medium · Investment Banking
Which of the following would be the most appropriate treatment for an in-the-money convertible bond in an Enterprise Value bridge calculation?
- Add the value of the converted shares to Equity Value and do not include the bond's principal in Total Debt.
- Subtract the convertible bond's principal amount from Cash and separately include it in Total Debt.
- Include the bond's full principal amount in Total Debt and additionally add the dilutive shares to the FDSO count.
- Exclude the convertible bond entirely from the Enterprise Value bridge since it is considered a complex hybrid security.
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