Phy Full Notes

&,($/HYHO3K\VLFV H[DPVIURP5HYLVLRQ1RWHV VDYHP\H[DPVFRXN
<285127(6
3K\VLFDO4XDQWLWLHV 8QLWV k
&217(176
3K\VLFDO4XDQWLWLHV 8QLWV
3K\VLFDO4XDQWLWLHV
6,8QLWV
+RPRJHQHLW\RI3K\VLFDO(TXDWLRQV 3RZHUVRI7HQ
6FDODUV 9HFWRUV
0HDVXUHPHQWV (UURUV
(UURUV 8QFHUWDLQWLHV
&DOFXODWLQJ8QFHUWDLQWLHV
0HDVXUHPHQW7HFKQLTXHV
3+<6,&$/48$17,7,(6 81,76
3+<6,&$/48$17,7,(6
:KDWLVD3K\VLFDO4XDQWLW\"
6SHHGDQGYHORFLW\DUHH[DPSOHVRISK\VLFDOTXDQWLWLHVERWKFDQEHPHDVXUHG
$OOSK\VLFDOTXDQWLWLHVFRQVLVWRIDQXPHULFDOPDJQLWXGHDQGDXQLW
,QSK\VLFVHYHU\OHWWHURIWKHDOSKDEHW DQGPRVWRIWKH*UHHNDOSKDEHW LVXVHGWRUHSUHVHQW

WKHVHSK\VLFDOTXDQWLWLHV
7KHVHOHWWHUVZLWKRXWDQ\FRQWH[WDUHPHDQLQJOHVV
7RUHSUHVHQWDSK\VLFDOTXDQWLW\LWPXVWFRQWDLQERWKDQXPHULFDOYDOXHDQGWKHXQLWLQ
ZKLFKLWZDVPHDVXUHG
7KHOHWWHUYEHXVHGWRUHSUHVHQWWKHSK\VLFDOTXDQWLWLHVRIYHORFLW\YROXPHRUYROWDJH
7KHXQLWVSURYLGHWKHFRQWH[WDVWRZKDWYUHIHUVWR
,IYUHSUHVHQWVYHORFLW\WKHXQLWZRXOGEHPVc
,IYUHSUHVHQWVYROXPHWKHXQLWZRXOGEHP
,IYUHSUHVHQWVYROWDJHWKHXQLWZRXOGEH9
&,($/HYHO3K\VLFV H[DPVIURP

cFRS\ULJKW6DYH0\([DPV 5HVRXUFHV 3DJH
5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
$OOSK\VLFDOTXDQWLWLHVPXVWKDYHDQXPHULFDOPDJQLWXGHDQGDXQLW
(VWLPDWLQJ3K\VLFDO4XDQWLWLHV
7KHUHDUHLPSRUWDQWSK\VLFDOTXDQWLWLHVWROHDUQLQSK\VLFV
,WLVXVHIXOWRNQRZWKHVHSK\VLFDOTXDQWLWLHVWKH\DUHSDUWLFXODUO\XVHIXOZKHQPDNLQJ
HVWLPDWHV
$IHZH[DPSOHVRIXVHIXOTXDQWLWLHVWRPHPRULVHDUHJLYHQLQWKHWDEOHEHORZ WKLVLVE\QR
PHDQVDQH[KDXVWLYHOLVW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(VWLPDWLQJ3K\VLFDO4XDQWLWLHV7DEOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHG([DPSOH
:RUNHGH[DPSOHHVWLPDWLQJJUDYLWDWLRQDOSRWHQWLDOHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6,81,76
6,%DVH4XDQWLWLHV
7KHUHDUHDVHHPLQJO\HQGOHVVQXPEHURIXQLWVLQ3K\VLFV
7KHVHFDQDOOEHUHGXFHGWRVHYHQEDVHXQLWVIURPZKLFKHYHU\RWKHUXQLWFDQEHGHULYHG
7KHVHVHYHQXQLWVDUHUHIHUUHGWRDVWKH6,%DVH8QLWVWKLVLVWKHRQO\V\VWHPRI
PHDVXUHPHQWWKDWLVRoFLDOO\XVHGLQDOPRVWHYHU\FRXQWU\DURXQGWKHZRUOG
6,%DVH4XDQWLWLHV7DEOH
([DP7LS
<RXZLOORQO\EHUHTXLUHGWRXVHWKHmUVWmYH6,EDVHXQLWVLQWKLVFRXUVHVR

PDNHVXUH\RXNQRZWKHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'HULYHG8QLWV
'HULYHGXQLWVDUHGHULYHGIURPWKHVHYHQ6,%DVHXQLWV
7KHEDVHXQLWVRISK\VLFDOTXDQWLWLHVVXFKDV
1HZWRQV1
-RXOHV-
3DVFDOV3DFDQEHGHGXFHG
7RGHGXFHWKHEDVHXQLWVLWLVQHFHVVDU\WRXVHWKHGHmQLWLRQRIWKHTXDQWLW\
7KH1HZWRQ 1 WKHXQLWRIIRUFHLVGHmQHGE\WKHHTXDWLRQ
)RUFH PDVVgDFFHOHUDWLRQ
1 NJgPVi NJPVi
7KHUHIRUHWKH1HZWRQ 1 LQ6,EDVHXQLWVLVNJPVc
7KH-RXOH - WKHXQLWRIHQHUJ\LVGHmQHGE\WKHHTXDWLRQ
(QHUJ\ fgPDVVgYHORFLW\
- NJg PVi NJPVi
7KHUHIRUHWKH-RXOH - LQ6,EDVHXQLWVLVNJPVc
7KH3DVFDO 3D WKHXQLWRISUHVVXUHLVGHmQHGE\WKHHTXDWLRQ
3UHVVXUH IRUFHhDUHD
3D 1hP NJPVi hP NJPiVi
7KHUHIRUHWKH3DVFDO 3D LQ6,EDVHXQLWVLVNJPcVc

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
+202*(1(,7<2)3+<6,&$/(48$7,216 32:(562)7(1
+RPRJHQHLW\RI3K\VLFDO(TXDWLRQV
$QLPSRUWDQWVNLOOLVWREHDEOHWRFKHFNWKHKRPRJHQHLW\RISK\VLFDOHTXDWLRQVXVLQJWKH6,
EDVHXQLWV
7KHXQLWVRQHLWKHUVLGHRIWKHHTXDWLRQVKRXOGEHWKHVDPH
7RFKHFNWKHKRPRJHQHLW\RISK\VLFDOHTXDWLRQV
&KHFNWKHXQLWVRQERWKVLGHVRIDQHTXDWLRQ
'HWHUPLQHLIWKH\DUHHTXDO
,IWKH\GRQRWPDWFKWKHHTXDWLRQZLOOQHHGWREHDGMXVWHG
+RZWRFKHFNWKHKRPRJHQHLW\RISK\VLFDOHTXDWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3RZHUVRI7HQ
3K\VLFDOTXDQWLWLHVFDQVSDQDKXJHUDQJHRIYDOXHV
)RUH[DPSOHWKHGLDPHWHURIDQDWRPLVDERXWiP P ZKHUHDVWKHZLGWK
RIDJDOD[\PD\EHDERXWP P
7KLVLVDGLlHUHQFHRISRZHUVRIWHQ
3RZHUVRIWHQDUHQXPEHUVWKDWFDQEHDFKLHYHGE\PXOWLSO\LQJWLPHVLWVHOI
,WLVXVHIXOWRNQRZWKHSUHm[HVIRUFHUWDLQSRZHUVRIWHQ
3RZHUVRI7HQ7DEOH
([DP7LS
<RXZLOORIWHQVHHYHU\ODUJHRUYHU\VPDOOQXPEHUVFDWHJRULVHGE\SRZHUVRI
WHQVRLWLVYHU\LPSRUWDQW\RXEHFRPHIDPLOLDUZLWKWKHVHDVJHWWLQJWKHVH
SUHm[HVZURQJLVDYHU\FRPPRQH[DPPLVWDNH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6&$/$56 9(&7256
:KDWDUH6FDODU 9HFWRU4XDQWLWLHV"
$VFDODULVDTXDQWLW\ZKLFKRQO\KDVDPDJQLWXGH VL]H
$YHFWRULVDTXDQWLW\ZKLFKKDVERWKDPDJQLWXGHDQGDGLUHFWLRQ
)RUH[DPSOHLIDSHUVRQJRHVRQDKLNHLQWKHZRRGVWRDORFDWLRQZKLFKLVDFRXSOHRIPLOHV
IURPWKHLUVWDUWLQJSRLQW
$VWKHFURZnLHVWKHLUGLVSODFHPHQWZLOORQO\EHDIHZPLOHVEXWWKHGLVWDQFHWKH\
ZDONHGZLOOEHPXFKORQJHU
'LVSODFHPHQWLVDYHFWRUZKLOHGLVWDQFHLVDVFDODUTXDQWLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'LVWDQFHLVDVFDODUTXDQWLW\EHFDXVHLWGHVFULEHVKRZDQREMHFWKDVWUDYHOOHGRYHUDOOEXW
QRWWKHGLUHFWLRQLWKDVWUDYHOOHGLQ
'LVSODFHPHQWLVDYHFWRUTXDQWLW\EHFDXVHLWGHVFULEHVKRZIDUDQREMHFWLVIURPZKHUHLW
VWDUWHGDQGLQZKDWGLUHFWLRQ
7KHUHDUHDQXPEHURIFRPPRQVFDODUDQGYHFWRUTXDQWLWLHV
6FDODUVDQG9HFWRUV7DEOH
([DP7LS
'R\RXKDYHWURXEOHmJXULQJRXWLIDTXDQWLW\LVDYHFWRURUDVFDODU"-XVWWKLQN
iFDQWKLVTXDQWLW\KDYHDPLQXVVLJQ")RUH[DPSOHiFDQ\RXKDYHQHJDWLYH
HQHUJ\"1R&DQ\RXKDYHQHJDWLYHGLVSODFHPHQW"<HV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&RPELQLQJ9HFWRUV
9HFWRUVDUHUHSUHVHQWHGE\DQDUURZ
7KHDUURZKHDGLQGLFDWHVWKHGLUHFWLRQRIWKHYHFWRU
7KHOHQJWKRIWKHDUURZUHSUHVHQWVWKHPDJQLWXGH
9HFWRUVFDQEHFRPELQHGE\DGGLQJRUVXEWUDFWLQJWKHPIURPHDFKRWKHU
7KHUHDUHWZRPHWKRGVWKDWFDQEHXVHGWRFRPELQHYHFWRUVWKHWULDQJOHPHWKRGDQGWKH
SDUDOOHORJUDPPHWKRG
7RFRPELQHYHFWRUVXVLQJWKHWULDQJOHPHWKRG
6WHSOLQNWKHYHFWRUVKHDGWRWDLO
6WHSWKHUHVXOWDQWYHFWRULVIRUPHGE\FRQQHFWLQJWKHWDLORIWKHmUVWYHFWRUWRWKH
KHDGRIWKHVHFRQGYHFWRU
7RFRPELQHYHFWRUVXVLQJWKHSDUDOOHORJUDPPHWKRG
6WHSOLQNWKHYHFWRUVWDLOWRWDLO
6WHSFRPSOHWHWKHUHVXOWLQJSDUDOOHORJUDP
6WHSWKHUHVXOWDQWYHFWRULVWKHGLDJRQDORIWKHSDUDOOHORJUDP
:KHQWZRRUPRUHYHFWRUVDUHDGGHGWRJHWKHU RURQHLVVXEWUDFWHGIURPWKHRWKHU DVLQJOH

