InterDigital Inc (IDCC)

[ddutta]

The current stock price of $79.20 is 9.4% higher than the conversion price of $72.37.

My questions:

1. Why is the bond trading 22.2 % (and not 9.4 %)higher than the face value ($122.20 vs $100)?

2. Why is someone buying bond for $122.2, which translates to approximately $88 per share ($122.2 / 1.38172), when they can buy the stock for $79.20?

Thanks in Advance.

Note: The $1.50 dividend on $122.20 bond, and the $1.20 dividend on $79.20 stock yields roughly the same. So, IMHO, bond does not have a substantially higher dividend yield to justify the extra 12.8 % (22.2 % - 9.4 %) premium.