A company has basic earnings per share of 1218 If the tax ra

A company has basic earnings per share of $12.18. If the tax rate is 25%, which of the following securities would be dilutive?

I. 15,000 incentive stock options with an exercise price of $17 to its employees and an average market price of $15 per share.

II. Cumulative 9%, $30 par preferred stock.

Multiple Choice

I and II

I only

Neither I nor II

II only

The answer is C neither I nor Ii

The exercise price of stock options is $17 and market price of the share is $ 15 therefore option is is not dilutive

Since in second option the preference share is not convertable it is not dilutive