hard · Investment Banking
Under the Net Share Settlement (NSS) method for convertible bonds, what portion of the principal is added to the diluted share count?
- The principal is treated as equity if the bond is in-the-money.
- Only the interest expense saved is added to the numerator of the EPS calculation.
- None; only the in-the-money value is settled in shares, while the principal is paid in cash.
- The entire principal is converted into shares at the conversion price.
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