YHFWRULVIRUPHGDQGLVNQRZQDVWKHUHVXOWDQWYHFWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
9HFWRU$GGLWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
9HFWRU6XEWUDFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&RQGLWLRQIRU(TXLOLEULXP
&RSODQDUIRUFHVFDQEHUHSUHVHQWHGE\YHFWRUWULDQJOHV
,QHTXLOLEULXPWKHVHDUHFORVHGYHFWRUWULDQJOHV7KHYHFWRUVZKHQMRLQHGWRJHWKHUIRUPD
FORVHGSDWK
,IWKUHHIRUFHVDFWLQJRQDQREMHFWDUHLQHTXLOLEULXPWKH\IRUPDFORVHGWULDQJOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
5HVROYLQJ9HFWRUV
7ZRYHFWRUVFDQEHUHSUHVHQWHGE\DVLQJOHUHVXOWDQWYHFWRUWKDWKDVWKHVDPHHlHFW
$VLQJOHUHVXOWDQWYHFWRUFDQEHUHVROYHGDQGUHSUHVHQWHGE\WZRYHFWRUVZKLFKLQ
FRPELQDWLRQKDYHWKHVDPHHlHFWDVWKHRULJLQDORQH
:KHQDVLQJOHUHVXOWDQWYHFWRULVEURNHQGRZQLQWRLWVSDUWVWKRVHSDUWVDUHFDOOHG
FRPSRQHQWV
)RUH[DPSOHDIRUFHYHFWRURIPDJQLWXGH)DQGDQDQJOHRIbWRWKHKRUL]RQWDOLVVKRZQ
EHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,WLVSRVVLEOHWRUHVROYHWKLVYHFWRULQWRLWVKRUL]RQWDODQGYHUWLFDOFRPSRQHQWVXVLQJ
WULJRQRPHWU\
)RUWKHKRUL]RQWDOFRPSRQHQW)[ )FRVb
)RUWKHYHUWLFDOFRPSRQHQW)\ )VLQb
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ0HGLXP
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0($685(0(176 (55256
(55256 81&(57$,17,(6
5DQGRP 6\VWHPDWLF(UURUV
0HDVXUHPHQWVRITXDQWLWLHVDUHPDGHZLWKWKHDLPRImQGLQJWKHWUXHYDOXHRIWKDWTXDQWLW\
,QUHDOLW\LWLVLPSRVVLEOHWRREWDLQWKHWUXHYDOXHRIDQ\TXDQWLW\WKHUHZLOODOZD\VEHD
GHJUHHRIXQFHUWDLQW\
7KHXQFHUWDLQW\LVDQHVWLPDWHRIWKHGLlHUHQFHEHWZHHQDPHDVXUHPHQWUHDGLQJDQGWKH
WUXHYDOXH
5DQGRPDQGV\VWHPDWLFHUURUVDUHWZRW\SHVRIPHDVXUHPHQWHUURUVZKLFKOHDGWR
XQFHUWDLQW\
5DQGRPHUURU
5DQGRPHUURUVFDXVHXQSUHGLFWDEOHnXFWXDWLRQVLQDQLQVWUXPHQWjVUHDGLQJVDVDUHVXOWRI
XQFRQWUROODEOHIDFWRUVVXFKDVHQYLURQPHQWDOFRQGLWLRQV
7KLVDlHFWVWKHSUHFLVLRQRIWKHPHDVXUHPHQWVWDNHQFDXVLQJDZLGHUVSUHDGRIUHVXOWV
DERXWWKHPHDQYDOXH
7RUHGXFHUDQGRPHUURUUHSHDWPHDVXUHPHQWVVHYHUDOWLPHVDQGFDOFXODWHDQDYHUDJH
IURPWKHP
6\VWHPDWLFHUURU
6\VWHPDWLFHUURUVDULVHIURPWKHXVHRIIDXOW\LQVWUXPHQWVXVHGRUIURPnDZVLQWKH
H[SHULPHQWDOPHWKRG
7KLVW\SHRIHUURULVUHSHDWHGHYHU\WLPHWKHLQVWUXPHQWLVXVHGRUWKHPHWKRGLVIROORZHG
ZKLFKDlHFWVWKHDFFXUDF\RIDOOUHDGLQJVREWDLQHG
7RUHGXFHV\VWHPDWLFHUURUVLQVWUXPHQWVVKRXOGEHUHFDOLEUDWHGRUWKHWHFKQLTXHEHLQJ
XVHGVKRXOGEHFRUUHFWHGRUDGMXVWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
5HSUHVHQWLQJSUHFLVLRQDQGDFFXUDF\RQDJUDSK
=HURHUURU
7KLVLVDW\SHRIV\VWHPDWLFHUURUZKLFKRFFXUVZKHQDQLQVWUXPHQWJLYHVDUHDGLQJZKHQWKH
WUXHUHDGLQJLV]HUR
7KLVLQWURGXFHVDm[HGHUURULQWRUHDGLQJVZKLFKPXVWEHDFFRXQWHGIRUZKHQWKHUHVXOWVDUH
UHFRUGHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3UHFLVLRQ $FFXUDF\
3UHFLVLRQRIDPHDVXUHPHQWWKLVLVKRZFORVHWKHPHDVXUHGYDOXHVDUHWRHDFKRWKHULID
PHDVXUHPHQWLVUHSHDWHGVHYHUDOWLPHVWKHQWKH\FDQEHGHVFULEHGDVSUHFLVHZKHQWKH
YDOXHVDUHYHU\VLPLODUWRRUWKHVDPHDVHDFKRWKHU
7KHSUHFLVLRQRIDPHDVXUHPHQWLVUHnHFWHGLQWKHYDOXHVUHFRUGHGiPHDVXUHPHQWVWRD
JUHDWHUQXPEHURIGHFLPDOSODFHVDUHVDLGWREHPRUHSUHFLVHWKDQWKRVHWRDZKROHQXPEHU
$FFXUDF\WKLVLVKRZFORVHDPHDVXUHGYDOXHLVWRWKHWUXHYDOXHWKHDFFXUDF\FDQEH
LQFUHDVHGE\UHSHDWLQJPHDVXUHPHQWVDQGmQGLQJDPHDQDYHUDJH
7KHGLbHUHQFHEHWZHHQSUHFLVHDQGDFFXUDWHUHVXOWV
([DP7LS
,WLVYHU\FRPPRQIRUVWXGHQWVWRFRQIXVHSUHFLVLRQZLWKDFFXUDF\i
PHDVXUHPHQWVFDQEHSUHFLVHEXWQRWDFFXUDWHLIHDFKPHDVXUHPHQWUHDGLQJ
KDVWKHVDPHHUURU3UHFLVLRQUHIHUVWRWKHDELOLW\WRWDNHPXOWLSOHUHDGLQJV
ZLWKDQLQVWUXPHQWWKDWDUHFORVHWRHDFKRWKHUZKHUHDVDFFXUDF\LVWKH
FORVHQHVVRIWKRVHPHDVXUHPHQWVWRWKHWUXHYDOXH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&$/&8/$7,1*81&(57$,17,(6
&DOFXODWLQJ8QFHUWDLQW\
7KHUHLVDOZD\VDGHJUHHRIXQFHUWDLQW\ZKHQPHDVXUHPHQWVDUHWDNHQWKHXQFHUWDLQW\FDQ
EHWKRXJKWRIDVWKHGLlHUHQFHEHWZHHQWKHDFWXDOUHDGLQJWDNHQ FDXVHGE\WKHHTXLSPHQW
RUWHFKQLTXHVXVHG DQGWKHWUXHYDOXH
8QFHUWDLQWLHVDUHQRWWKHVDPHDVHUURUV
(UURUVFDQEHWKRXJKWRIDVLVVXHVZLWKHTXLSPHQWRUPHWKRGRORJ\WKDWFDXVHD
UHDGLQJWREHGLlHUHQWIURPWKHWUXHYDOXH
7KHXQFHUWDLQW\LVDUDQJHRIYDOXHVDURXQGDPHDVXUHPHQWZLWKLQZKLFKWKHWUXH
YDOXHLVH[SHFWHGWROLHDQGLVDQHVWLPDWH
)RUH[DPSOHLIWKHWUXHYDOXHRIWKHPDVVRIDER[LVJEXWDV\VWHPDWLFHUURUZLWKD
EDODQFHJLYHVDQDFWXDOUHDGLQJRIJWKHXQFHUWDLQW\LVeJ
7KHVHXQFHUWDLQWLHVFDQEHUHSUHVHQWHGLQDQXPEHURIZD\V
$EVROXWH8QFHUWDLQW\ZKHUHXQFHUWDLQW\LVJLYHQDVDm[HGTXDQWLW\
)UDFWLRQDO8QFHUWDLQW\ZKHUHXQFHUWDLQW\LVJLYHQDVDIUDFWLRQRIWKH
PHDVXUHPHQW
3HUFHQWDJH8QFHUWDLQW\ZKHUHXQFHUWDLQW\LVJLYHQDVDSHUFHQWDJHRIWKH
PHDVXUHPHQW
7RmQGXQFHUWDLQWLHVLQGLlHUHQWVLWXDWLRQV
7KHXQFHUWDLQW\LQDUHDGLQJeKDOIWKHVPDOOHVWGLYLVLRQ
7KHXQFHUWDLQW\LQDPHDVXUHPHQWDWOHDVWeVPDOOHVWGLYLVLRQ
7KHXQFHUWDLQW\LQUHSHDWHGGDWDKDOIWKHUDQJHLHef ODUJHVWiVPDOOHVWYDOXH
7KHXQFHUWDLQW\LQGLJLWDOUHDGLQJVeWKHODVWVLJQLmFDQWGLJLWXQOHVVRWKHUZLVHTXRWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
+RZWRFDOFXODWHDEVROXWHIUDFWLRQDODQGSHUFHQWDJHXQFHUWDLQW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&RPELQLQJ8QFHUWDLQWLHV
7KHUXOHVWRIROORZ
$GGLQJVXEWUDFWLQJGDWDiDGGWKHDEVROXWHXQFHUWDLQWLHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0XOWLSO\LQJGLYLGLQJGDWDiDGGWKHSHUFHQWDJHXQFHUWDLQWLHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
5DLVLQJWRDSRZHUiPXOWLSO\WKHXQFHUWDLQW\E\WKHSRZHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0($685(0(177(&+1,48(6
0HDVXUHPHQW7HFKQLTXHV
&RPPRQLQVWUXPHQWVXVHGLQ3K\VLFVDUH
0HWUHUXOHViWRPHDVXUHGLVWDQFHDQGOHQJWK
%DODQFHViWRPHDVXUHPDVV
3URWUDFWRUViWRPHDVXUHDQJOHV
6WRSZDWFKHViWRPHDVXUHWLPH
$PPHWHUViWRPHDVXUHFXUUHQW
9ROWPHWHUViWRPHDVXUHSRWHQWLDOGLlHUHQFH
0RUHFRPSOLFDWHGLQVWUXPHQWVVXFKDVWKHPLFURPHWHUVFUHZJDXJHDQG9HUQLHUFDOLSHUVFDQ
EHXVHGWRPRUHDFFXUDWHO\PHDVXUHOHQJWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:KHQXVLQJPHDVXULQJLQVWUXPHQWVOLNHWKHVH\RXQHHGWRHQVXUHWKDW\RXDUHIXOO\DZDUHRI
ZKDWHDFKGLYLVLRQRQDVFDOHUHSUHVHQWV
7KLVLVNQRZQDVWKHUHVROXWLRQ
7KHUHVROXWLRQLVWKHVPDOOHVWFKDQJHLQWKHSK\VLFDOTXDQWLW\EHLQJPHDVXUHGWKDWUHVXOWVLQ
DFKDQJHLQWKHUHDGLQJJLYHQE\WKHPHDVXULQJLQVWUXPHQW
7KHVPDOOHUWKHFKDQJHWKDWFDQEHPHDVXUHGE\WKHLQVWUXPHQWWKHJUHDWHUWKHGHJUHHRI
UHVROXWLRQ
)RUH[DPSOHDVWDQGDUGPHUFXU\WKHUPRPHWHUKDVDUHVROXWLRQRId&ZKHUHDVDW\SLFDO
GLJLWDOWKHUPRPHWHUZLOOKDYHDUHVROXWLRQRId&
7KHGLJLWDOWKHUPRPHWHUKDVDKLJKHUUHVROXWLRQWKDQWKHPHUFXU\WKHUPRPHWHU
0HDVXULQJ,QVWUXPHQWV7DEOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0LFURPHWHU6FUHZ*DXJH
+RZWRRSHUDWHDPLFURPHWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
9HUQLHU&DOLSHUV
+RZWRRSHUDWHYHUQLHUFDOLSHUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
&217(176
(TXDWLRQVRI0RWLRQ
'LVSODFHPHQW9HORFLW\ $FFHOHUDWLRQ
0RWLRQ*UDSKV
$UHDXQGHUD9HORFLW\7LPH*UDSK
*UDGLHQWRID'LVSODFHPHQW7LPH*UDSK
*UDGLHQWRID9HORFLW\7LPH*UDSK
'HULYLQJ.LQHPDWLF(TXDWLRQV
6ROYLQJ3UREOHPVZLWK.LQHPDWLF(TXDWLRQV
$FFHOHUDWLRQRI)UHH)DOO([SHULPHQW
3URMHFWLOH0RWLRQ
(48$7,2162)027,21
',63/$&(0(179(/2&,7< $&&(/(5$7,21
'HmQLQJ'LVSODFHPHQW9HORFLW\ $FFHOHUDWLRQ
6FDODUTXDQWLWLHV
5HPHPEHUVFDODUTXDQWLWLHVRQO\KDYHDPDJQLWXGH VL]H
'LVWDQFHWKHWRWDOOHQJWKEHWZHHQWZRSRLQWV
6SHHGWKHWRWDOGLVWDQFHWUDYHOOHGSHUXQLWRIWLPH
9HFWRUTXDQWLWLHV
5HPHPEHUYHFWRUTXDQWLWLHVKDYHERWKPDJQLWXGHDQGGLUHFWLRQ
'LVSODFHPHQWWKHGLVWDQFHRIDQREMHFWIURPDm[HGSRLQWLQDVSHFLmHGGLUHFWLRQ
9HORFLW\WKHUDWHRIFKDQJHRIGLVSODFHPHQWRIDQREMHFW
$FFHOHUDWLRQWKHUDWHRIFKDQJHRIYHORFLW\RIDQREMHFW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
(TXDWLRQV
(TXDWLRQVOLQNLQJGLVSODFHPHQWYHORFLW\DQGDFFHOHUDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
027,21*5$3+6
0RWLRQ*UDSKV
7KUHHW\SHVRIJUDSKWKDWFDQUHSUHVHQWPRWLRQDUHGLVSODFHPHQWWLPHJUDSKVYHORFLW\
WLPHJUDSKVDQGDFFHOHUDWLRQWLPHJUDSKV
2QDGLVSODFHPHQWWLPHJUDSKc
VORSHHTXDOVYHORFLW\
WKH\LQWHUFHSWHTXDOVWKHLQLWLDOGLVSODFHPHQW
DVWUDLJKWOLQHUHSUHVHQWVDFRQVWDQWYHORFLW\
DFXUYHGOLQHUHSUHVHQWVDQDFFHOHUDWLRQ
DSRVLWLYHVORSHUHSUHVHQWVPRWLRQLQWKHSRVLWLYHGLUHFWLRQ
DQHJDWLYHVORSHUHSUHVHQWVPRWLRQLQWKHQHJDWLYHGLUHFWLRQ
D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVDVWDWHRIUHVW
WKHDUHDXQGHUWKHFXUYHLVPHDQLQJOHVV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
2QDYHORFLW\WLPHJUDSKc
VORSHHTXDOVDFFHOHUDWLRQ
WKH\LQWHUFHSWHTXDOVWKHLQLWLDOYHORFLW\
DVWUDLJKWOLQHUHSUHVHQWVXQLIRUPDFFHOHUDWLRQ
DFXUYHGOLQHUHSUHVHQWVQRQXQLIRUPDFFHOHUDWLRQ
DSRVLWLYHVORSHUHSUHVHQWVDQLQFUHDVHLQYHORFLW\LQWKHSRVLWLYHGLUHFWLRQ
DQHJDWLYHVORSHUHSUHVHQWVDQLQFUHDVHLQYHORFLW\LQWKHQHJDWLYHGLUHFWLRQ
D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVPRWLRQZLWKFRQVWDQWYHORFLW\
WKHDUHDXQGHUWKHFXUYHHTXDOVWKHFKDQJHLQGLVSODFHPHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
2QDQDFFHOHUDWLRQWLPHJUDSKc
VORSHLVPHDQLQJOHVV
WKH\LQWHUFHSWHTXDOVWKHLQLWLDODFFHOHUDWLRQ
D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVDQREMHFWXQGHUJRLQJFRQVWDQWDFFHOHUDWLRQ
WKHDUHDXQGHUWKHFXUYHHTXDOVWKHFKDQJHLQYHORFLW\
+RZGLVSODFHPHQWYHORFLW\DQGDFFHOHUDWLRQJUDSKVUHODWHWRHDFKRWKHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
$5($81'(5$9(/2&,7<7,0(*5$3+
$UHDXQGHUD9HORFLW\7LPH*UDSK
9HORFLW\WLPHJUDSKVVKRZWKHVSHHGDQGGLUHFWLRQRIDQREMHFWLQPRWLRQRYHUDVSHFLmF
SHULRGRIWLPH
7KHDUHDXQGHUDYHORFLW\WLPHJUDSKLVHTXDOWRWKHGLVSODFHPHQWRIDPRYLQJREMHFW
GLVSODFHPHQW DUHDXQGHUDYHORFLW\WLPHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
+RZWRGHWHUPLQHWKHDUHDXQGHUDYHORFLW\WLPHJUDSK
([DP7LS
$OZD\VFKHFNWKHYDOXHVJLYHQRQWKH\D[LVRIDPRWLRQJUDSKgVWXGHQWV
RIWHQFRQIXVHGLVSODFHPHQWWLPHJUDSKVDQGYHORFLW\WLPHJUDSKV

7KHDUHDXQGHUWKHJUDSKFDQRIWHQEHEURNHQGRZQLQWRWULDQJOHVVTXDUHV
DQGUHFWDQJOHVVRPDNHVXUH\RXDUHFRPIRUWDEOHZLWKFDOFXODWLQJDUHD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
*5$',(172)$',63/$&(0(177,0(*5$3+
*UDGLHQWRID'LVSODFHPHQW7LPH*UDSK
'LVSODFHPHQWWLPHJUDSKVVKRZWKHFKDQJLQJSRVLWLRQRIDQREMHFWLQPRWLRQ
7KH\DOVRVKRZZKHWKHUDQREMHFWLVPRYLQJIRUZDUGV SRVLWLYHGLVSODFHPHQW RUEDFNZDUGV

QHJDWLYHGLVSODFHPHQW
$QHJDWLYHJUDGLHQW DQHJDWLYHYHORFLW\ WKHREMHFWLVPRYLQJEDFNZDUGV
7KHJUDGLHQW VORSH RIDGLVSODFHPHQWWLPHJUDSKLVHTXDOWRYHORFLW\

7KHJUHDWHUWKHVORSHWKHJUHDWHUWKHYHORFLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
+RZWRGHWHUPLQHWKHVORSHRIDGLVSODFHPHQWWLPHJUDSK
([DP7LS
'RQiWIRUJHWWKDWYHORFLW\LVDYHFWRUTXDQWLW\LWKDVDVL]HDQGDGLUHFWLRQ,I
YHORFLW\LVLQLWLDOO\SRVLWLYHDQGWKHQEHFRPHVQHJDWLYHWKHQWKHREMHFWKDV
FKDQJHGGLUHFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
*5$',(172)$9(/2&,7<7,0(*5$3+
*UDGLHQWRID9HORFLW\7LPH*UDSK
$FFHOHUDWLRQLVDQ\FKDQJHLQWKHYHORFLW\RIDQREMHFWLQDJLYHQWLPH
$VYHORFLW\LVDYHFWRUTXDQWLW\WKLVPHDQVWKDWLIWKHVSHHGRIDQREMHFWFKDQJHVRULWV
GLUHFWLRQFKDQJHVWKHQLWLVDFFHOHUDWLQJ
$QREMHFWWKDWVORZVGRZQWHQGVWREHGHVFULEHGDVhGHFHOHUDWLQJi
7KHJUDGLHQWRIDYHORFLW\WLPHJUDSKLVHTXDOWRDFFHOHUDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
+RZWRGHWHUPLQHWKHVORSHRIDYHORFLW\WLPHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
'(5,9,1*.,1(0$7,&(48$7,216
'HULYLQJ.LQHPDWLF(TXDWLRQVRI0RWLRQ
7KHNLQHPDWLFHTXDWLRQVRIPRWLRQDUHDVHWRIIRXUHTXDWLRQVZKLFKFDQGHVFULEHDQ\REMHFW
PRYLQJZLWKFRQVWDQWDFFHOHUDWLRQ
7KH\UHODWHWKHmYHYDULDEOHV
V GLVSODFHPHQW
X LQLWLDOYHORFLW\
Y dQDOYHORFLW\
D DFFHOHUDWLRQ
W WLPHLQWHUYDO
,WiVLPSRUWDQWWRNQRZZKHUHWKHVHHTXDWLRQVFRPHIURPDQGKRZWKH\DUHGHULYHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
$JUDSKVKRZLQJKRZWKHYHORFLW\RIDQREMHFWYDULHVZLWKWLPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
7KHDYHUDJHYHORFLW\LVKDOIZD\EHWZHHQXDQGY

