medium · Investment Banking implied-share-price

Which of the following describes the 'If-Converted' method for convertible bonds in the context of fully diluted shares?

  1. It assumes the bond is converted into equity at the beginning of the period if it is in-the-money.
  2. It requires the company to pay the principal in cash and only issues shares for the interest savings.
  3. It treats the bond as debt if the share price is above the conversion price to be conservative.
  4. It calculates the number of shares by dividing the market cap by the bond's coupon rate.

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