Explanation:

• Option A is incorrect because a stock split or stock dividend requires retroactive adjustment to the number of shares outstanding at the beginning of the period. Consequently, the denominator for both basic and diluted EPS would be the same.

• Option B is correct because the exercise of stock options does not affect net income (the numerator). However, it increases the denominator by the incremental shares issued upon exercise, leading to different denominators for basic and diluted EPS.

• Option C is incorrect because convertible debt impacts both the numerator (adjusted for after-tax interest) and the denominator (additional shares from conversion), resulting in changes to both components.