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
7KHWZRWHUPVXWDQGbDWPDNHXSWKHDUHDXQGHUWKHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
7KLVcQDOHTXDWLRQFDQEHGHULYHGIURPWZRRIWKHRWKHUV
6XPPDU\RIWKHIRXUHTXDWLRQVRIXQLIRUPO\DFFHOHUDWHGPRWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
62/9,1*352%/(06:,7+.,1(0$7,&(48$7,216
6ROYLQJ3UREOHPVZLWK.LQHPDWLF(TXDWLRQV
6WHS:ULWHRXWWKHYDULDEOHVWKDWDUHJLYHQLQWKHTXHVWLRQERWKNQRZQDQGXQNQRZQDQG
XVHWKHFRQWH[WRIWKHTXHVWLRQWRGHGXFHDQ\TXDQWLWLHVWKDWDUHQiWH[SOLFLWO\JLYHQ
HJIRUYHUWLFDOPRWLRQD dPVgDQREMHFWZKLFKVWDUWVRUmQLVKHVDWUHVWZLOO
KDYHX RUY
6WHS&KRRVHWKHHTXDWLRQZKLFKFRQWDLQVWKHTXDQWLWLHV\RXKDYHOLVWHG
HJWKHHTXDWLRQWKDWOLQNVVXDDQGWLVV XWeDW
6WHS&RQYHUWDQ\XQLWVWR6,XQLWVDQGWKHQLQVHUWWKHTXDQWLWLHVLQWRWKHHTXDWLRQDQG
UHDUUDQJHDOJHEUDLFDOO\WRGHWHUPLQHWKHDQVZHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
:RUNHG([DPSOH
+RZWRVROYHSUREOHPVXVLQJWKHNLQHPDWLFHTXDWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
([DP7LS
j7KLVLVDUJXDEO\WKHPRVWLPSRUWDQWVHFWLRQRIWKLVWRSLF\RXFDQDOZD\VEH
VXUHWKHUHZLOOEHRQHRUPRUHTXHVWLRQVLQWKHH[DPDERXWVROYLQJSUREOHPV
ZLWKWKHNLQHPDWLFHTXDWLRQV
j7KHEHVWZD\WRPDVWHUWKLVVHFWLRQLVWRSUDFWLFHDVPDQ\TXHVWLRQVDV
SRVVLEOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
$&&(/(5$7,212))5(()$//(;3(5,0(17
$FFHOHUDWLRQRI)UHH)DOO([SHULPHQW
$FRPPRQH[SHULPHQWWRGHWHUPLQHDFFHOHUDWLRQRIDIDOOLQJREMHFWZKLFKFDQEHFDUULHGRXW
LQWKHODE
$SSDUDWXV
0HWUHUXOHEDOOEHDULQJHOHFWURPDJQHWHOHFWURQLFWLPHUWUDSGRRU
$SSDUDWXVXVHGWRPHDVXUHJ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
0HWKRG
:KHQWKHFXUUHQWWRWKHPDJQHWVZLWFKHVRlWKHEDOOGURSVDQGWKHWLPHUVWDUWV
:KHQWKHEDOOKLWVWKHWUDSGRRUWKHWLPHUVWRSV
7KHUHDGLQJRQWKHWLPHULQGLFDWHVWKHWLPHLWWDNHVIRUWKHEDOOWRIDOODGLVWDQFHK
7KLVSURFHGXUHLVUHSHDWHGVHYHUDOWLPHVIRUGLlHUHQWYDOXHVRIKLQRUGHUWRUHGXFHUDQGRP
HUURU
7KHGLVWDQFHKFDQEHPHDVXUHGXVLQJDPHWUHUXOHDVLWZRXOGEHSUHIHUDEOHWRXVHIRU
GLVWDQFHVEHWZHHQFPgP
$QDO\VLQJGDWD
7RmQGJXVHWKHVDPHVWHSVDVLQWKHSUREOHPVROYLQJVHFWLRQ
7KHNQRZQTXDQWLWLHVDUH
'LVSODFHPHQWV K
7LPHWDNHQ W
,QLWLDOYHORFLW\X
$FFHOHUDWLRQD J
7KHHTXDWLRQWKDWOLQNVWKHVHTXDQWLWLHVLV
V XWeDW
K eJW
8VLQJWKLVHTXDWLRQGHGXFHJIURPWKHJUDGLHQWRIWKHJUDSKRIKDJDLQVWW
6RXUFHVRIHUURU
6\VWHPDWLFHUURUUHVLGXHPDJQHWLVPDIWHUWKHHOHFWURPDJQHWLVVZLWFKHGRlPD\FDXVH
WKHWLPHWREHUHFRUGHGDVORQJHUWKDQLWVKRXOGEH
5DQGRPHUURUODUJHXQFHUWDLQW\LQGLVWDQFHIURPXVLQJDPHWUHUXOHZLWKDSUHFLVLRQRI
PPRUIURPSDUDOOD[HUURU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
352-(&7,/(027,21
3URMHFWLOH0RWLRQ
7KHWUDMHFWRU\RIDQREMHFWXQGHUJRLQJSURMHFWLOHPRWLRQFRQVLVWVRIDYHUWLFDOFRPSRQHQW
DQGDKRUL]RQWDOFRPSRQHQW
7KHVHQHHGWREHHYDOXDWHGVHSDUDWHO\
6RPHNH\WHUPVWRNQRZDQGKRZWRFDOFXODWHWKHPDUH
7LPHRIeLJKWKRZORQJWKHSURMHFWLOHLVLQWKHDLU
0D[LPXPKHLJKWDWWDLQHGWKHKHLJKWDWZKLFKWKHSURMHFWLOHLVPRPHQWDULO\DWUHVW
5DQJHWKHKRUL]RQWDOGLVWDQFHWUDYHOOHGE\WKHSURMHFWLOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
+RZWRcQGWKHWLPHRIdLJKWPD[LPXPKHLJKWDQGUDQJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
5HPHPEHUWKHRQO\IRUFHDFWLQJRQWKHSURMHFWLOHDIWHULWKDVEHHQUHOHDVHGLVJUDYLW\
7KHUHDUHWKUHHSRVVLEOHVFHQDULRVIRUSURMHFWLOHPRWLRQ
9HUWLFDOSURMHFWLRQ
+RUL]RQWDOSURMHFWLRQ
3URMHFWLRQDWDQDQJOH
/HWiVFRQVLGHUHDFKLQWXUQ
:RUNHG([DPSOH
+RZWRFDOFXODWHYHUWLFDOSURMHFWLRQ IUHHIDOO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
:RUNHG([DPSOH
+RZWRFDOFXODWHKRUL]RQWDOSURMHFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
:RUNHG([DPSOH
+RZWRFDOFXODWHSURMHFWLRQDWDQDQJOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
([DP7LS
0DNHVXUH\RXGRQiWPDNHWKHVHFRPPRQPLVWDNHV
j)RUJHWWLQJWKDWGHFHOHUDWLRQLVQHJDWLYHDVWKHREMHFWULVHV

j&RQIXVLQJWKHGLUHFWLRQRIVLQfDQGFRVf
j1RWFRQYHUWLQJXQLWV PPFPNPHWF WRPHWUHV
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
.LQHPDWLFV k
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
&217(176
1HZWRQ V/DZVRI0RWLRQ
0DVV :HLJKW
)RUFH $FFHOHUDWLRQ
1HZWRQ V/DZVRI0RWLRQ
/LQHDU0RPHQWXP
)RUFH 0RPHQWXP
'UDJ)RUFH $LU5HVLVWDQFH
7HUPLQDO9HORFLW\
/LQHDU0RPHQWXP &RQVHUYDWLRQ
&RQVHUYDWLRQRI0RPHQWXP
(ODVWLF ,QHODVWLF&ROOLVLRQV
1(:721 6/$:62)027,21
0$66 :(,*+7
:KDWLV0DVV"
0DVVLVWKHPHDVXUHRIWKHDPRXQWRIPDWWHULQDQREMHFW
&RQVHTXHQWO\WKLVLVWKHSURSHUW\RIDQREMHFWWKDWUHVLVWVFKDQJHLQPRWLRQ
7KHJUHDWHUWKHPDVVRIDERG\WKHVPDOOHUWKHFKDQJHSURGXFHGE\DQDSSOLHGIRUFH
7KH6,XQLWIRUPDVVLVWKHNLORJUDP NJ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
i6LQFHPDVVLVPHDVXUHGLQNLORJUDPVLQ3K\VLFVLILWLVJLYHQLQJUDPV
PDNHVXUHWRFRQYHUWWRNJE\GLYLGLQJWKHYDOXHE\
i,WLVDFRPPRQPLVFRQFHSWLRQWKDWPDVVDQGZHLJKWDUHWKHVDPHEXWWKH\
DUHLQIDFWYHU\GLgHUHQW

i:HLJKWLVWKHIRUFHRIJUDYLW\DFWLQJXSRQDQREMHFW
k:HLJKWLVDYHFWRUTXDQWLW\
i0DVVLVWKHDPRXQWRIPDWWHUFRQWDLQHGLQWKHREMHFW
k0DVVLVDVFDODUTXDQWLW\
:HLJKW
:HLJKWLVWKHHmHFWRIDJUDYLWDWLRQDOnHOGRQDPDVV
6LQFHLWLVDIRUFHRQDQREMHFWGXHWRWKHSXOORIJUDYLW\LWLVPHDVXUHGLQ1HZWRQV 1 DQG
LVDYHFWRUTXDQWLW\
7KHZHLJKWRIDERG\LVHTXDOWRWKHSURGXFWRILWVPDVV P DQGWKHDFFHOHUDWLRQRIIUHHIDOO
J
:HLJKWHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
JLVWKHDFFHOHUDWLRQGXHWRJUDYLW\RUWKHJUDYLWDWLRQDOnHOGVWUHQJWK
2Q(DUWKWKLVLVPVf RU1NJj
)UHHIDOO
$QREMHFWLQIUHHIDOOLVIDOOLQJVROHO\XQGHUWKHLQoXHQFHRIJUDYLW\
2Q(DUWKDOOIUHHIDOOLQJREMHFWVDFFHOHUDWHWRZDUGV(DUWKDWDUDWHRIPVf
,QWKHDEVHQFHRIDLUUHVLVWDQFHDOOERGLHVQHDUWKH(DUWKIDOOZLWKWKHVDPHDFFHOHUDWLRQ
UHJDUGOHVVRIWKHLUPDVV
0DVVY:HLJKW
$QREMHFWfVPDVVDOZD\VUHPDLQVWKHVDPHKRZHYHULWVZHLJKWZLOOGLmHUGHSHQGLQJRQWKH
VWUHQJWKRIWKHJUDYLWDWLRQDOnHOGRQGLmHUHQWSODQHWV
)RUH[DPSOHWKHJUDYLWDWLRQDOnHOGVWUHQJWKRQWKH0RRQLV1NJPHDQLQJDQREMHFWfV
ZHLJKWZLOOEHDERXWWLPHVOHVVWKDQRQ(DUWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
2QWKHPRRQ\RXUPDVVZLOOVWD\WKHVDPHEXW\RXUZHLJKWZLOOEHPXFKORZHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
$OWKRXJK\RXRQO\QHHGWRPHPRULVHJRQ(DUWKLWVYDOXHRQRWKHUSODQHWVLQRXUVRODU
V\VWHPLVJLYHQLQWKHGLDJUDPEHORZ1RWLFHKRZPXFKWKLVYDULHVDFFRUGLQJWRWKHVL]HRI
WKHSODQHW
*UDYLWDWLRQDOfHOGVWUHQJWKRIWKHSODQHWVLQRXUVRODUV\VWHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:RUNHGH[DPSOH
&DOFXODWLQJPDVVRIDVSDFHSUREH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
)25&( $&&(/(5$7,21
)RUFH $FFHOHUDWLRQ
$VVWDWHGRQWKHSUHYLRXVSDJH1HZWRQfV6HFRQG/DZRI0RWLRQWHOOVXVWKDWREMHFWVZLOO
DFFHOHUDWHLIWKHUHLVDUHVXOWDQWIRUFHDFWLQJXSRQWKHP
7KLVDFFHOHUDWLRQZLOOEHLQWKHVDPHGLUHFWLRQDVWKLVUHVXOWDQWIRUFH
1HZWRQdV6HFRQGODZHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
5HVXOWDQW)RUFH
6LQFHIRUFHLVDYHFWRUHYHU\IRUFHRQDERG\KDVDPDJQLWXGHDQGGLUHFWLRQ
7KHUHVXOWDQWIRUFHLVWKHUHIRUHWKHYHFWRUVXPRIDOOWKHIRUFHVDFWLQJRQWKHERG\7KH
GLUHFWLRQLVJLYHQE\HLWKHUWKHSRVLWLYHRUQHJDWLYHGLUHFWLRQDVVKRZQLQWKHH[DPSOHVEHORZ
5HVXOWDQWIRUFHVRQDERG\
7KHUHVXOWDQWIRUFHFRXOGDOVREHDWDQDQJOHLQZKLFKFDVHDGGLWLRQRIYHFWRUVLVXVHGWRnQG
WKHPDJQLWXGHDQGGLUHFWLRQRIWKHUHVXOWDQWIRUFH
)RUPRUHGHWDLOVRQWKLVKDYHDORRNDWWKHSDJHRQg6FDODUV 9HFWRUVh
$FFHOHUDWLRQ
*LYHQWKHPDVV1HZWRQfV6HFRQG/DZPHDQV\RXFDQnQGWKHDFFHOHUDWLRQRIDQREMHFW
6LQFHDFFHOHUDWLRQLVDOVRDYHFWRULWFDQEHHLWKHUSRVLWLYHRUQHJDWLYHGHSHQGLQJRQWKH
GLUHFWLRQRIWKHUHVXOWDQWIRUFH
1HJDWLYHDFFHOHUDWLRQLVGHFHOHUDWLRQ
$QREMHFWPD\FRQWLQXHLQWKHVDPHGLUHFWLRQKRZHYHUZLWKDUHVXOWDQWIRUFHLQWKHRSSRVLWH
GLUHFWLRQWRLWVPRWLRQLWZLOOVORZGRZQDQGHYHQWXDOO\FRPHWRDVWRS

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
5HVXOWDQWIRUFHDQGDFFHOHUDWLRQRQDURFNHW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
7KHGLUHFWLRQ\RXFRQVLGHUSRVLWLYHLV\RXUFKRLFHDVORQJWKHVLJQVRIWKH
QXPEHUV SRVLWLYHRUQHJDWLYH DUHFRQVLVWHQWZLWKWKLVWKURXJKRXWWKH
TXHVWLRQ

,WLVDJHQHUDOUXOHWRFRQVLGHUWKHGLUHFWLRQRIPRWLRQWKHREMHFWLVWUDYHOOLQJ
LQDVSRVLWLYH7KHUHIRUHDOOYHFWRUVLQWKHGLUHFWLRQRIPRWLRQZLOOEHSRVLWLYH
DQGRSSRVLQJYHFWRUVVXFKDVGUDJIRUFHVDUHQHJDWLYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
1(:721 6/$:62)027,21
1HZWRQ V7KUHH/DZVRI0RWLRQ
1HZWRQeV)LUVW/DZ$ERG\ZLOOUHPDLQDWUHVWRUPRYHZLWKFRQVWDQWYHORFLW\XQOHVVDFWHG
RQE\DUHVXOWDQWIRUFH
1HZWRQdV)LUVW/DZRQDFDUDWFRQVWDQWYHORFLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
1HZWRQeV6HFRQG/DZ$UHVXOWDQWIRUFHDFWLQJRQDERG\ZLOOFDXVHDFKDQJHLQ
PRPHQWXPLQWKHGLUHFWLRQRIWKHIRUFH7KHUDWHRIFKDQJHLQPRPHQWXPLVSURSRUWLRQDOWR
WKHPDJQLWXGHRIWKHIRUFH
7KLVFDQDOVREHZULWWHQDV) PD
8VLQJ1HZWRQdV6HFRQGODZWRfQGWKHPDVVRIDQDFFHOHUDWLQJVNDWHERDUGHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
1HZWRQeV7KLUG/DZ,IERG\$H[HUWVDIRUFHRQERG\%WKHQERG\%ZLOOH[HUWDIRUFHRQ
ERG\$RIHTXDOPDJQLWXGHEXWLQWKHRSSRVLWHGLUHFWLRQ
1HZWRQfV7KLUG/DZIRUFHSDLUVPXVWDFWRQGLgHUHQWREMHFWV
1HZWRQfV7KLUG/DZIRUFHSDLUVPXVWDOVREHRIWKHVDPHW\SHHJJUDYLWDWLRQDORU
IULFWLRQDO
1HZWRQdV7KLUG/DZWRGHVFULEHWKHPRWLRQRIDQXQWLHGEDOORRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
<RXPD\KDYHKHDUG1HZWRQfV7KLUG/DZDVe)RUHYHU\DFWLRQLVDQHTXDODQG
RSSRVLWHUHDFWLRQf+RZHYHUWU\DQGDYRLGXVLQJWKLVGHnQLWLRQVLQFHLWLVXQFOHDU
RQZKDWWKHIRUFHVDUHDFWLQJRQDQGFDQEHPLVOHDGLQJ

