CAF-6 · Chapter 11 · Question 13 of 15
When calculating diluted EPS, share options are assumed to be exercised:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Only if the exercise price is lower than the average market price.
Explanation
Options are dilutive (and thus included in diluted EPS) only when their exercise price is lower than the average market price of the shares during the period (i.e., they are 'in the money').
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