Which one of the following characteristics of preferred stock would make the stock a dilutive security for earnings per share?
A) The preferred stock is callable.
B) The preferred stock is convertible.
C) The preferred stock is cumulative.
D) The preferred stock is noncumulative.
E) The preferred stock is participating.

Question

Quizplus · Accepted Answer

Convertible preferred stock can be converted into common stock, which would increase the number of outstanding shares and potentially dilute earnings per share. Callable, cumulative, noncumulative, and participating preferred stock do not necessarily have an impact on earnings per share.

Which One of the Following Characteristics of Preferred Stock Would