1HZWRQdV7KLUG/DZIRUFHSDLUVDUHRQO\WKRVHWKDWDFWRQGLeHUHQW
REMHFWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
/,1($5020(1780
/LQHDU0RPHQWXP
/LQHDUPRPHQWXP S LVGHnQHGDVWKHSURGXFWRIPDVVDQGYHORFLW\
0RPHQWXPLVWKHSURGXFWRIPDVVDQGYHORFLW\
0RPHQWXPLVDYHFWRUTXDQWLW\dLWKDVERWKDPDJQLWXGHDQGDGLUHFWLRQ
7KLVPHDQVLWFDQKDYHDQHJDWLYHRUSRVLWLYHYDOXH
,IDQREMHFWWUDYHOOLQJWRWKHULJKWKDVSRVLWLYHPRPHQWXPDQREMHFWWUDYHOOLQJWRWKH
OHIW LQWKHRSSRVLWHGLUHFWLRQ KDVDQHJDWLYHPRPHQWXP
7KH6,XQLWIRUPRPHQWXPLVNJPVf

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:KHQWKHEDOOLVWUDYHOOLQJLQWKHRSSRVLWHGLUHFWLRQLWVYHORFLW\LVQHJDWLYH6LQFH
PRPHQWXP PDVVbYHORFLW\LWVPRPHQWXPLVDOVRQHJDWLYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:RUNHG([DPSOH
%RWKWKHWHQQLVEDOODQGWKHEULFNKDYHWKHVDPHPRPHQWXP
(YHQWKRXJKWKHEULFNLVPXFKKHDYLHUWKDQWKHEDOOWKHEDOOLVWUDYHOOLQJPXFKIDVWHUWKDQ
WKHEULFN
7KLVPHDQVWKDWRQLPSDFWWKH\ZRXOGERWKH[HUWDVLPLODUIRUFH GHSHQGLQJRQWKHWLPHLW
WDNHVIRUHDFKWRFRPHWRUHVW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
6LQFHPRPHQWXPLVLQNJPVf
i,IWKHPDVVLVJLYHQLQJUDPVPDNHVXUHWRFRQYHUWWRNJE\GLYLGLQJWKH
YDOXHE\
k,IWKHYHORFLW\LVJLYHQLQNPVjPDNHVXUHWRFRQYHUWWRPVjE\
PXOWLSO\LQJWKHYDOXHE\
i7KHGLUHFWLRQ\RXFRQVLGHUSRVLWLYHLV\RXUFKRLFHDVORQJWKHVLJQVRIWKH
QXPEHUV SRVLWLYHRUQHJDWLYH DUHFRQVLVWHQWZLWKWKLVWKURXJKRXWWKH
TXHVWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
)25&( 020(1780
)RUFH 0RPHQWXP
)RUFHLVGHnQHGDVWKHUDWHRIFKDQJHRIPRPHQWXPRQDERG\
)RUFHLVHTXDOWRWKHUDWHRIFKDQJHLQPRPHQWXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
7KHFKDQJHLQPRPHQWXPLVGHnQHGDVWKHnQDOPRPHQWXPPLQXVWKHLQLWLDOPRPHQWXP
ShQDOfSLQLWLDO
)RUFHDQGPRPHQWXPDUHYHFWRUVVRWKH\FDQEHHLWKHUSRVLWLYHRUQHJDWLYHYDOXHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
)RUFHLVUDWHRIFKDQJHRIPRPHQWXPHTXDWLRQRQDFDUKLWWLQJDZDOO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
'LUHFWLRQRI)RUFHV
7KHIRUFHWKDWLVHTXDOWRWKHUDWHRIFKDQJHRIPRPHQWXPLVVWLOOWKHUHVXOWDQWIRUFH
$IRUFHRQDQREMHFWZLOOEHQHJDWLYHLILWLVGLUHFWHGLQWKHRSSRVLWHPRWLRQWRLWVLQLWLDO
YHORFLW\7KLVPHDQVWKDWWKHIRUFHLVSURGXFHGE\WKHREMHFWLWKDVFROOLGHGZLWK
)FDU c)ZDOO
7KHGLDJUDPVKRZVDFDUFROOLGLQJZLWKDZDOO
,WLVWKHZDOOWKDWSURGXFHVDIRUFHRI1RQWKHFDU
'XHWR1HZWRQfV7KLUG/DZ VHHg1HZWRQfV/DZVRI0RWLRQh WKHFDUDOVRSURGXFHVDIRUFHRI

1EDFNRQWRWKHZDOO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
0DWKVWLS
e5DWHRIFKDQJHfGHVFULEHVKRZRQHYDULDEOHFKDQJHVZLWKUHVSHFWWRDQRWKHU,QPDWKVKRZ
IDVWVRPHWKLQJFKDQJHVZLWKWLPHLVUHSUHVHQWHGDVGLYLGLQJE\cW HJDFFHOHUDWLRQLVWKH
UDWHRIFKDQJHLQYHORFLW\
0RUHVSHFLnFDOO\cWLVXVHGIRUnQLWHDQGTXDQWLnDEOHFKDQJHVVXFKDVWKHGLmHUHQFHLQWLPH
EHWZHHQWZRHYHQWV
7KHVDPHFKDQJHLQPRPHQWXPRYHUDORQJHUSHULRGRIWLPHZLOOSURGXFHOHVVIRUFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
,QDQH[DPTXHVWLRQFDUHIXOO\FRQVLGHUZKDWSURGXFHVWKHIRUFH V DFWLQJ
/RRNRXWIRUZRUGVOLNHeIURPeDQGeDFWLQJRQeWRGHWHUPLQHWKLVDQGGRQfWEH
DIUDLGWRGUDZDIRUFHGLDJUDPWRnJXUHRXWZKDWLVJRLQJRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
'5$*)25&( $,55(6,67$1&(
'UDJ)RUFHV
'UDJIRUFHVDUHIRUFHVDFWLQJWKHRSSRVLWHGLUHFWLRQWRDQREMHFWPRYLQJWKURXJKDoXLG
HLWKHUJDVRUOLTXLG
([DPSOHVRIGUDJIRUFHVDUHIULFWLRQDQGDLUUHVLVWDQFH
$NH\FRPSRQHQWRIGUDJIRUFHVLVLWLQFUHDVHVZLWKWKHVSHHGRIWKHREMHFW7KLVLVVKRZQLQ
WKHGLDJUDPEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
)ULFWLRQDOIRUFHVRQDFDULQFUHDVHZLWKLWVVSHHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:RUNHG([DPSOH
([DP7LS
5HPHPEHUWRFRQVLGHUGUDJIRUFHVLQ\RXUFDOFXODWLRQIRUWKHUHVXOWDQWIRUFH

0RUHGHWDLOVRIWKLVDUHLQWKHQRWHVg)RUFHDQGDFFHOHUDWLRQh

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
$LU5HVLVWDQFH
$LUUHVLVWDQFHLVDQH[DPSOHRIDGUDJIRUFHZKLFKREMHFWVH[SHULHQFHZKHQPRYLQJWKURXJK
WKHDLU
$WDZDONLQJSDFHDSHUVRQUDUHO\H[SHULHQFHVWKHHmHFWVRIDLUUHVLVWDQFH
+RZHYHUDSHUVRQVZLPPLQJDWWKHVDPHSDFHXVHVXSPXFKPRUHHQHUJ\dWKLVLVEHFDXVH
DLULVWLPHVOHVVGHQVHWKDQZDWHU
$LUUHVLVWDQFHGHSHQGVRQWKHVKDSHRIWKHERG\ REMHFW DQGWKHVSHHGLWfVWUDYHOOLQJ
6LQFHGUDJIRUFHLQFUHDVHVZLWKVSHHGDLUUHVLVWDQFHEHFRPHVLPSRUWDQWZKHQREMHFWVPRYH
IDVWHU
$UDFLQJF\FOLVWDGRSWVDPRUHVWUHDPOLQHSRVWXUHWRUHGXFHWKHHeHFWVRIDLUUHVLVWDQFH
7KHF\FOHFORWKLQJDQGKHOPHWDUHGHVLJQHGWRDOORZWKHPWRJRDVIDVWDVSRVVLEOH
([DP7LS
,IDTXHVWLRQFRQVLGHUVDLUUHVLVWDQFHWREHdQHJOLJLEOHfWKLVPHDQVLQWKDW
TXHVWLRQDLUUHVLVWDQFHLVWDNHQWREHVRVPDOOLWZLOOQRWPDNHDGLmHUHQFHWR

WKHPRWLRQRIWKHERG\<RXFDQWDNHWKLVWRPHDQWKHUHDUHQRGUDJIRUFHV
DFWLQJRQWKHERG\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
7(50,1$/9(/2&,7<
7HUPLQDO9HORFLW\
)RUDERG\LQIUHHIDOOWKHRQO\IRUFHDFWLQJLVLWVZHLJKWDQGLWVDFFHOHUDWLRQJLVRQO\GXHWR
JUDYLW\
7KHGUDJIRUFHLQFUHDVHVDVWKHERG\DFFHOHUDWHV
7KLVLQFUHDVHLQYHORFLW\PHDQVWKHGUDJIRUFHDOVRLQFUHDVHV
'XHWR1HZWRQfV6HFRQG/DZWKLVPHDQVWKHUHVXOWDQWIRUFHDQGWKHUHIRUHDFFHOHUDWLRQ
GHFUHDVHV UHFDOO) PD
:KHQWKHGUDJIRUFHLVHTXDOWRWKHJUDYLWDWLRQDOSXOORQWKHERG\WKHERG\ZLOOQRORQJHU
DFFHOHUDWHDQGZLOOIDOODWDFRQVWDQWYHORFLW\
7KLVYHORFLW\LVFDOOHGWKHWHUPLQDOYHORFLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
$VN\GLYHULQIUHHIDOOUHDFKLQJWHUPLQDOYHORFLW\
7KHJUDSKVKRZVKRZWKHYHORFLW\RIWKHVN\GLYHUYDULHVZLWKWLPH
6LQFHWKHDFFHOHUDWLRQLVHTXDOWRWKHJUDGLHQWRIDYHORFLW\WLPHJUDSKWKHDFFHOHUDWLRQ
GHFUHDVHVDQGHYHQWXDOO\EHFRPHV]HURZKHQWHUPLQDOYHORFLW\LVUHDFKHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
:RUNHGH[DPSOH
6N\GLYHU%VKRXOGMXPSnUVWVLQFHKHZLOOWDNHORQJHUWRUHDFKWHUPLQDOYHORFLW\
7KLVLVEHFDXVHVN\GLYHU$KDVDKLJKHUPDVVDQGKHQFHZHLJKW
0RUHZHLJKWPHDQVKLJKHUDFFHOHUDWLRQDQGKHQFHKLJKHUVSHHGWKHUHIRUH$ZLOOUHDFK
WHUPLQDOYHORFLW\IDVWHUWKDQ%
([DP7LS
i([DPTXHVWLRQVDERXWWHUPLQDOYHORFLW\WHQGWRLQYROYHWKHPRWLRQRI
VN\GLYHUVDVWKH\IDOO
i$FRPPRQPLVFRQFHSWLRQLVWKDWVN\GLYHUVPRYHXSZDUGVZKHQWKHLU

SDUDFKXWHVDUHGHSOR\HGdKRZHYHUWKLVLVQRWWKHFDVHWKH\DUHLQIDFW
GHFHOHUDWLQJWRDORZHUWHUPLQDOYHORFLW\
i:KDWGR\RXWKLQNWKLVZRXOGORRNOLNHRQWKHJUDSKDERYH"

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
/,1($5020(1780 &216(59$7,21
&216(59$7,212)020(1780
7KH3ULQFLSOHRI&RQVHUYDWLRQRI0RPHQWXP
7KHSULQFLSOHRIFRQVHUYDWLRQRIPRPHQWXPLV
7KHWRWDOPRPHQWXPRIDV\VWHPUHPDLQVFRQVWDQWSURYLGHGQRH[WHUQDO
IRUFHDFWVRQLW
)RUH[DPSOHLIWZRREMHFWVFROOLGH
WKHWRWDOPRPHQWXPEHIRUHWKHFROOLVLRQ WKHWRWDOPRPHQWXPDIWHUWKHFROOLVLRQ
5HPHPEHUPRPHQWXPLVDYHFWRUTXDQWLW\7KLVDOORZVRSSRVLWHO\GLUHFWHGYHFWRUVWRFDQFHO
RXWVRWKHPRPHQWXPRIWKHV\VWHPDVDZKROHLV]HUR
0RPHQWXPLVDOZD\VFRQVHUYHGRYHUWLPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([WHUQDODQG,QWHUQDO)RUFHV
([WHUQDOIRUFHVDUHIRUFHVWKDWDFWRQDVWUXFWXUHIURPRXWVLGHHJIULFWLRQDQGZHLJKW
,QWHUQDOIRUFHVDUHIRUFHVH[FKDQJHGE\WKHSDUWLFOHVLQWKHV\VWHPHJWHQVLRQLQDVWULQJ
:KLFKIRUFHVDUHLQWHUQDORUH[WHUQDOZLOOGHSHQGRQWKHV\VWHPLWVHOIDVVKRZQLQWKH
GLDJUDPEHORZ
,QWHUQDODQGH[WHUQDOIRUFHVRQDPDVVRQDVSULQJ
<RXPD\DOVRFRPHDFURVVDV\VWHPZLWKQRH[WHUQDOIRUFHVEHLQJGHVFULEHGDVDeFORVHGfRU
eLVRODWHGfV\VWHP
7KHVHDOOVWLOOUHIHUWRDV\VWHPWKDWLVQRWDmHFWHGE\H[WHUQDOIRUFHV
)RUH[DPSOHDVZLPPHUGLYLQJIURPDERDW
7KHGLYHUZLOOPRYHIRUZDUGDQGWRFRQVHUYHPRPHQWXPWKHERDWZLOOPRYH
EDFNZDUGV
7KLVLVEHFDXVHWKHPRPHQWXPEHIRUHKDQGZDV]HURDQGQRH[WHUQDOIRUFHVDUHSUHVHQWWR
DmHFWWKHPRWLRQRIWKHGLYHURUWKHERDW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
&ROOLVLRQVLQ2QH 7ZR'LPHQVLRQV
2QHGLPHQVLRQDOPRPHQWXPSUREOHPV
0RPHQWXP S LVHTXDOWRS PbY
8VLQJWKHFRQYHUVDWLRQRIOLQHDUPRPHQWXPLWLVSRVVLEOHWRFDOFXODWHPLVVLQJYHORFLWLHVDQG
PDVVHVRIFRPSRQHQWVLQWKHV\VWHP7KLVLVVKRZQLQWKHH[DPSOHEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
7RnQGRXWZKHWKHUDFROOLVLRQLVHODVWLFRULQHODVWLFFRPSDUHWKHNLQHWLFHQHUJ\EHIRUHDQG
DIWHUWKHFROOLVLRQ
,IWKHNLQHWLFHQHUJ\LVFRQVHUYHGLWLVDQHODVWLFFROOLVLRQ
,IWKHNLQHWLFHQHUJ\LVQRWFRQVHUYHGLWLVDQLQHODVWLFFROOLVLRQ
(ODVWLFFROOLVLRQVDUHFRPPRQO\WKRVHZKHUHREMHFWVFROOLGLQJGRQRWVWLFNWRJHWKHUDQG
WKHQPRYHLQRSSRVLWHGLUHFWLRQV
,QHODVWLFFROOLVLRQDUHZKHUHREMHFWVFROOLGHDQGVWLFNWRJHWKHUDIWHUWKHFROOLVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
7ZRGLPHQVLRQDOPRPHQWXPSUREOHPV
6LQFHPRPHQWXPLVDYHFWRULQ'LWFDQEHVSOLWXSLQWRLWV[DQG\FRPSRQHQWV
5HYLHZUHYLVLRQQRWHV6FDODUV 9HFWRUVRQKRZWRUHVROYHYHFWRUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP7LS
,IDQREMHFWLVVWDWLRQDU\RUDWUHVWLWfVYHORFLW\HTXDOVWKHUHIRUHWKHPRPHQWXPDQGNLQHWLF
HQHUJ\DUHDOVRHTXDOWR
:KHQDFROOLVLRQRFFXUVLQZKLFKWZRREMHFWVDUHVWXFNWRJHWKHUWUHDWWKHnQDOREMHFWDVD
VLQJOHREMHFWZLWKDPDVVHTXDOWRWKHVXPRIWKHWZRLQGLYLGXDOREMHFWV
,Q'SUREOHPVPDNHVXUH\RXfUHFRQnGHQWUHVROYLQJYHFWRUV+HUHLVDVPDOOWULFNWR
UHPHPEHUZKLFKFRPSRQHQWLVFRVLQHRUVLQHRIWKHDQJOHIRUDYHFWRU5

