If Preferred Stock, Which Can Be Exchanged for Long-Term Debt

If preferred stock, which can be exchanged for long-term debt in three years, is classified as an equity financial instrument instead of a liability, then

A) the current ratio declines.
B) earnings per share is less than if the preferred stock was reported as debt.
C) fixed assets and net worth increase.
D) the debt/equity ratio is less than if the preferred stock was reported as debt.