On May 26, 1991, Svensk Exportkredit (SEK), the Swedish export credit corporation, is- sued a Bull Indexed Silver Opportunity Note (BISON). Consider an extended version of this BISON issue that has the following terms: Maturity Coupon Face value Purchase price May 26, 1993 6.50%, paid annually in arrears USD 30 million 100,125% of par value Additionally, this BISON includes a redemption feature that, for each USD 1,000 of face value held at maturity, repays the investor's principal according to the following formula: USD 1,000+ [(Spot Silver Price per Ounce - USD 4.46) × (USD 224.21525)]

On May 26, 1991, Svensk Exportkredit (SEK), the Swedish export credit corporation, is- sued a Bull Indexed Silver Opportunity Note (BISON). Consider an extended version of this BISON issue that has the following terms: Maturity Coupon Face value Purchase price May 26, 1993 6.50%, paid annually in arrears USD 30 million 100,125% of par value Additionally, this BISON includes a redemption feature that, for each USD 1,000 of face value held at maturity, repays the investor's principal according to the following formula: USD 1,000+ [(Spot Silver Price per Ounce - USD 4.46) × (USD 224.21525)]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Calculate the yield to maturity for an investor holding USD 10,000 in face value of these BISON if the May 1993 spot price for silver is (1) USD 4.96 per ounce, or(2) USD 3.96 per ounce

8. On May 26, 1991, Svensk Exportkredit (SEK), the Swedish export credit corporation, is-
sued a Bull Indexed Silver Opportunity Note (BISON). Consider an extended version of
this BISON issue that has the following terms:
Maturity
Coupon
Face value
Purchase price
May 26, 1993
6.50%, paid annually in arrears
USD 30 million
100,125% of par value
Additionally, this BISON includes a redemption feature that, for each USD 1,000 of face
value held at maturity, repays the investor's principal according to the following formula:
USD 1,000+ [(Spot Silver Price per Ounce - USD 4.46) × (USD 224.21525)]

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