residual security

Residual Security

A security that has the potential to dilute its issuer's earnings per share. For example, a convertible bond can be exchange for so many shares of common stock. If it is exchanged, then the earnings per common share are diluted because there are now more common shares by which to divide earnings. For that reason, a convertible bond is a residual security.

residual security

A security with the potential for diluting earnings per share. A convertible bond is a residual security because conversion of the bond by an investor will result in more shares of common stock outstanding and a reduction in earnings per share.
References in periodicals archive ?
Enterprises spend the vast majority of their time collecting data rather than performing risk management and mitigation processes to reduce the residual security risk third parties represent.
Senator Bob Corker, Ranking Member of the Senate Foreign Relations Committee, applauded Obama's announcement that he will support the size of the residual security forces requested by US commanders.
The secretary general's report also expressed concern over the residual security threats facing Lebanon and the recent political uncertainty in Israel after Foreign Minister Tzipi Livni failed to form a coalition government.