Rob Stevens is the chief executive officer of Isner Construction plc and owns 500,000 shares. The company currently has 4 million shares and convertible bonds with a face value of £20 million outstanding. The convertible bonds have a conversion price of £20, and the equity is currently selling for £25.

(a) What percentage of the firm’s equity does Mr Stevens own?

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