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Filed
Pursuant to Rule 433
Registration
No. 333−136666
January
14, 2008
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STRUCTURED
EQUITY
PRODUCTS
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New
Issue
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Indicative
Terms
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THE
BEAR STEARNS COMPANIES INC.
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Note
Linked to the Standard and Poor’s 500®
Index
Due: January
[l],
2009
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INVESTMENT
HIGHLIGHTS
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·
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[12]-month
term to maturity.
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·
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The
Notes are fully principal protected if held to maturity and
are linked to
the Standard and Poor’s 500®
Index.
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·
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Issue
is a direct obligation of The Bear Stearns Companies Inc. (Rated
A2 by
Moody’s / A by S&P).
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Issue
Price: 100.00% of the Principal Amount of $1,000 per
Note.
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On
the Maturity Date, you will receive the “Cash Settlement Value,” which is
an amount in cash equal to the principal amount of each Note
plus a
“Variable Return”, where the Variable Return is calculated in the
following manner:
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·
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if,
at all times during the Observation Period, the Index Level
is observed
below the Upper Barrier and above the Lower Barrier, then the
Variable
Return will equal the product of (i) the $1,000 principal amount
of the
Notes multiplied by (ii) the Participation Rate multiplied
by (iii) the
Index Return;
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·
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however,
if at any time during the Observation Period the Index Level
is observed
at or above the Upper Barrier or at or below the Lower Barrier,
then the
Variable Return will be equal to zero.
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·
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The
Index Return, on the Final Valuation Date, will equal the absolute
value
of the quotient of (i) the Final Index Level minus the Initial
Index Level
divided by (ii) the Initial Index Level.
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·
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The
Participation Rate is [100.00]%.
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The
Upper Barrier is the Index Level that is 120.00% of the Initial
Index
Level.
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The
Lower Barrier is the Index Level that is 80.00% of the Initial
Index
Level.
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BEAR,
STEARNS & CO. INC.
STRUCTURED
PRODUCTS GROUP
(212)
272-6928
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The
issuer has filed a registration statement (including
a prospectus) with
the SEC for the offering to which this free writing prospectus
relates.
Before you invest, you should read the prospectus in
that registration
statement and other documents the issuer has filed with
the SEC for more
complete information about the issuer and this offering.
You may get these
documents for free by visiting EDGAR on the SEC Web site
at
www.sec.gov. Alternatively,
the
issuer, any underwriter or any dealer participating in
the offering will
arrange to send you the prospectus if you request it
by calling toll free
1-866-803-9204.
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-1-
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STRUCTURED
PRODUCTS
GROUP
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TERMS OF
OFFERING
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ISSUER:
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The
Bear Stearns Companies Inc.
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ISSUER’S
RATING:
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A2
/ A (Moody’s / S&P)
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CUSIP
NUMBER:
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[l]
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ISSUE
PRICE:
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100.00%
of the Principal Amount
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PRINCIPAL
AMOUNT:
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$[l]
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DENOMINATIONS:
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$1,000
per Note and $1,000 multiples thereafter
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SELLING
PERIOD ENDS:
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January
[l],
2008
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SETTLEMENT
DATE:
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January
[l],
2008
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FINAL
VALUATION DATE:
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[January]
[l],
2009 unless such date is not an Index Business Day, in which
case the
Final Valuation Date shall be the next Index Business Day. The
Calculation
Date is subject to adjustment as described in the Pricing Supplement
under
“Description of the Notes—Market Disruption Events.”
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MATURITY
DATE:
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The
Notes are expected to mature on [January] [l],
2009 unless such date is not a Business Day, in which case the
Maturity
Date shall be the next Business Day. If the Final Valuation Date
is
postponed, the Maturity Date will be three Business Days following
the
postponed Final Valuation Date.
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INDEX:
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Standard
& Poor’s 500®
Index (ticker “SPX”), as published by S&P (the
“Sponsor”).
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CASH
SETTLEMENT VALUE:
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On
the Maturity Date, you will receive the Cash Settlement Value,
which is an
amount in cash equal to the $1,000 principal amount of each Note
plus the
Variable Return.
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VARIABLE
RETURN:
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An
amount determined by the Calculation Agent and calculated in
the following
manner:
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(a)
if at all times during the Observation Period the Index Level
is observed
below the Upper Barrier and above the Lower Barrier, then the
Variable
Return will equal the product of (i) the $1,000 principal amount
of the
Notes multiplied by (ii) the Participation Rate multiplied by
(iii) the
Index Return,
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(b)
however, if at any time during the Observation Period the Index
Level is
observed at or above the Upper Barrier or at or below the Lower
Barrier,
then the Variable Return will be equal to zero.