5HVROYLQJYHFWRUVZLWKVLQHDQGFRVLQH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
(/$67,& ,1(/$67,&&2//,6,216
(ODVWLF&ROOLVLRQV
:KHQWZRREMHFWVFROOLGHWKH\PD\VSULQJDSDUWUHWDLQLQJDOORIWKHLUNLQHWLFHQHUJ\7KLVLVD
SHUIHFWHODVWLFFROOLVLRQ
$QHODVWLFFROOLVLRQLVRQHZKHUHNLQHWLFHQHUJ\LVFRQVHUYHG
(TXDWLRQIRUNLQHWLFHQHUJ\
6LQFHNLQHWLFHQHUJ\GHSHQGVRQWKHVSHHGRIDQREMHFWLQDSHUIHFWO\HODVWLFFROOLVLRQ KHDG
RQDSSURDFK WKHUHODWLYHVSHHGRIDSSURDFK WKHUHODWLYHVSHHGRIVHSDUDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
(ODVWLFFROOLVLRQH[DPSOH
([DP7LS
'HVSLWHYHORFLW\EHLQJDYHFWRUNLQHWLFHQHUJ\LVDVFDODUTXDQWLW\DQG
WKHUHIRUHZLOOQHYHULQFOXGHDPLQXVVLJQ7KLVLVEHFDXVHLQWKHNLQHWLFHQHUJ\

IRUPXODPDVVLVVFDODUDQGWKHYZLOODOZD\VJLYHDSRVLWLYHYDOXHZKHWKHULWV
DQHJDWLYHRUSRVLWLYHYHORFLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
,QHODVWLF&ROOLVLRQV
:KLOVWWKHPRPHQWXPRIDV\VWHPLVDOZD\VFRQVHUYHGLQLQWHUDFWLRQVEHWZHHQREMHFWV
NLQHWLFHQHUJ\PD\QRWDOZD\VEH
$QLQHODVWLFFROOLVLRQLVRQHZKHUHNLQHWLFHQHUJ\LVQRWFRQVHUYHG
(TXDWLRQIRUNLQHWLFHQHUJ\
7KHNLQHWLFHQHUJ\LVWUDQVIHUUHGLQWRRWKHUIRUPVRIHQHUJ\VXFKDVDKHDWRUVRXQG
,QHODVWLFFROOLVLRQVFDQEHZKHQWZRREMHFWVFROOLGHDQGWKH\FUXPSOHDQGGHIRUP7KHLU
NLQHWLFHQHUJ\PD\DOVRGLVDSSHDUFRPSOHWHO\DVWKH\FRPHWRDKDOW
$SHUIHFWO\LQHODVWLFFROOLVLRQLVZKHQWZRREMHFWVVWLFNWRJHWKHUDIWHUFROOLVLRQDVVKRZQLQ
WKHH[DPSOHEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
,QHODVWLFFROOLVLRQH[DPSOH
([DP7LS
$OWKRXJKNLQHWLFHQHUJ\PD\QRWDOZD\VEHLQJFRQVHUYHGUHPHPEHU

PRPHQWXPZLOODOZD\VEHFRQVHUYHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'\QDPLFV l
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
)RUFHV'HQVLW\ 3UHVVXUH q
&217(176
)RUFHV7XUQLQJ(rHFWV (TXLOLEULXP
&HQWUHRI*UDYLW\
0RPHQWV
7XUQLQJ(rHFWVRI)RUFHV
&RQGLWLRQVIRU(TXLOLEULXP
)RUFHV'HQVLW\ 3UHVVXUH
'HQVLW\
3UHVVXUH
'HULYDWLRQRInS fJnK
8SWKUXVW
$UFKLPHGHV3ULQFLSOH
)25&(67851,1*())(&76 (48,/,%5,80
&(175(2)*5$9,7<
&HQWUHRI*UDYLW\
7KHFHQWUHRIJUDYLW\RIDQREMHFWLVWKHSRLQWDWZKLFKWKHZHLJKWRIWKHREMHFWPD\EH
FRQVLGHUHGWRDFW
)RUH[DPSOHIRUDSHUVRQVWDQGLQJXSULJKWWKHLUFHQWUHRIJUDYLW\LVURXJKO\LQWKHPLGGOHRI
WKHERG\EHKLQGWKHQDYHODQGIRUDVSKHUHLWLVDWWKHFHQWUH
)RUV\PPHWULFDOREMHFWVZLWKXQLIRUPGHQVLW\WKHFHQWUHRIJUDYLW\LVORFDWHGDWWKHSRLQWRI
V\PPHWU\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHFHQWUHRIJUDYLW\RIDVKDSHFDQEHIRXQGE\V\PPHWU\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WDELOLW\
7KHSRVLWLRQRIWKHFHQWUHRIJUDYLW\RIDQREMHFWDrHFWVLWVVWDELOLW\
$QREMHFWLVVWDEOHZKHQLWVFHQWUHRIJUDYLW\OLHVDERYHLWVEDVH
7KHREMHFWRQWKHULJKWZLOOWRSSOHDVLWVFHQWUHRIPDVVLVQRORQJHURYHULWVEDVH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHZLGHUEDVHDQREMHFWKDVWKHORZHULWVFHQWUHRIJUDYLW\DQGLWLVPRUHVWDEOH
7KHQDUURZHUEDVHDQREMHFWKDVWKHKLJKHULWVFHQWUHRIJUDYLW\DQGWKHREMHFWLVPRUH
OLNHO\WRWRSSOHRYHULISXVKHG
7KHPRVWVWDEOHREMHFWVKDYHZLGHEDVHVDQGORZFHQWUHVRIPDVV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&HQWUHRIJUDYLW\YFHQWUHRIPDVV
,QDXQLIRUPJUDYLWDWLRQDOsHOGWKHFHQWUHRIJUDYLW\LVLGHQWLFDOWRWKHFHQWUHRIPDVV
7KHFHQWUHRIPDVVGRHVQRWGHSHQGRQWKHJUDYLWDWLRQDOsHOG
6LQFHZHLJKW PDVVpDFFHOHUDWLRQGXHWRJUDYLW\WKHFHQWUHRIJUDYLW\GRHVGHSHQGRQWKH
JUDYLWDWLRQDOsHOG
:KHQDQREMHFWLVLQVSDFHLWVFHQWUHRIJUDYLW\ZLOOEHPRUHWRZDUGVWKHREMHFWZLWKODUJHU
JUDYLWDWLRQDOsHOGIRUH[DPSOHWKH(DUWKjVJUDYLWDWLRQDOsHOGRQWKH0RRQ
7KH(DUWKdVVWURQJHUJUDYLWDWLRQDOfHOGSXVKHVWKH0RRQVFHQWUHRIJUDYLW\FORVHUWR
(DUWK
([DP7LS
6LQFHWKHFHQWUHRIJUDYLW\LVDK\SRWKHWLFDOSRLQWLWFDQOLHLQVLGHRURXWVLGH
RIDERG\7KHFHQWUHRIJUDYLW\ZLOOFRQVWDQWO\VKLIWGHSHQGLQJRQWKHVKDSH

RIDERG\)RUH[DPSOHDKXPDQERG\jVFHQWUHRIJUDYLW\LVORZHUZKHQ
OHDUQLQJIRUZDUGWKDQXSULJKW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
020(176
:KDWLVD0RPHQW"
$PRPHQWLVWKHWXUQLQJHeHFWRIDIRUFH
0RPHQWVRFFXUZKHQIRUFHVFDXVHREMHFWVWRURWDWHDERXWVRPHSLYRW
7KHPRPHQWRIDIRUFHLVJLYHQE\
0RPHQW 1P )RUFH 1 dSHUSHQGLFXODUGLVWDQFHIURPWKHSLYRW P
7KH6,XQLWIRUWKHPRPHQWLV1HZWRQPHWUHV 1P 7KLVPD\DOVREH1HZWRQFHQWLPHWUHV 1

FP GHSHQGLQJRQWKHXQLWVJLYHQIRUWKHGLVWDQFH
7KHIRUFHPLJKWQRWDOZD\VEHSHUSHQGLFXODUWRWKHGLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
$QH[DPSOHRIPRPHQWVLQHYHU\GD\OLIHLVRSHQLQJDGRRU7KHGRRUKDQGOHLVSODFHGRQWKH
RWKHUVLGHRIWKHGRRUWRWKHKLQJH WKHSLYRW WRPD[LPLVHWKHGLVWDQFHIRUDJLYHQIRUFHDQG
WKHUHIRUHDJUHDWHUPRPHQW WXUQLQJIRUFH 7KLVPDNHVLWHDVLHUWRSXVKRUSXOOLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
,IQRWDOUHDG\JLYHQGUDZLQJDOOWKHIRUFHVRQDQREMHFWLQWKHGLDJUDPZLOO
KHOS\RXVHHZKLFKRQHVDUHSHUSHQGLFXODUWRWKHGLVWDQFHIURPWKHSLYRW1RW

DOOWKHIRUFHVZLOOSURYLGHDWXUQLQJHrHFWDQGLWLVQRWXQXVXDOIRUDTXHVWLRQ
WRSURYLGHPRUHIRUFHVWKDQUHTXLUHG
7KH3ULQFLSOHRI0RPHQWV
7KHSULQFLSOHRIPRPHQWVVWDWHV)RUDV\VWHPWREHEDODQFHG LQHTXLOLEULXP WKHVXPRI

FORFNZLVHPRPHQWVDERXWDSRLQWPXVWEHHTXDOWRWKHVXPRIDQWLFORFNZLVHPRPHQWV
DERXWWKHVDPHSRLQW
'LDJUDPVKRZLQJWKHPRPHQWVDFWLQJRQDEDODQFHGEHDP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,QWKHDERYHGLDJUDP
)RUFH)LVVXSSO\LQJDFORFNZLVHPRPHQW
)RUFHV)DQG)DUHVXSSO\LQJDQWLFORFNZLVHPRPHQWV
+HQFH)dG )dG)dG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
0DNHVXUHWKDWDOOWKHGLVWDQFHVDUHLQWKHVDPHXQLWVDQG\RXjUHFRQVLGHULQJWKHFRUUHFWIRUFHV
DVFORFNZLVHRUDQWLFORFNZLVHDVVHHQLQWKHGLDJUDPEHORZ


5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7851,1*())(&762))25&(6
&RXSOHV
$FRXSOHLVDSDLURIIRUFHVWKDWDFWVWRSURGXFHURWDWLRQRQO\
8QOLNHPRPHQWVRIDVLQJOHIRUFHWKHPRPHQWRIDFRXSOHGRHVQjWGHSHQGRQDSLYRWRQO\RQ
WKHSHUSHQGLFXODUGLVWDQFHEHWZHHQWKHWZRIRUFHV
$FRXSOHFRQVLVWVRIDSDLURIIRUFHVWKDWDUH
(TXDOLQPDJQLWXGH
2SSRVLWHLQGLUHFWLRQ
3HUSHQGLFXODUWRWKHGLVWDQFHEHWZHHQWKHP
'LDJUDPRIDFRXSOH
&RXSOHVSURGXFHDUHVXOWDQWIRUFHRI]HURVRGXHWR1HZWRQjV6HFRQGODZ ) PD WKH

REMHFWGRHVQRWDFFHOHUDWH
7KHVL]HRIWKLVWXUQLQJHrHFWLVJLYHQE\LWVWRUTXH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHG([DPSOH
([DP7LS
7KHIRUFHVWKDWPDNHXSDFRXSOHFDQQRWVKDUHWKHVDPHOLQHRIDFWLRQZKLFKLVWKHOLQHWKURXJK
WKHSRLQWDWZKLFKWKHIRUFHLVDSSOLHG$QH[DPSOHRIWKLVLVVKRZQLQWKHGLDJUDPEHORZ


5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7RUTXH
7KHPRPHQWRIDFRXSOHLVNQRZQDVDWRUTXH
<RXFDQFDOFXODWHWKHWRUTXHRIDFRXSOHZLWKWKHIROORZLQJHTXDWLRQ
7RUTXHg 1P RQHRIWKHIRUFHV 1 dSHUSHQGLFXODUGLVWDQFHEHWZHHQWKHIRUFHV P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOHhSHUSHQGLFXODUGLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOHh1RQSHUSHQGLFXODUGLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
7KHIRUFHVJLYHQPLJKWQRWDOZD\VEHSHUSHQGLFXODUWRWKHGLVWDQFHEHWZHHQ
WKHP,QWKLVFDVHUHPHPEHUWRsQGWKHFRPSRQHQWRIWKHIRUFHYHFWRUWKDWLV

SHUSHQGLFXODU<RXFDQOHDUQPRUHRQKRZWRGRWKLVLQWKHi5HVROYLQJ9HFWRUVj
VHFWLRQRIi6FDODUV 9HFWRUVj

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&21',7,216)25(48,/,%5,80
(TXLOLEULXP
$V\VWHPLVLQHTXLOLEULXPZKHQDOOWKHIRUFHVDUHEDODQFHG7KLVPHDQV
7KHUHLVQRUHVXOWDQWIRUFH
7KHUHLVQRUHVXOWDQWWRUTXH
$QREMHFWLQHTXLOLEULXPZLOOWKHUHIRUHUHPDLQDWUHVWRUDWDFRQVWDQWYHORFLW\DQGQRWURWDWH
7KHV\VWHPLVLQDQHTXLOLEULXPVWDWHZKHQDSSO\LQJWKHSULQFLSOHRIPRPHQWV VHH7KH
3ULQFLSOHRI0RPHQWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOHh%HDPLQHTXLOLEULXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&RSODQDU)RUFHVLQ(TXLOLEULXP
&RSODQDUIRUFHVFDQEHUHSUHVHQWHGE\YHFWRUWULDQJOHV
,QHTXLOLEULXPWKHVHDUHFORVHGYHFWRUWULDQJOHV7KHYHFWRUVZKHQMRLQHGWRJHWKHUIRUPD
FORVHGSDWK
7KHPRVWFRPPRQIRUFHVRQREMHFWVDUH
:HLJKW
1RUPDOUHDFWLRQIRUFH
7HQVLRQ IURPFRUGVDQGVWULQJV
)ULFWLRQ
7KHIRUFHVRQDERG\LQHTXLOLEULXPDUHGHPRQVWUDWHGEHORZ
7KUHHIRUFHVRQDQREMHFWLQHTXLOLEULXPIRUPDFORVHGYHFWRUWULDQJOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOHh)RUFHVLQHTXLOLEULXP
([DP7LS
7KHGLDJUDPVLQH[DPTXHVWLRQVDERXWWKLVWRSLFWHQGWREHGUDZQWRVFDOHVR

