Primary Earnings per Share Calculation under Treasury Stock Method | Test Prep

Calculating Primary Earnings per Share using the Treasury Stock Method

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Question

Under the treasury stock method, primary earnings per share data are computed as if options and warrants (outstanding for the entire year) were exercised at the

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A. B. C. D. E.

E

The treasury stock method assumes the exercise of outstanding options and warrants at the beginning of the period or at time of issuance, if later. It also assumes that the proceeds from the exercise were used to purchase common stock at the average market price during the period.