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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 ______.
B. conventional capital structure
C. simple capital structure
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 |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
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® 2024 Level I Curriculum, Volume 2, Module 2.