferred Shares, being an equity component becomes anti-dilutive and is to be excluded. b. Put Options [R1], Warrants [R1] and Convertible Preferred Shares [R2] are all potentially dilutive securities; and Convertible Bonds [R2] being a long-term debt is reported annually at fair market value becomes anti-dilutive and so is to be excluded. c. Put Options [R1], Warrants [R1], Call Options [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and none of the securities should be excluded. d. d. Put Options [R1], Warrants [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and Call Options, being anti-dilutive are to be excluded. e. Put Options, Warrants and Call Options should be excluded as they do not contribute to income; and Convertible Preferred Shares [R1] and Convertible Bonds [R2] are both potentially dilutive securities.
TRI reported holding five securities on January 1, 2021. There were no equity related transactions during the year and thus these remained unchanged throughout the year. You are provided the following particulars about the basic EPS plus the incremental effect per share required for the calculation of diluted EPS for each of the five securities are listed below: Adjusted Income ($) Shares Basic EPS $1,659,000 350,000 Security Change In Income Change In Shares Call Options $0 (21,000) Convertible Bonds $147,000 36,750 Convertible Preferred Shares $84,000 42,000 Put Options $0 14,000 Warrants $0 64,000 List all securities, highest to lowest, in the order of potential dilutiveness and assign the appropriate rank for each security. Select one: a. Call Options [R1], Put Options [R1], Warrants [R1], Convertible Bonds [R2], are all potentially dilutive securities; and Convertible Preferred Shares, being an equity component becomes anti-dilutive and is to be excluded. b. Put Options [R1], Warrants [R1] and Convertible Preferred Shares [R2] are all potentially dilutive securities; and Convertible Bonds [R2] being a long-term debt is reported annually at fair market value becomes anti-dilutive and so is to be excluded. c. Put Options [R1], Warrants [R1], Call Options [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and none of the securities should be excluded. d. d. Put Options [R1], Warrants [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and Call Options, being anti-dilutive are to be excluded. e. Put Options, Warrants and Call Options should be excluded as they do not contribute to income; and Convertible Preferred Shares [R1] and Convertible Bonds [R2] are both potentially dilutive securities.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
TRI reported holding five securities on January 1, 2021. There were no equity related transactions during the year and thus these remained unchanged throughout the year. You are provided the following particulars about the basic EPS plus the incremental effect per share required for the calculation of diluted EPS for each of the five securities are listed below:
|
|
Adjusted Income ($) |
Shares |
|
Basic EPS |
$1,659,000 |
350,000 |
|
Security |
Change In Income |
Change In Shares |
|
Call Options |
$0 |
(21,000) |
|
Convertible Bonds |
$147,000 |
36,750 |
|
Convertible |
$84,000 |
42,000 |
|
Put Options |
$0 |
14,000 |
|
Warrants |
$0 |
64,000 |
List all securities, highest to lowest, in the order of potential dilutiveness and assign the appropriate rank for each security.
Select one:
a.
Call Options [R1], Put Options [R1], Warrants [R1], Convertible Bonds [R2], are all potentially dilutive securities; and Convertible Preferred Shares, being an equity component becomes anti-dilutive and is to be excluded.
b.
Put Options [R1], Warrants [R1] and Convertible Preferred Shares [R2] are all potentially dilutive securities; and Convertible Bonds [R2] being a long-term debt is reported annually at fair market value becomes anti-dilutive and so is to be excluded.
c.
Put Options [R1], Warrants [R1], Call Options [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and none of the securities should be excluded.
d.
d. Put Options [R1], Warrants [R1], Convertible Preferred Shares [R2], Convertible Bonds [R3] are all potentially dilutive securities; and Call Options, being anti-dilutive are to be excluded.
e.
Put Options, Warrants and Call Options should be excluded as they do not contribute to income; and Convertible Preferred Shares [R1] and Convertible Bonds [R2] are both potentially dilutive securities.
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