In general, when a convertible security is exchanged for common stock, the overall effect is which of the following?
I. stock shares will decrease
II. earnings per share will decrease.
A) I only
B) II only
C) Both I and II
D) Nether I nor II

Question

Quizplus · Accepted Answer

When a convertible security is exchanged for common stock, the number of shares increases, which typically leads to a decrease in earnings per share (EPS) because the same earnings are now spread over a larger number of shares.

In General, When a Convertible Security Is Exchanged for Common