Question: Q: Which security, if converted, would have the greatest impact on Company B's Basic EPS? My answer was: the decrease in EPS will be greater

Q: Which security, if converted, would have the greatest impact on Company B's Basic EPS?

My answer was: the decrease in EPS will be greater with conversion of the debentures since the two securities convert into an equal number of common shares.

Q: So, if the convertible 8% preferred stock and convertible 8% debentures are convertible for 10 shares of common stock, how do I calculate that the conversion of debentures would have the greater effect on EPS?

Your answer/explanation:

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