The economics of PIK certificate premiums

Stanley C. Stevens
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Stanley C. Stevens: Department of Agricultural and Applied Economics, University of Minnesota, Minnesota, Postal: Department of Agricultural and Applied Economics, University of Minnesota, Minnesota

Agribusiness, 1989, vol. 5, issue 4, 393-402

Abstract: PIK certificate premiums originate from marketing arbitrage opportunities. Under conditions of scarcity of certificates, these arbitrage values get partially bid into a premium for the PIK certificates. Part of the arbitrage profit is shifted from the user of PIK certificates to previous owners via the premium. Previous owners thereby receive a windfall profit.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:5:y:1989:i:4:p:393-402

DOI: 10.1002/1520-6297(198907)5:4<393::AID-AGR2720050409>3.0.CO;2-V

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