Rob Stevens is the chief executive officer of Isner Construction, Inc., and owns 950,000 shares of stock.

Question:

Rob Stevens is the chief executive officer of Isner Construction, Inc., and owns 950,000 shares of stock. The company currently has 6 million shares of stock and convertible bonds with a face value of $40 million outstanding. The convertible bonds have a conversion price of $38, and the stock is currently selling for $45.

a. What percentage of the firm’s common stock does Mr. Stevens own?

b. If the company decides to call the convertible bonds and force conversion, what percentage of the firm ’ s common stock will Mr. Stevens own? He does not own any convertible bonds.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...