Trick Question EPS/Diluted EPS ask, question, however, correct

Andreas42

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 antidilutive), 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!”

kd26gioi

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

BC_MBA_student

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

CPATrader

The basic eps also becomes the diluted eps when the securities in question are antidilutive. 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 antidilutive
securities and you will find an easy method to always get the correct answer.