When the bond sells at par, the implicit SF/$ exchange rate at maturity of a Swiss franc/U.S. dollar dual currency bonds that pay $581.40 at maturity per SF1,000, is

Question

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When the bond sells at par, the implicit SF/$ exchange rate is equal to the conversion price (which is fixed at the issuance of the bond) divided by the dollar value of the bond ($1,000 in this case).

The conversion price is the amount of Swiss francs that can be exchanged for one U.S. dollar at maturity.

The bond pays $581.40 at maturity per SF1,000, so the conversion price is:

1 / ($581.40 / 1000) = 1.71993

Rounding to four decimal places, the implicit SF/$ exchange rate is therefore:

1.7199 / 1 = SF1.7199/$1.00

Which is equivalent to SF1.72/$1.00, the only option that matches this value.

When the Bond Sells at Par, the Implicit SF/$ Exchange