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Questions on Dilluted EPS

Let’s say you get a Diluted EPS question during the real exam that includes all three items: convertible preferreds, convertible debt and warrants.
Are you going to bother calculating the dilutive effect of each of the three separately to make sure they’re not antidilutive? Are you going to do a quick “back of the napkin” calculation (say: say, dividing the par value of the convertible bonds by the number of shares they can be converted into and comparing that to the ending stock price)?
Or are you just going to assume that if they give you a question with all three, all three will be dilutive (unless, for example, the options are out of the money…)?

I don’t know but I sure hope I am good enough at these where I can do the quick test to see if the individual parts are dillutive. I will be assuming nothing.

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I will skip it and come back to it

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inthemoney warrants always dillutive

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If they give you the average market value and end year value of the warrants which do you use?

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Yeah, I think I am thinking of the same question. I’m pretty sure you always use year end.

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Schweser said to use the average
Exam 3 afternoon session #51 pg 284 volume 1

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I am pretty sure it was average because I remember thinking “That doesn’t make sense…”

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We have to use average.

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