Problem 1 (8 Marks) Indicate which of the following types of securities would be included in the calculation of “basic earnings per share,” and which would be included in the calculation of “diluted earnings per share.” Place a “B” before those which affect only basic EPS, a “D” before those which affect only diluted EPS, a “BD” before those which affect both basic and diluted EPS, and an “N” before those securities which do not affect EPS calculations. Assume that, where applicable, the securities are dilutive. __ 1. Notes payable __ 2. Executive stock options __ 3. Convertible bonds __ 4. Cumulative, nonconvertible preferred shares __ 5. Warrants to purchase additional common shares __ 6. Common shares __ 7. Nonconvertible bonds __ 8. Convertible preferred shares
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