PDNHVXUH\RXKDYHDUXOHUKDQG\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
)25&(6'(16,7< 35(6685(
'(16,7<
'HQVLW\
'HQVLW\LVWKHPDVVSHUXQLWYROXPHRIDQREMHFW
2EMHFWVPDGHIURPORZGHQVLW\PDWHULDOVW\SLFDOO\KDYHORZHUPDVV)RUH[DPSOHD
EDOORRQLVOHVVGHQVHWKDQDVPDOOEDURIOHDGGHVSLWHRFFXS\LQJDODUJHUYROXPH
7KHXQLWVRIGHQVLW\GHSHQGRQZKDWXQLWVDUHXVHGIRUPDVVDQGYROXPH
,IWKHPDVVLVPHDVXUHGLQJDQGYROXPHLQFPWKHQWKHGHQVLW\ZLOOEHLQJFP
,IWKHPDVVLVPHDVXUHGLQNJDQGYROXPHLQPWKHQWKHGHQVLW\ZLOOEHLQNJP
(TXDWLRQIRUGHQVLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*DVHVDUHOHVVGHQVHWKDQDVROLG
7KHYROXPHRIDQREMHFWPD\QRWDOZD\VEHJLYHQGLUHFWO\EXWFDQEHFDOFXODWHGZLWKWKH
DSSURSULDWHHTXDWLRQGHSHQGLQJRQWKHREMHFWjVVKDSH
9ROXPHVRIFRPPRQ'VKDSHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
m:KHQFRQYHUWLQJDODUJHUXQLWWRDVPDOOHURQH\RXPXOWLSO\ c
o(JP d FP
m:KHQ\RXFRQYHUWDVPDOOHUXQLWWRDODUJHURQH\RXGLYLGH d
o(JJ RUdNJ

m:KHQGHDOLQJZLWKVTXDUHGRUFXELFFRQYHUVLRQVFXEHRUVTXDUHWKH
FRQYHUVLRQIDFWRUWRR
o(JPP dP
o(JFP dP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
35(6685(
3UHVVXUH
3UHVVXUHWHOOVXVKRZFRQFHQWUDWHGDIRUFHLVLWLVGHsQHGDVWKHIRUFHSHUXQLWDUHD
3UHVVXUHLVHTXDOWRWKHIRUFHSHUXQLWDUHD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KLVHTXDWLRQWHOOVXV
,IDIRUFHLVVSUHDGRYHUDODUJHDUHDLWZLOOUHVXOWLQDVPDOOSUHVVXUH
,ILWLVVSUHDGRYHUDVPDOODUHDLWZLOOUHVXOWLQDODUJHSUHVVXUH
'LeHUHQWSUHVVXUHLVH[HUWHGIRUWKHVDPHIRUFHRQGLeHUHQWDUHDV
7KHXQLWVRISUHVVXUHGHSHQGRQWKHXQLWVRIDUHD
,IWKHDUHDLVPHDVXUHGLQFP DQGWKHIRUFHLQ1 WKHQWKHSUHVVXUHZLOOEHLQ1FP
,IWKHDUHDLVPHDVXUHGLQP DQGWKHIRUFHLQ1 WKHQWKHSUHVVXUHZLOOEHLQ1P
3UHVVXUHFDQDOVREHPHDVXUHGLQSDVFDOV3DZKHUH3DLVWKHVDPHDV1P
3UHVVXUHXQOLNHIRUFHLVDVFDODU7KHUHIRUHSUHVVXUHGRHVQRWKDYHDVSHFLsFGLUHFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
8WXEHPDQRPHWHU
$PDQRPHWHULVDQLQVWUXPHQWWRPHDVXUHSUHVVXUHDQGGHQVLW\RIWZROLTXLGV
,Q)LJXUH7KHOHYHORIOLTXLGLVHTXDOEHFDXVHWKHDWPRVSKHULFSUHVVXUH 3DWP LVWKHVDPH
,Q)LJXUH,IWKHSUHVVXUHRQRQHVLGHULVHVWKHOLTXLGZLOOEHIRUFHGGRZQPDNLQJWKHOLTXLG
LQWKHRWKHUOLPEULVH7KHGLrHUHQFHEHWZHHQWKHWZROHYHOVJLYHVWKHSUHVVXUHGLrHUHQFH
EHWZHHQWKHWZRHQGVRIWKHWXEH
,Q)LJXUH7KH8WXEHQRZKDVWZRGLrHUHQWOLTXLGV7KHGHQVLW\RIWKHEOXHRQHLVODUJHU
WKDQWKDWRIWKHRUDQJHRQH7KHSUHVVXUHDWHDFKSRLQWLVGXHWRWKHDWPRVSKHULFSUHVVXUH
SOXVWKHZHLJKWRIWKHOLTXLGDERYHLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
7KHDUHDUHIHUUHGWRLVWKHiFURVVVHFWLRQDOjDUHDRID'REMHFW7KLVLVWKH
DUHDRIWKHEDVHWKDWWKHIRUFHLVDSSOLHGRQ)RUDF\OLQGHUWKLVZLOOEHD
FLUFOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'(5,9$7,212)n3 e*n+
'HULYDWLRQRInS fJnK
+\GURVWDWLFSUHVVXUHLVWKHSUHVVXUHWKDWLVH[HUWHGE\DfXLGDWHTXLOLEULXPDWDJLYHQ
SRLQWZLWKLQWKHtXLGGXHWRWKHIRUFHRIJUDYLW\
7KHGHULYDWLRQIRUWKLVHTXDWLRQLVVKRZQEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
+\GURVWDWLFSUHVVXUHGHULYDWLRQ
([DP7LS
<RXZLOOEHH[SHFWHGWRUHPHPEHUDOOWKHVWHSVIRUWKLVGHULYDWLRQIRUDQH[DP
TXHVWLRQ,IDQ\HTXDWLRQVZKLFKORRNXQIDPLOLDUKDYHDORRNDWWKHQRWHVIRU
k'HQVLW\lDQGk3UHVVXUHl

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
8VLQJWKH(TXDWLRQIRU+\GURVWDWLF3UHVVXUH
+\GURVWDWLFSUHVVXUHLVWKHSUHVVXUHWKDWLVH[HUWHGE\DfXLGDWHTXLOLEULXPDWDJLYHQ
SRLQWZLWKLQWKHtXLGGXHWRWKHIRUFHRIJUDYLW\
7KLVLVZKHQDQREMHFWLVLPPHUVHGLQDOLTXLGWKHOLTXLGZLOOH[HUWDSUHVVXUHVTXHH]LQJWKH
REMHFW
7KHVL]HRIWKLVSUHVVXUHGHSHQGVXSRQWKHGHQVLW\ c RIWKHOLTXLGWKHGHSWK K RIWKH

REMHFWDQGWKHJUDYLWDWLRQDOsHOGVWUHQJWK J
:KHQDVNHGDERXWWKHWRWDOSUHVVXUHUHPHPEHUWRDOVRDGGWKHDWPRVSKHULFSUHVVXUH
7RWDOSUHVVXUH +\GURVWDWLFSUHVVXUH$WPRVSKHULFSUHVVXUH
$WPRVSKHULFSUHVVXUH DOVRNQRZQDVEDURPHWULFSUHVVXUH LV3D

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
([DP7LS
7KHVHSUHVVXUHVFDQYDU\ZLGHO\DQGGHSHQGRQPHWULFSUHs[HVVXFKDVN3D
RU03D:KHQ\RXjUHGRLQJFDOFXODWLRQVPDNHVXUHDOOWKHSUHVVXUHVDUHLQWKH

VDPHXQLWV RWKHUZLVH\RXPD\EHRXWE\DIDFWRURI 7REHRQWKHVDIH
VLGH\RXFDQFRQYHUWWKHPDOOWR3DVFDOV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
837+5867
8SWKUXVW
8SWKUXVWLVDIRUFHZKLFKSXVKHVXSZDUGVRQDQREMHFWVXEPHUJHGLQDtXLGLHOLTXLGVDQG
JDVHV
$OVRNQRZQDVEXR\DQF\IRUFHXSWKUXVWLVGXHWRWKHGLeHUHQFHLQK\GURVWDWLFSUHVVXUH
DWWKHWRSDQGERWWRPRIWKHLPPHUVHGREMHFW
7KHIRUFHRIXSWKUXVWLVVLJQLsFDQWO\ODUJHULQOLTXLGVWKDQLQJDVHVWKLVLVEHFDXVHOLTXLGVDUH
PXFKGHQVHUWKDQJDVHV
5HFDOOWKDWK\GURVWDWLFSUHVVXUHGHSHQGVRQWKHKHLJKW K RUGHSWKWKDWDQREMHFWLV
VXEPHUJHGLQIURP3 bJK
7KHUHIRUHWKHZDWHUSUHVVXUHDWWKHERWWRPRIDQREMHFWLVJUHDWHUWKDQWKHZDWHUSUHVVXUH
DWWKHWRSDVVKRZQLQWKHGLDJUDPEHORZ
7KLVFDQZLOOH[SHULHQFHXSWKUXVWGXHWRWKHK\GURVWDWLFSUHVVXUHGLeHUHQFH
8SWKUXVWLVDIRUFHDQGLVGLUHFWO\SURSRUWLRQDOWRWKHSUHVVXUH7KHIRUFHRQWKHERWWRPRIWKH
FDQZLOOEHJUHDWHUWKDQWKHIRUFHRQWRSRIWKHFDQ
7KLVUHVXOWDQWSUHVVXUHFDXVHVDUHVXOWDQWXSZDUGIRUFHRQWKHFDQNQRZQDVXSWKUXVW
8SWKUXVWLVZK\REMHFWVDSSHDUWRZHLJKOHVVZKHQLPPHUVHGLQDOLTXLG,IWKHXSWKUXVWLV
JUHDWHUWKDQWKHZHLJKWRIWKHREMHFWWKHREMHFWZLOOULVHXS
)RUDQREMHFWWRtRDWLWPXVWKDYHDGHQVLW\OHVVWKDQWKHGHQVLW\RIWKHtXLGLWVLPPHUVHGLQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
([DP7LS
6LQFHXSWKUXVWLVIRUFHLWLVLQtXHQFHGE\SUHVVXUHQRWE\WKHGHQVLW\RIWKH

REMHFWDVFRPPRQO\PLVXQGHUVWRRG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
$5&+,0('(635,1&,3/(
$UFKLPHGHV 3ULQFLSOH
$UFKLPHGHVjSULQFLSOHVWDWHVWKDWDQREMHFWVXEPHUJHGLQDtXLGDWUHVWKDVDQXSZDUG
EXR\DQF\IRUFH XSWKUXVW HTXDOWRWKHZHLJKWRIWKHfXLGGLVSODFHGE\WKHREMHFW
7KHREMHFWVLQNVXQWLOWKHZHLJKWRIWKHtXLGGLVSODFHGLVHTXDOWRLWVRZQZHLJKW
7KHUHIRUHWKHREMHFWtRDWVZKHQWKHPDJQLWXGHRIWKHXSWKUXVWHTXDOVWKHZHLJKWRIWKH
REMHFW
7KHPDJQLWXGHRIXSWKUXVWFDQEHFDOFXODWHGE\
8SWKUXVWHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6LQFHP b9XSWKUXVWLVHTXDOWR) PJZKLFKLVWKHZHLJKWRIWKHtXLGGLVSODFHGE\WKH

REMHFW
$UFKLPHGHVj3ULQFLSOHH[SODLQVKRZVKLSVtRDW
%RDWVgRDWEHFDXVHWKH\GLVSODFHDQDPRXQWRIZDWHUWKDWLVHTXDOWRWKHLUZHLJKW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ0HGLXP
([DP4XHVWLRQ+DUG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
&217(176
(QHUJ\&RQVHUYDWLRQ:RUN3RZHU (oFLHQF\
:RUN (QHUJ\
7KH3ULQFLSOHRI&RQVHUYDWLRQRI(QHUJ\
(oFLHQF\
3RZHU
'HULYDWLRQRI3 )Y
(QHUJ\*3( .(
*UDYLWDWLRQDO3RWHQWLDO(QHUJ\
.LQHWLF(QHUJ\
(1(5*<&216(59$7,21:25.32:(5 ()),&,(1&<
:25. (1(5*<
:RUN'RQH
,Q3K\VLFVZRUNLVGRQHZKHQDQREMHFWLVPRYHGRYHUDGLVWDQFHE\DQH[WHUQDOIRUFH
DSSOLHGLQWKHGLUHFWLRQRILWVGLVSODFHPHQW
,QWKHGLDJUDPEHORZWKHPDQgVSXVKLQJIRUFHRQWKHEORFNLVGRLQJZRUNDVLWLVWUDQVIHUULQJ
HQHUJ\WRWKHEORFN LQFUHDVLQJLWVNLQHWLFHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNLVGRQHZKHQDIRUFHLVXVHGWRPRYHDQREMHFWRYHUDGLVWDQFH
:KHQZRUNLVGRQHHQHUJ\LVWUDQVIHUUHGIURPRQHREMHFWWRDQRWKHU
:RUNGRQHFDQEHWKRXJKWRIDVWKHDPRXQWRIHQHUJ\WUDQVIHUUHGKHQFHLWVXQLWVDUHLQ
-RXOHV -
8VXDOO\LIDIRUFHDFWVLQWKHGLUHFWLRQWKDWDQREMHFWLVPRYLQJWKHQWKHREMHFWZLOOJDLQ
HQHUJ\
,IWKHIRUFHDFWVLQWKHRSSRVLWHGLUHFWLRQWRWKHPRYHPHQWWKHQWKHREMHFWZLOOORVH
HQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
([DP7LS
$FRPPRQH[DPPLVWDNHLVFKRRVLQJWKHLQFRUUHFWIRUFHZKLFKLVQRWSDUDOOHO
WRWKHGLUHFWLRQRIPRYHPHQWRIDQREMHFW<RXPD\KDYHWRUHVROYHWKHIRUFH

YHFWRUWRmQGWKHFRPSRQHQWWKDWLVSDUDOOHO7KHIRUFHGRHVQRWKDYHWREHLQ
WKHVDPHGLUHFWLRQDVWKHPRYHPHQWDVVKRZQLQWKHZRUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
7+(35,1&,3/(2)&216(59$7,212)(1(5*<
7KH3ULQFLSOHRI&RQVHUYDWLRQRI(QHUJ\
7KH3ULQFLSOHRI&RQVHUYDWLRQRI(QHUJ\VWDWHVWKDW
(QHUJ\FDQQRWEHFUHDWHGRUGHVWUR\HGLWFDQRQO\FKDQJHIURPRQHIRUPWR
DQRWKHU
7KLVPHDQVWKHWRWDODPRXQWRIHQHUJ\LQDFORVHGV\VWHPUHPDLQVFRQVWDQWDOWKRXJKKRZ
PXFKRIHDFKIRUPWKHUHLVPD\FKDQJH
&RPPRQH[DPSOHVRIHQHUJ\WUDQVIHUVDUH
$IDOOLQJREMHFW LQDYDFXXP JUDYLWDWLRQDOSRWHQWLDOHQHUJ\jNLQHWLFHQHUJ\
$EDWWHU\FKHPLFDOHQHUJ\jHOHFWULFDOHQHUJ\jOLJKWHQHUJ\ LIFRQQHFWHGWRDEXOE
+RUL]RQWDOPDVVRQDVSULQJHODVWLFSRWHQWLDOHQHUJ\jNLQHWLFHQHUJ\
7\SHVRIHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
'LDJUDPVKRZLQJWKHIRUPVRIHQHUJ\WUDQVIHUVDQGVWRUHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
(QHUJ\GLVVLSDWLRQ
:KHQHQHUJ\LVWUDQVIHUUHGIURPRQHIRUPWRDQRWKHUQRWDOOWKHHQHUJ\ZLOOHQGXSLQWKH
GHVLUHGIRUP RUSODFH
'LVVLSDWLRQLVXVHGWRGHVFULEHZD\VLQZKLFKHQHUJ\LVZDVWHG
$Q\HQHUJ\QRWWUDQVIHUUHGWRXVHIXOHQHUJ\VWRUHVLVZDVWHGEHFDXVHLWLVORVWWRWKH
VXUURXQGLQJV
7KHVHDUHFRPPRQO\LQWKHIRUPRIWKHUPDO KHDW OLJKWRUVRXQGHQHUJ\
:KDWFRXQWVDVZDVWHGHQHUJ\GHSHQGVRQWKHV\VWHP
)RUH[DPSOHLQDWHOHYLVLRQ
HOHFWULFDOHQHUJ\jOLJKWHQHUJ\VRXQGHQHUJ\WKHUPDOHQHUJ\
/LJKWDQGVRXQGHQHUJ\DUHXVHIXOHQHUJ\WUDQVIHUVZKHUHDVWKHUPDOHQHUJ\ IURPWKH
KHDWLQJXSRIZLUHV LVZDVWHG
$QRWKHUH[DPSOHLQDKHDWHU
HOHFWULFDOHQHUJ\jWKHUPDOHQHUJ\VRXQGHQHUJ\
7KHWKHUPDOHQHUJ\LVXVHIXOZKHUHDVVRXQGLVQRW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
$WSRLQW$
7KHUROOHUFRDVWHULVUDLVHGDERYHWKHJURXQGWKHUHIRUHLWKDV*3(
$VLWWUDYHOVGRZQWKHWUDFN*3(LVFRQYHUWHGWR.(DQGWKHUROOHUFRDVWHUVSHHGVXS
$WSRLQW%
.(LVFRQYHUWHGWR*3(DVWKHUROOHUFRDVWHUULVHVXSWKHORRS
$WSRLQW&
7KLV*3(LVFRQYHUWHGEDFNLQWR.(DVWKHUROOHUFRDVWHUWUDYHOVEDFNGRZQWKHORRS
$WSRLQW'
7KHnDWWHUUDLQPHDQVWKHUROOHUFRDVWHURQO\KDV.(

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP7LS
<RXPD\QRWDOZD\VEHJLYHQWKHHQHUJ\WUDQVIHUVKDSSHQLQJLQWKHV\VWHPLQ
H[DPTXHVWLRQV
%\IDPLOLDULVLQJ\RXUVHOIZLWKWKHWUDQVIHUVDQGVWRUHVRIHQHUJ\\RXZLOOEH

