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gizmo_the_mogwai [7]
2 years ago
7

The basic earnings per share and the diluted earnings per share would have quite different values for a firm that relied heavily

on preferred stock and convertible debt securities to acquire funds.True/False
Business
1 answer:
S_A_V [24]2 years ago
7 0

Answer: TRUE

Explanation:BASIC EARNINGS PER SHARE is a term used in the financial Securities market to mean the NET INCOME available to common shareholders.

DILLUTED EARNINGS PER SHARE is a term used in the financial Securities market to describe the outstanding profits available to common shareholders, after all the preferred stocks, warrants,convertible securities have been converted to common stocks.

Preferred stocks are also called hybrid stock, because it has certain features of common stock and convertible securities,it has a higher priority than common stock to payment of dividend etc.

Convertible debt securities are debt securities which can be converted to common stocks.

It basic earnings and diluted earning per share will definitely not be the same for such a firm.

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Answer:

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Answer:

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We use the dividend discount method to estimate the current price. We use the growth rate and required return to figure out the current price by using the DDM formula.

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