To incorporate the effect of outstanding stock options in the calculation of diluted EPS:
A) Would be inappropriate because options are considered only when calculating basic EPS.
B) We would never increase or decrease the numerator of the EPS fraction.
C) We assume common shares are issued at the average market price and repurchased at the exercise price.
D) We assume the options were exercised at mid-year.
Answer: B) We would never increase or decrease the numerator of the EPS fraction.
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.