A convertible security may have the appearance of being individually dilutive but in fact be antidilutive when viewed with combinations of other convertible securities.

Question

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Convertible securities can appear dilutive when considered individually because they increase the number of shares outstanding when converted. However, in combination with other convertible securities, their conversion might lead to a higher earnings per share than if each were converted individually, thus being antidilutive in the broader context. This is because the conversion terms and the impact on earnings can interact in complex ways, sometimes leading to a net increase in earnings per share when multiple securities are considered together.

A Convertible Security May Have the Appearance of Being Individually