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Basic Question 1 of 40

A firm with a capital structure made up of common stock and non-convertible bonds is said to have a ______.

A. non-diluted capital structure
B. conventional capital structure
C. simple capital structure

User Contributed Comments 4

User Comment
jpducros I've seen questions where convertible-bond are still considered simple structure, while Warrant is definitely a sign of a complex structure. Not sure why however.
Xiangrong Maybe it's because convertible-bonds are not always dilutive, ie. when the option is OOM, it's like a normal bond.
ascruggs92 The Key between simple and complex is the prospect of dilution. If the bonds are not convertible for whatever reason within the current period, there is no potential of dilution and the company is said to have a simple structure until terms of conversion are met
Freddie33 40 questions... kill me now
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Martin Rockenfeldt

Martin Rockenfeldt

Learning Outcome Statements

describe how earnings per share is calculated and calculate and interpret a company's basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities

CFA® 2025 Level I Curriculum, Volume 2, Module 2.