hard · Investment Banking implied-share-price
What happens to the Enterprise Value of a company if a $500 million out-of-the-money convertible bond suddenly becomes in-the-money due to a share price spike?
- Enterprise Value remains exactly the same.
- Enterprise Value decreases because debt is being removed from the bridge.
- Enterprise Value increases because the bond principal is now added to both debt and equity.
- Enterprise Value increases because the Equity Value component of the bridge increases.
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