H[SHFWHGWRUHODWHWKHVHWRWKHVLWXDWLRQLQTXHVWLRQ)RUH[DPSOHDEDOO
UROOLQJGRZQDKLOOLVWUDQVIHUULQJJUDYLWDWLRQDOSRWHQWLDOHQHUJ\WRNLQHWLF
HQHUJ\ZKLOVWDVSULQJFRQYHUWVHODVWLFSRWHQWLDOHQHUJ\LQWRNLQHWLFHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
()),&,(1&<
(oFLHQF\RID6\VWHP
7KHHoFLHQF\RIDV\VWHPLVWKHUDWLRRIWKHXVHIXOHQHUJ\RXWSXWIURPWKHV\VWHPWR
WKHWRWDOHQHUJ\LQSXW
,IDV\VWHPKDVKLJKHoFLHQF\WKLVPHDQVPRVWRIWKHHQHUJ\WUDQVIHUUHGLVXVHIXO
,IDV\VWHPKDVORZHoFLHQF\WKLVPHDQVPRVWRIWKHHQHUJ\WUDQVIHUUHGLVZDVWHG
0XOWLSO\LQJWKLVUDWLRE\JLYHVWKHHoFLHQF\DVDSHUFHQWDJH
(dFLHQF\HTXDWLRQLQWHUPVRIHQHUJ\
(oFLHQF\FDQDOVREHZULWWHQLQWHUPVRISRZHU WKHHQHUJ\SHUVHFRQG
(dFLHQF\HTXDWLRQLQWHUPVRISRZHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
([DP7LS
(oFLHQF\FDQEHLQDUDWLRRUSHUFHQWDJHIRUPDW,IWKHTXHVWLRQDVNVIRUDQ
HoFLHQF\DVDUDWLRJLYH\RXUDQVZHUDVDIUDFWLRQRUGHFLPDO,IWKHDQVZHULV

UHTXLUHGDVDSHUFHQWDJHUHPHPEHUWRPXOWLSO\WKHUDWLRE\WRFRQYHUWLW
HJ5DWLR 3HUFHQWDJH e

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
6ROYLQJ3UREOHPV,QYROYLQJ(oFLHQF\
5HFDOOWKHWZRHTXDWLRQVIRUFDOFXODWLQJHoFLHQF\DUH
:KLFKWRXVHZLOOGHSHQGRQZKHWKHU\RXgUHJLYHQDV\VWHPFDOFXODWLQJHQHUJLHVRUSRZHUDV
VKRZQLQWKHH[DPSOHVEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
7KHSXPSLVZKDWFRQYHUWVWKHZDWHUgVNLQHWLFHQHUJ\LQWRJUDYLWDWLRQDOSRWHQWLDO
HQHUJ\6LQFHLWVHoFLHQF\LV\RXZRXOGPXOWLSO\WKHNLQHWLFHQHUJ\E\VLQFHRQO\
RIWKHNLQHWLFHQHUJ\ZLOOEHFRQYHUWHG QRWRIWKHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP7LS
(TXDWLRQVIRUNLQHWLFDQGSRWHQWLDOHQHUJLHVDUHLPSRUWDQWIRUWKHVHW\SHVRI
TXHVWLRQV$OVRIDPLOLDULVH\RXUVHOIZLWKWKHGLlHUHQWHTXDWLRQVIRUSRZHU
GHSHQGLQJRQZKDWTXDQWLWLHVDUHJLYHQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
32:(5
'HmQLQJ3RZHU
7KHSRZHURIDPDFKLQHLVWKHUDWHDWZKLFKLWWUDQVIHUVHQHUJ\
6LQFHZRUNGRQHLVHTXDOWRWKHHQHUJ\WUDQVIHUUHGSRZHUFDQDOVREHGHmQHGDVWKHUDWHRI
GRLQJZRUNRUWKHZRUNGRQHSHUXQLWWLPH
7KH6,XQLWIRUSRZHULV:DWWV : ZKHUH: -V
3RZHULVWKHUDWHRIFKDQJHRIZRUN
<RXPD\EHIDPLOLDUZLWKODEHOVRQOLJKWEXOEVZKLFKLQGLFDWHWKHLUSRZHUVXFKDV:RU
:7KHVHWHOO\RXDERXWDQHQHUJ\WUDQVIHUUHGE\DQHOHFWULFDOFXUUHQWUDWKHUWKDQE\DIRUFH
GRLQJZRUN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
6ROYLQJ3UREOHPV,QYROYLQJ3RZHU
:RUNHGH[DPSOH
([DP7LS
7KLQNRISRZHUDVhHQHUJ\SHUVHFRQGi7KLQNLQJRILWWKLVZD\ZLOOKHOS\RXWR
UHPHPEHUWKHUHODWLRQVKLSEHWZHHQSRZHUDQGHQHUJ\h:DWWLVWKHXQLWRI
SRZHU"i

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
'(5,9$7,212)3 )9
'HULYDWLRQRI3 )Y
0RYLQJSRZHULVGHmQHGE\WKHHTXDWLRQ
7KLVHTXDWLRQLVRQO\UHOHYDQWZKHUHDFRQVWDQWIRUFHPRYHVDERG\DWFRQVWDQWYHORFLW\
3RZHULVUHTXLUHGLQRUGHUWRSURGXFHDQDFFHOHUDWLRQ
7KHIRUFHPXVWEHDSSOLHGLQWKHVDPHGLUHFWLRQDVWKHYHORFLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
'HULYDWLRQ
'HULYDWLRQRI3 )cY

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP7LS
7KHIRUFHUHSUHVHQWHGLQH[DPTXHVWLRQVZLOORIWHQEHDGUDJIRUFH:KLOVWWKLV
LVLQWKHRSSRVLWHGLUHFWLRQWRLWVYHORFLW\UHPHPEHUWKHIRUFHQHHGHGWR

FDOFXODWHWKHSRZHULVHTXDOWR RUDERYH WKLVGUDJIRUFHWRRYHUFRPHLW
WKHUHIRUH\RXHTXDWHLWWRWKDWYDOXH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
(1(5*<*3( .(
*5$9,7$7,21$/327(17,$/(1(5*<
'HULYDWLRQRI*3( PJK
*UDYLWDWLRQDOSRWHQWLDOHQHUJ\LVHQHUJ\VWRUHGLQDPDVVGXHWRLWVSRVLWLRQLQDJUDYLWDWLRQDO
mHOG
:KHQDKHDY\REMHFWLVOLIWHGZRUNLVGRQHVLQFHWKHREMHFWLVSURYLGHGZLWKDQXSZDUGIRUFH
DJDLQVWWKHGRZQZDUGIRUFHRIJUDYLW\
7KHUHIRUHHQHUJ\LVWUDQVIHUUHGWRWKHREMHFW
7KLVHTXDWLRQFDQWKHUHIRUHEHGHULYHGIURPWKHZRUNGRQH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
'HULYDWLRQRI*3( PJK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
*UDYLWDWLRQDOSRWHQWLDOHQHUJ\ *3( LVHQHUJ\VWRUHGLQDPDVVGXHWRLWVSRVLWLRQLQD

JUDYLWDWLRQDOmHOG
,IDPDVVLVOLIWHGXSLWZLOOJDLQ*3( FRQYHUWHGIURPRWKHUIRUPVRIHQHUJ\
,IDPDVVIDOOVLWZLOOORVH*3( DQGEHFRQYHUWHGWRRWKHUIRUPVRIHQHUJ\
7KHHTXDWLRQIRUJUDYLWDWLRQDOSRWHQWLDOHQHUJ\IRUHQHUJ\FKDQJHVLQDXQLIRUP
JUDYLWDWLRQDOcHOGLV
(TXDWLRQIRU*3(

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
*3(7KHHQHUJ\DQREMHFWKDVZKHQOLIWHGXS
7KHSRWHQWLDOHQHUJ\RQWKH(DUWKgVVXUIDFHDWJURXQGOHYHOLVWDNHQWREHHTXDOWR
7KLVHTXDWLRQLVRQO\UHOHYDQWIRUHQHUJ\FKDQJHVLQDXQLIRUPJUDYLWDWLRQDOcHOG VXFKDV
QHDUWKH(DUWKgVVXUIDFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
*3(Y+HLJKWJUDSKV
7KHWZRJUDSKVEHORZVKRZKRZ*3(FKDQJHVZLWKKHLJKWIRUDEDOOEHLQJWKURZQXSLQWKHDLU
DQGZKHQIDOOLQJGRZQ
*UDSKVVKRZLQJWKHOLQHDUUHODWLRQVKLSEHWZHHQ*3(DQGKHLJKW
6LQFHWKHJUDSKVDUHVWUDLJKWOLQHV*3(DQGKHLJKWDUHVDLGWRKDYHDOLQHDUUHODWLRQVKLS
7KHVHJUDSKVZRXOGEHLGHQWLFDOIRU*3(DJDLQVWWLPHLQVWHDGRIKHLJKW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
([DP7LS
7KLVHTXDWLRQRQO\ZRUNVIRUREMHFWVFORVHWRWKH(DUWKgVVXUIDFHZKHUHZHFDQ
FRQVLGHUWKHJUDYLWDWLRQDOmHOGWREHXQLIRUP,Q$OHYHO\RXZLOOFRQVLGHU

H[DPSOHVZKHUHWKHJUDYLWDWLRQDOmHOGLVQRWXQLIRUPVXFKDVLQVSDFHZKHUH
WKLVHTXDWLRQIRU*3(ZLOOQRWEHUHOHYDQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
.,1(7,&(1(5*<
'HULYDWLRQRI.( PY
.LQHWLFHQHUJ\LVHQHUJ\DQREMHFWKDVGXHWRLWVPRWLRQ RUYHORFLW\
$IRUFHFDQPDNHDQREMHFWDFFHOHUDWHZRUNLVGRQHE\WKHIRUFHDQGHQHUJ\LVWUDQVIHUUHGWR
WKHREMHFW
8VLQJWKLVFRQFHSWRIZRUNGRQHDQGDQHTXDWLRQRIPRWLRQWKHH[WUDZRUNGRQHGXHWRDQ
REMHFWgVVSHHGFDQEHGHULYHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
'HULYDWLRQIRU.LQHWLF(QHUJ\HTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
.LQHWLF(QHUJ\
.LQHWLFHQHUJ\LVHQHUJ\DQREMHFWKDVGXHWRLWVPRWLRQ RUYHORFLW\
7KHIDVWHUDQREMHFWLVPRYLQJWKHJUHDWHULWVNLQHWLFHQHUJ\
:KHQDQREMHFWLVIDOOLQJLWLVJDLQLQJNLQHWLFHQHUJ\VLQFHLWLVJDLQLQJVSHHG7KLVHQHUJ\
WUDQVIHUUHGIURPWKHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\LWLVORVLQJ
$QREMHFWZLOOPDLQWDLQWKLVNLQHWLFHQHUJ\XQOHVVLWVVSHHGFKDQJHV
(TXDWLRQIRU.LQHWLFHQHUJ\
.(7KHHQHUJ\DQREMHFWKDVZKHQLWVPRYLQJ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
:RUNHGH[DPSOH
([DP7LS
:KHQXVLQJWKHNLQHWLFHQHUJ\HTXDWLRQQRWHWKDWRQO\WKHVSHHGLVVTXDUHG
QRWWKHPDVVRUWKHd

,IDTXHVWLRQDVNVDERXWWKHfORVVRINLQHWLFHQHUJ\gUHPHPEHUQRWWRLQFOXGH
DQHJDWLYHVLJQVLQFHHQHUJ\LVDVFDODUTXDQWLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUN(QHUJ\ 3RZHU k
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'HIRUPDWLRQRI6ROLGV k
&217(176
'HIRUPDWLRQ6WUHVV 6WUDLQ
([WHQVLRQ &RPSUHVVLRQ
+RRNH V/DZ
7KH<RXQJ0RGXOXV
'HIRUPDWLRQ(ODVWLF 3ODVWLF%HKDYLRXU
(ODVWLF 3ODVWLF%HKDYLRXU
(ODVWLF3RWHQWLDO(QHUJ\
'()250$7,21675(66 675$,1
(;7(16,21 &2035(66,21
7HQVLOH)RUFH
)RUFHVGRQhWMXVWFKDQJHWKHPRWLRQRIDERG\EXWFDQFKDQJHWKHVL]HDQGVKDSHRIWKHP
WRR7KLVLVNQRZQDVGHIRUPDWLRQ
)RUFHVLQRSSRVLWHGLUHFWLRQVVWUHWFKRUFRPSUHVVDERG\
:KHQWZRIRUFHVVWUHWFKDERG\WKH\DUHGHVFULEHGDVWHQVLOH
:KHQWZRIRUFHVFRPSUHVVDERG\WKH\DUHNQRZQDVFRPSUHVVLYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'LDJUDPRIWHQVLOHDQGFRPSUHVVLYHIRUFHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HQVLOH6WUHQJWK
7HQVLOHVWUHQJWKLVWKHDPRXQWRIORDGRUVWUHVVDPDWHULDOFDQKDQGOHXQWLOLWVWUHWFKHVDQG
EUHDNV
+HUHDUHVRPHFRPPRQPDWHULDOVDQGWKHLUWHQVLOHVWUHQJWK
7HQVLOHVWUHQJWKRIYDULRXVPDWHULDOV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
5HPHPEHUWRUHDGWKHTXHVWLRQVFDUHIXOO\LQRUGHUWRQRWFRQIXVHWKHWHUPV

gWHQVLOHVWUHVVhDQGgWHQVLOHVWUDLQh

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([WHQVLRQDQG&RPSUHVVLRQ
:KHQ\RXDSSO\DIRUFH ORDG RQWRDVSULQJLWSURGXFHVDWHQVLOHIRUFHDQGFDXVHVWKHVSULQJ

WRH[WHQG
6WUHWFKLQJDVSULQJZLWKDORDGSURGXFHVDIRUFHWKDWOHDGVWRDQH[WHQVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
+RRNHhV/DZ
,IDPDWHULDOUHVSRQGVWRWHQVLOHIRUFHVLQDZD\LQZKLFKWKHH[WHQVLRQSURGXFHGLV
SURSRUWLRQDOWRWKHDSSOLHGIRUFH ORDG ZHVD\LWREH\V+RRNHbV/DZ
7KLVUHODWLRQVKLSEHWZHHQIRUFHDQGH[WHQVLRQLVVKRZQLQWKHJUDSKEHORZ
)RUFHYH[WHQVLRQJUDSKIRUDVSULQJ
7KHH[WHQVLRQRIWKHVSULQJLVGHWHUPLQHGE\KRZPXFKLWKDVLQFUHDVHGLQOHQJWK
7KHOLPLWRISURSRUWLRQDOLW\LVWKHSRLQWEH\RQGZKLFK+RRNHhVODZLVQRORQJHUWUXHZKHQ
VWUHWFKLQJDPDWHULDOLHWKHH[WHQVLRQLVQRORQJHUSURSRUWLRQDOWRWKHDSSOLHGORDG
7KHSRLQWLVLGHQWLmHGRQWKHJUDSKZKHUHWKHOLQHLVQRORQJHUVWUDLJKWDQGVWDUWVWR
FXUYH nDWWHQVRXW
+RRNHhVODZDOVRDSSOLHVWRFRPSUHVVLRQDVZHOODVH[WHQVLRQ7KHRQO\GLlHUHQFHLVWKDWDQ
DSSOLHGIRUFHLVQRZSURSRUWLRQDOWRWKHGHFUHDVHLQOHQJWK
7KHJUDGLHQWRIWKLVJUDSKLVHTXDOWRWKHVSULQJFRQVWDQWN7KLVLVH[SORUHGIXUWKHULQWKH
UHYLVLRQQRWHVi7KH6SULQJ&RQVWDQWj

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
5XEEHUEDQGVREH\+RRNHhVODZXQWLOWKH\hUHVWUHWFKHGXSWRWZLFHWKHLURULJLQDOVL]HRUPRUH
fWKLVLVEHFDXVHWKHORQJFKDLQPROHFXOHVEHFRPHIXOO\DOLJQHGDQGFDQQRORQJHUPRYHSDVW
HDFKRWKHU
7KLVLVVKRZQE\JUDSK$fDIWHUWKHVHFWLRQRIOLQHDUSURSRUWLRQDOLW\ WKHVWUDLJKWOLQH WKH

