medium · Investment Banking
How does Net Share Settlement (NSS) differ from full physical conversion in the calculation of diluted shares?
- NSS assumes the interest expense is added back to Net Income as in the if-converted method.
- In NSS, only the 'spread' value above the conversion price is settled in shares, while the principal is settled in cash.
- In NSS, the entire principal is settled in shares, but at the current market price rather than the conversion price.
- In NSS, shares are only issued if the bond is out-of-the-money.
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