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INDEX
RETURN:
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With
respect to the Final Valuation Date, the absolute value of the
quotient of
(i) the Final Index Level minus the Initial Index Level divided
by (ii)
the Initial Index Level.
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UPPER
BARRIER:
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The
Index Level that is
120.00% of the Initial Index Level.
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LOWER
BARRIER:
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The
Index Level that is
80.00% of the Initial Index Level.
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INDEX
LEVEL:
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As
of any time or date of determination during the Observation Period,
the
index level as reported by the Sponsor and displayed on Bloomberg
Page SPX
<Index> <Go>.
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OBSERVATION
PERIOD:
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Each
day which is an Index Business Day for the Index from and including
the
Pricing Date to and including the Final Valuation Date.
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INITIAL
INDEX LEVEL:
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[l],
the Index Level on the Pricing Date.
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FINAL
INDEX LEVEL:
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Will
be determined by the Calculation Agent and
will equal the closing Index Level on the Final Valuation
Date.
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BEAR,
STEARNS & CO.
INC.
-2-
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STRUCTURED
PRODUCTS
GROUP
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INTEREST:
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The
Notes will not bear interest.
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PARTICIPATION
RATE:
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[100.00]%
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PRICING
DATE:
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January
[l],
2008.
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INDEX
BUSINESS DAY:
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With
respect to the Index, any day on which the Primary Exchange (as
defined
below) and each Related Exchange (as defined below) are scheduled
to be
open for trading.
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BUSINESS
DAY:
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Any
day other than a Saturday or Sunday, on which banking institutions
in the
cities of New York, New York and London, England are not authorized
or
obligated by law or executive order to be closed.
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PRIMARY
EXCHANGE:
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The
primary exchange or market of trading of any security then included
in the
Index.
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RELATED
EXCHANGE:
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Each
exchange or quotation system where trading has a material effect
(as
determined by the Calculation Agent) on the overall market for
futures or
options contracts relating to the Index.
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EXCHANGE
LISTING:
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The
Notes will not be listed on any securities exchange or quotation
system.
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CALCULATION
AGENT:
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Bear,
Stearns & Co. Inc.
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BEAR,
STEARNS & CO.
INC.
-3-
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STRUCTURED
PRODUCTS
GROUP
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ADDITIONAL
TERMS SPECIFIC TO THE
NOTES
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You
should read this document together with the prospectus and prospectus
supplement, each dated August 16, 2006 (the “Prospectus” and “Prospectus
Supplement,” respectively), and the more detailed information contained in the
Pricing Supplement, dated January 14,
2008 (subject to completion) (the “Pricing Supplement”). You should carefully
consider, among other things, the matters set forth in “Risk Factors” in the
Prospectus Supplement and the Pricing Supplement, as the Notes
involve risks not
associated with conventional debt securities. We urge you to consult
your
investment, legal, tax, accounting and other advisers before you invest in the
Notes. You may access the Pricing Supplement, the Prospectus Supplement
and the
Prospectus on the SEC web site as
follows:
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·
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Pricing
Supplement dated January
14,
2008 (Subject to Completion):
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·
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Prospectus
Supplement dated August 16, 2006:
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| · |
Prospectus
dated August 16, 2006:
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BEAR,
STEARNS & CO.
INC.
-4-
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STRUCTURED
PRODUCTS
GROUP
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ILLUSTRATIVE
EXAMPLES
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The
following tables and graphs are for illustrative
purposes and are not indicative
of the future performance of the Index or the
future value of the
Notes.
Because
the Index Level may be subject to significant
fluctuation over the term of the
Notes, it is not possible to present a chart
or table illustrating the complete
range of all possible Cash Settlement Values.
Therefore, the examples do not
purport to be representative of every possible
scenario concerning increases or
decreases in the Index Level during the term
of the Notes or whether, at any
time during the Observation Period, the Index
Level is observed above the Upper
Barrier or below the Lower Barrier. You should
not construe these examples or
the data included in any table or graph below
as an indication or assurance of
the expected performance of the Notes.
