Question

When calculating diluted EPS, which of the following, if dilutive, would cause the weighted average number of shares to increase?

1) Convertible bonds
2) Stock options
3) Stock warrants
4) All of the above

Answer 1

Convertible bonds, stock options, and stock warrants, if dilutive, would cause the weighted average number of shares to increase when calculating diluted EPS.

Step-by-step explanation:

When calculating diluted EPS (Earnings Per Share), all of the following - convertible bonds, stock options, and stock warrants - if dilutive, would cause the weighted average number of shares to increase.

Convertible bonds are debt instruments that can be converted into a company's common stock at a predetermined price.

Stock options give employees or certain stakeholders the right to purchase company stock at a predetermined price. Stock warrants are similar to stock options and allow the holder to purchase shares at a specific price during a certain period.