Antidilutive security

CFA Level I Glossary

An antidilutive security is a convertible, option, or warrant that would increase earnings per share if converted or exercised. Because basic EPS already looks worse than the diluted figure would, diluted EPS ignores antidilutive securities. You only include potential shares that reduce EPS. A common exam mistake is mechanically including every convertible without checking the dilution test.

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