You
can review the historical levels of the Index
in the section of the Pricing
Supplement called “Description of the Index.” The historical performance of the
Index included in the Pricing Supplement should
not be taken as an indication of
the future performance of the Index. It is
impossible to predict whether the
Final Index Level will be greater than or less
than the Initial Index Level or
whether, at any time during the Observation
Period, the Index Level will be
observed above the Upper Barrier or below the
Lower Barrier during the term of
the Notes.
Assumptions:
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Investor
purchases $1,000.00 aggregate principal
amount of Notes at the initial
public offering price of $1,000.00.
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Investor
holds the Notes to maturity.
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The
Initial Index Level is equal to
1,400.00.
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The
Lower Barrier is 1,120.00 (representing
80.00% of the Initial Index
Level).
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The
Upper Barrier is 1,680.00 (representing
120.00% of the Initial Index
Level).
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The
Participation Rate is 100.00%.
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All
returns are based on a 12-month term;
pre-tax
basis.
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No
Market Disruption Events occur during
the term of the
Notes.
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Example
1
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Example
2
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Example
3
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Example
4
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Example
5
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Example
6
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Highest
Index Level during term of Note
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1,652.00
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1,820.00
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1,652.00
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1,652.00
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2,100.00
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1,610.00
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Upper
Barrier Breached
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No
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Yes
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No
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No
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Yes
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No
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Lowest
Index Level during term of Note
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1,127.00
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1,127.00
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1,190.00
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980.00
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910.00
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1,148.00
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Lower
Barrier Breached
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No
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No
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No
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Yes
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Yes
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No
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Final
Index Level
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1,134.00
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1,134.00
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1,638.00
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1,652.00
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2,100.00
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1,437.33
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Index
Return
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-19.00%
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-19.00%
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17.00%
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18.00%
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50.00%
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2.67%
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Variable
Return
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$190.00
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$0.00
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$170.00
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$0.00
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$0.00
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$26.67
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Cash
Settlement Value per Note
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$1,190.00
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$1,000.00
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$1,170.00
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$1,000.00
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$1,000.00
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$1,026.67
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Example
1:
In
this
example, the Index Level, at all times during
the Observation Period, is
observed below the Upper Barrier and above
the Lower Barrier. The Index Return,
as calculated below, is 19.00%.
BEAR,
STEARNS & CO.
INC.
-5-
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STRUCTURED
PRODUCTS
GROUP
|
Therefore,
the Cash Settlement Value would equal $1,190.00, or
the $1,000.00 principal
amount of the Notes plus the Variable Return of $190.00;
where the Variable
Return is as calculated below:
Variable
Return = $1,000.00 x Participation Rate x Index Return
Variable
Return = $1,000.00 x 100.00% x 19.00%
Variable
Return = $190.00
In
this
example, although the Final Index Level is lower than
the Initial Index Level,
your return on investment will still be positive (in
this case, 19.00%), because
(1) the Index Return measures the absolute value of
the quotient of (i) the
Final Index Level minus the Initial Index Level divided
by (ii) the Initial
Index Level, and (2) at all times during the Observation
Period, the Index Level
was observed below the Upper Barrier and above the
Lower Barrier.
Example
2:
In
this
example, the Index Level at some time during the Observation
Period is observed
above the Upper Barrier. Although the Final Index Level
in this Example 2 is
equal to the Final Index Level in Example 1, and therefore
the Index Return for
this Example 2 would also equal the Index Return in
Example 1, because the Index
Level at some time during the Observation Period was
observed above the Upper
Barrier the Variable Return equals zero.
Therefore,
the Cash Settlement Value would equal the $1,000.00
principal amount of the
Notes.
In
this
example, your return on investment would be 0.00%,
because at some time during
the Observation Period the Index Level was observed
above the Upper
Barrier.
Example
3:
In
this
example, the Index Level, at all times during the Observation
Period, is
observed below the Upper Barrier and above the Lower
Barrier. The Index Return,
as calculated below, is 17.00%.
Therefore,
the Cash Settlement Value would equal $1,170.00, or
the $1,000.00 principal
amount of the Notes plus the Variable Return of $170.00;
where the Variable
Return is as calculated below:
Variable
Return = $1,000.00 x Participation Rate x Index Return
Variable
Return = $1,000.00 x 100.00% x 17.00%
Variable
Return = $170.00
In
this
example, your return on investment will be positive
(in this case, 17.00%),
because at all times during the Observation Period,
the Index Level was observed
below the Upper Barrier and above the Lower Barrier.
