Here is another interview question I was asked in my last interview: Investment banking technical interview question using treasury stock method to calculate dilutive shares for valuation comparable company analysis. I have a doubt on STEP 3, When the Company repurchases shares using in-the-money proceeds, are they not purchasing from the total outstanding shares in the market. If yes how does it add to the total diluted shares outstanding. I might be wrong here but could you please let me know.

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Wednesday, May 14, The Treasury Stock Method. This question relates specifically to one of the first steps of performing a Public Comparable Analysis.

In this type of analysis the banker needs to Calculate Equity Value. There are typically two ways to do this. Only in-the-money options are used when performing the TSM calculation. For an option to be in-the-money, the option's strike price must be less than the current stock price. When performing this calculation you are also assuming that a rational investor will exercise their in-the-money option, allowing them to make the 'spread'.

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Another assumption of the TSM is that the money the company makes by all holders exercising their in-the-money options will be used to buy back stock. So how do you perform the actual calculation? Here are some more links on this topic for your reference: Treasury Stock Explained Investopedia: Posted by David Bonnemort at 7: Albina N muro said Cloud Bookkeeping June 25, at 4: Forex Trading Strategies July 16, at Businessman October 6, at Entrepreneur Mark Curry November 13, at Best rgs November 28, at May 17, at Newer Post Older Post Home.

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