Trick Question - EPS/Diluted EPS option, whether, correct, however, question

franzino

I'm using SchweserPro Q Bank.

The question asked to compute the diluted EPS - question basically said "what is the diluted EPS?"

I calculated the right answer, however as the basic EPS (the question did not ask to compute the basic EPS) was less than the diluted EPS (i.e the convertibles were anti-dilutive), the correct answer was the option for the basic EPS Calculation.

BUT, the question doesn't ask what the Basic EPS was, or whether the basic or diluted EPS should or should not be used, it simply says "compute basic EPS". Does this mean that for all questions that ask for Diluted EPS I need to calculate the Basic EPS also...just for good measure? Will the real CFA exam be so "tricky" and "mean!"



Edited 1 time(s). Last edit at Sunday, June 21, 2009 at 03:52AM by CFANZ.

dotamasta

yes , june 2009 exam had one ques (may be more but one for sure) which had an anti dilutive security .

ramdabom

This isn't tricky at all, check the basic before the diluted eps for every question of this type you do.

pogo

The basic eps also becomes the diluted eps when the securities in question are anti-dilutive. They are one in the same. So even though you used the correct calculation
for finding diluted eps this answer is not the true diluted eps. They are actually being
straight foward here. Always calculate both ways and compare in search of anti-dilutive
securities and you will find an easy method to always get the correct answer.



Edited 2 time(s). Last edit at Thursday, June 25, 2009 at 09:56AM by Investor83.