Example
4:
In
this
example, the Index Level at some time during the Observation
Period is observed
below the Lower Barrier. Although the Final Index Level
is greater than the
Initial Index Level, because the Index Level at some
time during the Observation
Period was observed below the Lower Barrier the Variable
Return equals
zero.
Therefore,
the Cash Settlement Value would equal the $1,000.00
principal amount of the
Notes.
In
this
example, your return on investment would be 0.00%,
because, at some time during
the Observation Period the Index Level was observed
below the Lower
Barrier.
BEAR,
STEARNS & CO.
INC.
-6-
|
|
STRUCTURED
PRODUCTS
GROUP
|
Example
5:
In
this
example, the Index Level at some time during the Observation Period is
observed
above the Upper Barrier and the Index Level, at another time during the
Observation Period, is observed below the Lower Barrier. Although the
Final
Index Level is greater than the Initial Index Level, because the Index
Level, at
some time during the Observation Period, was observed above the Upper
Barrier
and the Index Level, at another time during the Observation Period, was
observed
below the Lower Barrier the Variable Return equals zero.
Therefore,
the Cash Settlement Value would equal the $1,000.00 principal amount
of the
Notes.
In
this
example, your return on investment would be 0.00%, because, at some time
during
the Observation Period, the Index Level was observed above the Upper
Barrier
and, at another time during the Observation Period, the Index Level was
observed
below the Lower Barrier
Example
6:
In
this
example, the Index Level, at all times during the Observation Period,
is
observed below the Upper Barrier and above the Lower Barrier. The Index
Return,
as calculated below, is 2.67%.
Therefore,
the Cash Settlement Value would equal $1,026.67, or the $1,000.00 principal
amount of the Notes plus the Variable Return of $26.67; where the Variable
Return is as calculated below:
Variable
Return = $1,000.00 x Participation Rate x Index Return
Variable
Return = $1,000.00 x 100.00% x 2.67%
Variable
Return = $26.67
In
this
example, your return on investment will be positive (in this case, 2.67%),
because at all times during the Observation Period, the Index Level was
observed
below the Upper Barrier and above the Lower Barrier.
BEAR,
STEARNS & CO.
INC.
-7-
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|
STRUCTURED
PRODUCTS
GROUP
|
|
SELECTED
RISK
CONSIDERATIONS
|
|
·
|
Suitability
of Note for Investment - A
person should reach a decision to invest in the
Notes after carefully
considering, with his or her advisors, the suitability
of the Notes in
light of his or her investment objectives and
the information set out in
the Pricing Supplement. Neither the Issuer nor
any dealer participating in
the offering makes any recommendation as to the
suitability of the Notes
for investment.
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|
·
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Non-conventional
return - The
yield on the Notes may be less than the overall
return you would earn if
you purchased a conventional debt security at
the same time and with the
same maturity.
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·
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No
interest, dividend or other payments - You
will not receive any interest, dividend payments
or other distributions on
the stocks underlying the Index, nor will such
payments be included in the
calculation of the Cash Settlement Value you
will receive at
maturity.
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·
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Not
exchange listed - The
Notes will not be listed on any securities exchange
or quotation system,
and we do not expect a trading market to develop,
which may affect the
price that you receive for your Notes upon any
sale prior to maturity. If
you sell the Notes prior to maturity, you may
receive less, and possibly
significantly less, than your initial investment
in the Notes.
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|
·
|
Liquidity - Because
the Notes will not be listed on any securities
exchange or quotation
system, we do not expect a trading market to
develop, and, if such a
market were to develop, it may not be liquid.
Our subsidiary, Bear,
Stearns & Co. Inc. (“Bear Stearns”) has advised us that they intend
under ordinary market conditions to indicate
prices for the Notes on
request. However, we cannot guarantee that bids
for outstanding Notes will
be made in the future; nor can we predict the
price at which those bids
will be made. In any event, Notes will cease
trading as of the close of
business on the Maturity Date.
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|
|
·
|
Taxes - For
U.S. federal income tax purposes, we intend to
treat the Notes as
contingent payment debt instruments. As a result,
you will be required to
include original issue discount (“OID”) in income during your ownership of
the Notes even though no cash payments will be
made with respect to the
Notes until maturity. Additionally, you will
generally be required to
recognize ordinary income on the gain, if any,
realized on a sale, upon
maturity, or other disposition of the Notes.
You should review the
discussion under the section entitled “Certain U.S. Federal Income Tax
Considerations” in the Pricing
Supplement.
|
BEAR,
STEARNS & CO.
INC.
-8-