Question

1. What effect would antidilutive securities have on EPS if they were exercised?

   		Antidilutive securities don't effect EPS.
   		Antidilutive securities reduce EPS.
   		Antidilutive securities increase EPS.
   		Antidilutive securities can increase or reduce EPS, depending on the nature of the security.

QUESTION 2

1. How do equity options affect deferred taxes?

   		They have no effect on deferred taxes.
   		They result in a deferred tax asset until they are used.
   		They result in a deferred tax liability until they are used.
   		There is no way to determine the effect without seeing the values.

Answer 1

Antidilutive is a term that describes the effects of actions such as securities retirement, securities conversion or corporate actions (such as acquisitions made through the issuance of common stock or other securities) on the earnings per share (EPS) or voting power of existing shareholders.If an activity is antidilutive, it maintains or increases the voting power or EPS for existing shareholders by lowering the company's outstanding share count or increasing the company's earnings.

The effect antidilutive securities would have on EPS if they were exercised is:

Antidilutive securities increase EPS.

2. Equity options affect deferred taxes:

They result in a deferred tax asset until they are used.