Convertible Bonds Rob Stevens is the chief executive offi cer of Isner Construction, Inc., and owns 500,000 shares of stock. The company currently has 4 million shares of stock and convertible bonds with a face value of $20 million outstanding. The convertible bonds have a conversion price of $20, and the stock is currently selling for $25.

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

b. If the company decides to call the convertible bonds and force conversion, what percentage of the fi rm’s common stock will Mr. Stevens own? He does not own any convertible bonds. LO.1