Chapter 14, Problem 14.1APE

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

$\text{Earnings per share}=\frac{\text{Net income }-\text{Preferred dividends}}{\text{ Number of common shares outstanding}}$

Earnings per share of common stock.