Diluted EPS includes the impact of:

A Only outstanding shares

B Stock options, convertible securities, and other potentially dilutive instruments

C Treasury stock only

D Preferred stock only

✓ Correct Answer: Option B

Diluted EPS: assumes all potentially dilutive instruments (options, warrants, convertible debt/preferred) are converted/exercised.

💡 Why is B) the correct answer?

The correct answer to the question "Diluted EPS includes the impact of:" is Option B: Stock options, convertible securities, and other potentially dilutive instruments.

The other options — A) Only outstanding shares, C) Treasury stock only, D) Preferred stock only — are incorrect for this CFA Exam Prep question. As explained above: Diluted EPS: assumes all potentially dilutive instruments (options, warrants, convertible debt/preferred) are converted/exercised.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Financial Reporting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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Diluted EPS includes the impact of:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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