Question

A company has $200 million of convertible bonds with a par value of $1,000 per bond. The conversion price is $20.00, and the company's current share price is $30.00. How many diluted

shares get created by the convertible bond?

Answer 1

The number of diluted shares created by the convertible bond is 10 million shares.

Step-by-step explanation:

The number of diluted shares created by the convertible bond can be calculated by dividing the par value of the bonds by the conversion price. In this case, the par value of the bonds is $200 million, and the conversion price is $20.00. Therefore, the number of diluted shares created is:

$200 million / $20.00 = 10 million shares