JUDGLHQWLQFUHDVHVVLJQLmFDQWO\VRDODUJHIRUFHLVUHTXLUHGWRH[WHQGWKHUXEEHUEDQGE\
HYHQDVPDOODPRXQW
*UDSK%LVLQFRUUHFWDVWKHJUDGLHQWGHFUHDVHVVXJJHVWLQJWKDWOHVVIRUFHLVUHTXLUHGWRFDXVH
DVPDOOH[WHQVLRQ
*UDSK&LVLQFRUUHFWDVWKLVVKRZVDPDWHULDOZKLFKREH\V+RRNHhV/DZDQGGRHVQRWEUHDN
HDVLO\VXFKDVDPHWDO
*UDSK'LVLQFRUUHFWDVWKHSODWHDXVXJJHVWVQRH[WUDIRUFHLVUHTXLUHGWRH[WHQGWKHUXEEHU
DVLWKDVEHHQVWUHWFKHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
([DPTXHVWLRQVPD\DVNIRUWKHWRWDOOHQJWKRIDPDWHULDODIWHUDORDGLV
SODFHGRQLWDQGLWVH[WHQGHG5HPHPEHUWRDGGWKHH[WHQVLRQWRWKHRULJLQDO
OHQJWKRIWKHPDWHULDOWRJHWLWVmQDOIXOOOHQJWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
+22.( 6/$:
+RRNH V/DZ
$PDWHULDOREH\V+RRNHhV/DZLILWVH[WHQVLRQLVGLUHFWO\SURSRUWLRQDOWRWKHDSSOLHG
IRUFH ORDG
7KH)RUFHY([WHQVLRQJUDSKLVDVWUDLJKWOLQHWKURXJKWKHRULJLQ VHHi([WHQVLRQDQG
&RPSUHVVLRQj
7KLVOLQHDUUHODWLRQVKLSLVUHSUHVHQWHGE\WKH+RRNHhVODZHTXDWLRQ
+RRNHdV/DZ
7KHFRQVWDQWRISURSRUWLRQDOLW\LVNQRZQDVWKHVSULQJFRQVWDQWN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
'RXEOHFKHFNWKHD[HVEHIRUHmQGLQJWKHVSULQJFRQVWDQWDVWKHJUDGLHQWRID
IRUFHH[WHQVLRQJUDSK([DPTXHVWLRQVRIWHQVZDSWKHORDGRQWRWKH[D[LV

DQGOHQJWKRQWKH\D[LV,QWKLVFDVHWKHJUDGLHQWLVQRWWKHVSULQJFRQVWDQW
EXWeJUDGLHQWLV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KH6SULQJ&RQVWDQW
NLVWKHVSULQJFRQVWDQWRIWKHVSULQJDQGLVDPHDVXUHRIWKHVWLcQHVVRIDVSULQJ
$VWLlHUVSULQJZLOOKDYHDODUJHUYDOXHRIN
,WLVGHmQHGDVWKHIRUFHSHUXQLWH[WHQVLRQXSWRWKHOLPLWRISURSRUWLRQDOLW\ DIWHUZKLFK
WKHPDWHULDOZLOOQRWREH\+RRNHhVODZ
7KH6,XQLWIRUWKHVSULQJFRQVWDQWLV1P
5HDUUDQJLQJWKH+RRNHhVODZHTXDWLRQVKRZVWKHHTXDWLRQIRUWKHVSULQJFRQVWDQWLV
6SULQJFRQVWDQWHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHVSULQJFRQVWDQWLVWKHIRUFHSHUXQLWH[WHQVLRQXSWRWKHOLPLWRISURSRUWLRQDOLW\ DIWHU
ZKLFKWKHPDWHULDOZLOOQRWREH\+RRNHhVODZ
7KHUHIRUHWKHVSULQJFRQVWDQWNLVWKHJUDGLHQWRIWKHOLQHDUSDUWRID)RUFHY([WHQVLRQJUDSK
6SULQJFRQVWDQWLVWKHJUDGLHQWRIDIRUFHYH[WHQVLRQJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&RPELQDWLRQRIVSULQJV
6SULQJVFDQEHFRPELQHGLQGLlHUHQWZD\V
,QVHULHV HQGWRHQG
,QSDUDOOHO VLGHE\VLGH
6SULQJFRQVWDQWVIRUVSULQJVFRPELQHGLQVHULHVDQGSDUDOOHO
7KLVLVDVVXPLQJNDQGNDUHGLlHUHQWVSULQJFRQVWDQWV
7KHHTXLYDOHQWVSULQJFRQVWDQWIRUFRPELQHGVSULQJVDUHVXPPHGXSLQGLlHUHQWZD\V
GHSHQGLQJRQZKHWKHUWKH\hUHFRQQHFWHGLQSDUDOOHORUVHULHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
7KHHTXLYDOHQW RUHlHFWLYH VSULQJFRQVWDQWHTXDWLRQVIRUFRPELQHGVSULQJV
ZRUNIRUDQ\QXPEHURIVSULQJVHJLIWKHUHDUHVSULQJVLQSDUDOOHONNDQG
NWKHHTXLYDOHQWVSULQJFRQVWDQWZRXOGEHNHT NNN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7+(<281*02'8/86
6WUHVV6WUDLQ WKH<RXQJ0RGXOXV
6WUHVV
7HQVLOHVWUHVVLVWKHDSSOLHGIRUFHSHUXQLWFURVVVHFWLRQDODUHDRIDPDWHULDO
6WUHVVHTXDWLRQ
7KHXOWLPDWHWHQVLOHVWUHVVLVWKHPD[LPXPIRUFHSHURULJLQDOFURVVVHFWLRQDODUHDDZLUH
LVDEOHWRVXSSRUWXQWLOLWEUHDNV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WUDLQ
6WUDLQLVWKHH[WHQVLRQSHUXQLWOHQJWK
7KLVLVDGHIRUPDWLRQRIDVROLGGXHWRVWUHVVLQWKHIRUPRIHORQJDWLRQRUFRQWUDFWLRQ
1RWHWKDWVWUDLQLVDGLPHQVLRQOHVVXQLWEHFDXVHLWhVWKHUDWLRRIOHQJWKV
6WUDLQHTXDWLRQ
<RXQJhV0RGXOXV
7KH<RXQJPRGXOXVLVWKHPHDVXUHRIWKHDELOLW\RIDPDWHULDOWRZLWKVWDQGFKDQJHVLQOHQJWK
ZLWKDQDGGHGORDGLHKRZVWLlDPDWHULDOLV
7KLVJLYHVLQIRUPDWLRQDERXWWKHHODVWLFLW\RIDPDWHULDO
7KH<RXQJ0RGXOXVLVGHmQHGDVWKHUDWLRRIVWUHVVDQGVWUDLQ
<RXQJ0RGXOXVHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,WVXQLWLVWKHVDPHDVVWUHVV3D VLQFHVWUDLQLVXQLWOHVV
-XVWOLNHWKH)RUFH([WHQVLRQJUDSKVWUHVVDQGVWUDLQDUHGLUHFWO\SURSRUWLRQDOWRRQHDQRWKHU
IRUDPDWHULDOH[KLELWLQJHODVWLFEHKDYLRXU
$VWUHVVVWUDLQJUDSKLVDVWUDLJKWOLQHZLWKLWVJUDGLHQWHTXDOWR<RXQJPRGXOXV
7KHJUDGLHQWRIDVWUHVVVWUHVVJUDSKZKHQLWLVOLQHDULVWKH<RXQJ0RGXOXV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
([DP7LS
7RUHPHPEHUZKHWKHUVWUHVVRUVWUDLQFRPHVmUVWLQWKH<RXQJPRGXOXV
HTXDWLRQWU\WKLQNLQJRIWKHSKUDVHg:KHQ\RXhUHVWUHVVHG\RXVKRZWKH
VWUDLQhLH6WUHVVeVWUDLQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
<RXQJ V0RGXOXV([SHULPHQW
7RPHDVXUHWKH<RXQJhV0RGXOXVRIDPHWDOLQWKHIRUPRIDZLUHUHTXLUHVDFODPSHG
KRUL]RQWDOZLUHRYHUDSXOOH\ RUYHUWLFDOZLUHDWWDFKHGWRWKHFHLOLQJZLWKDPDVVDWWDFKHG DV
VKRZQLQWKHGLDJUDPEHORZ
$UHIHUHQFHPDUNHULVQHHGHGRQWKHZLUH7KLVLVXVHGWRDFFXUDWHO\PHDVXUHWKHH[WHQVLRQ
ZLWKWKHDSSOLHGORDG
7KHLQGHSHQGHQWYDULDEOHLVWKHORDG
7KHGHSHQGHQWYDULDEOHLVWKHH[WHQVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HWKRG
0HDVXUHWKHRULJLQDOOHQJWKRIWKHZLUHXVLQJDPHWUHUXOHUDQGPDUNWKLVUHIHUHQFHSRLQWZLWK
WDSH
0HDVXUHWKHGLDPHWHURIWKHZLUHZLWKPLFURPHWHUVFUHZJDXJHRUGLJLWDOFDOLSHUV
0HDVXUHRUUHFRUGWKHPDVVRUZHLJKWXVHGIRUWKHH[WHQVLRQHJJ
5HFRUGLQLWLDOUHDGLQJRQWKHUXOHUZKHUHWKHUHIHUHQFHSRLQWLV
$GGPDVVDQGUHFRUGWKHQHZVFDOHUHDGLQJIURPWKHPHWUHUXOHU
5HFRUGmQDOUHDGLQJIURPWKHQHZSRVLWLRQRIWKHUHIHUHQFHSRLQWRQWKHUXOHU
$GGDQRWKHUPDVVDQGUHSHDWPHWKRG
,PSURYLQJH[SHULPHQWDQGUHGXFLQJXQFHUWDLQWLHV
5HGXFHXQFHUWDLQW\RIWKHFURVVVHFWLRQDODUHDE\PHDVXULQJWKHGLDPHWHUGLQVHYHUDOSODFHV
DORQJWKHZLUHDQGFDOFXODWLQJDQDYHUDJH
5HPRYHWKHORDGDQGFKHFNZLUHUHWXUQVWRRULJLQDOOLPLWDIWHUHDFKUHDGLQJ
7DNHVHYHUDOUHDGLQJVZLWKGLlHUHQWORDGVDQGmQGDYHUDJH
8VHD9HUQLHUVFDOHWRPHDVXUHWKHH[WHQVLRQRIWKHZLUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HDVXUHPHQWVWRGHWHUPLQH<RXQJhVPRGXOXV
'HWHUPLQHH[WHQVLRQ[IURPmQDODQGLQLWLDOUHDGLQJV
([DPSOHWDEOHRIUHVXOWV
7DEOHZLWKDGGLWLRQDOGDWD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3ORWDJUDSKRIIRUFHDJDLQVWH[WHQVLRQDQGGUDZOLQHRIEHVWmW
'HWHUPLQHJUDGLHQWRIWKHIRUFHYH[WHQVLRQJUDSK
&DOFXODWHFURVVVHFWLRQDODUHDIURP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DOFXODWHWKH<RXQJhVPRGXOXVIURP
([DP7LS
$OWKRXJKHYHU\FDUHVKRXOGEHWDNHQWRPDNHWKHH[SHULPHQWDVUHOLDEOHDV
SRVVLEOH\RXZLOOEHH[SHFWHGWRVXJJHVWLPSURYHPHQWVLQSURGXFLQJPRUH

DFFXUDWHDQGUHOLDEOHUHVXOWV HJUHSHDWUHDGLQJVDQGXVHDORQJHUOHQJWKRI
ZLUH
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'()250$7,21(/$67,& 3/$67,&%(+$9,285
(/$67,& 3/$67,&%(+$9,285
(ODVWLF 3ODVWLF'HIRUPDWLRQ
(ODVWLFGHIRUPDWLRQZKHQWKHORDGLVUHPRYHGWKHREMHFWZLOOUHWXUQWRLWVRULJLQDOVKDSH
3ODVWLFGHIRUPDWLRQZKHQWKHORDGLVUHPRYHGWKHREMHFWZLOOQRWUHWXUQWRLWVRULJLQDO
VKDSHRUOHQJWK7KLVLVEH\RQGWKHHODVWLFOLPLW
(ODVWLFOLPLWWKHSRLQWEH\RQGZKLFKWKHREMHFWGRHVQRWUHWXUQWRLWVRULJLQDOOHQJWKZKHQ
WKHORDGLVUHPRYHG
7KHVHUHJLRQVFDQEHGHWHUPLQHGIURPD)RUFH([WHQVLRQJUDSK
%HORZWKHHODVWLFOLPLWWKHPDWHULDOH[KLELWVHODVWLFEHKDYLRXU
$ERYHWKHHODVWLFOLPLWWKHPDWHULDOH[KLELWVSODVWLFEHKDYLRXU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(ODVWLFGHIRUPDWLRQRFFXUVLQWKHgHODVWLFUHJLRQhRIWKHJUDSK7KHH[WHQVLRQLVSURSRUWLRQDO
WRWKHIRUFHDSSOLHGWRWKHPDWHULDO VWUDLJKWOLQH
3ODVWLFGHIRUPDWLRQRFFXUVLQWKHgSODVWLFUHJLRQhRIWKHJUDSK7KHH[WHQVLRQLVQRORQJHU
SURSRUWLRQDOWRWKHWRWKHIRUFHDSSOLHGWRWKHPDWHULDO JUDSKVWDUWVWRFXUYH
7KHVHUHJLRQVDUHGLYLGHGE\WKHHODVWLFOLPLW
%ULWWOHDQGGXFWLOHPDWHULDOV
%ULWWOHPDWHULDOVKDYHYHU\OLWWOHWRQRSODVWLFUHJLRQHJJODVVFRQFUHWH7KHPDWHULDOEUHDNV
ZLWKOLWWOHHODVWLFDQGLQVLJQLmFDQWSODVWLFGHIRUPDWLRQ
'XFWLOHPDWHULDOVKDYHDODUJHUSODVWLFUHJLRQHJUXEEHUFRSSHU7KHPDWHULDOVWUHWFKHVLQWR
DQHZVKDSHEHIRUHEUHDNLQJ
7RLGHQWLI\WKHVHPDWHULDOVRQDVWUHVVVWUDLQRUIRUFHH[WHQVLRQJUDSKXSWRWKHLUEUHDNLQJ
SRLQW
$EULWWOHPDWHULDOLVUHSUHVHQWHGE\DVWUDLJKWOLQHWKURXJKWKHRULJLQVZLWKQRRU
QHJOLJLEOHFXUYHGUHJLRQ
$GXFWLOHPDWHULDOLVUHSUHVHQWHGZLWKDVWUDLJKWOLQHWKURXJKWKHRULJLQWKHQFXUYLQJ
WRZDUGVWKH[D[LV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
6LQFHWKHJUDSKLVDVWUDLJKWOLQHDQGWKHPHWDOIUDFWXUHVWKHSRLQWDIWHU;PXVWEHLWVHODVWLF
OLPLW
7KHJUDSKVWDUWVWRFXUYHDIWHUWKLVDQGIUDFWXUHVDWSRLQW<
7KLVFXUYHEHWZHHQ;DQG<GHQRWHVSODVWLFEHKDYLRXU
7KHUHIRUHWKHFRUUHFWDQVZHULV&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
$OWKRXJKVLPLODUGHmQLWLRQVWKHHODVWLFOLPLWDQGOLPLWRISURSRUWLRQDOLW\DUH
QRWWKHVDPHSRLQWRQWKHJUDSK7KHOLPLWRISURSRUWLRQDOLW\LVWKHSRLQW
EH\RQGZKLFKWKHPDWHULDOLVQRORQJHUGHmQHGE\+RRNHhVODZ7KHHODVWLF

OLPLWLVWKHIXUWKHVWSRLQWDPDWHULDOFDQEHVWUHWFKHGZKLOVWVWLOODEOHWRUHWXUQ
WRLWVSUHYLRXVVKDSH7KLVLVDWDVOLJKWO\KLJKHUH[WHQVLRQWKDQWKHOLPLWRI
SURSRUWLRQDOLW\%HVXUHQRWWRFRQIXVHWKHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(/$67,&327(17,$/(1(5*<
$UHDXQGHUD)RUFH([WHQVLRQ*UDSK
7KHZRUNGRQHLQVWUHWFKLQJDPDWHULDOLVHTXDOWRWKHIRUFHPXOWLSOLHGE\WKHGLVWDQFHPRYHG
7KHUHIRUHWKHDUHDXQGHUDIRUFHH[WHQVLRQJUDSKLVHTXDOWRWKHZRUNGRQHWR
VWUHWFKWKHPDWHULDO
7KHZRUNGRQHLVDOVRHTXDOWRWKHHODVWLFSRWHQWLDOHQHUJ\VWRUHGLQWKHPDWHULDO
:RUNGRQHLVWKHDUHDXQGHUWKHIRUFHcH[WHQVLRQJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KLVLVWUXHIRUZKHWKHUWKHPDWHULDOREH\V+RRNHhVODZRUQRW
)RUWKHUHJLRQZKHUHWKHPDWHULDOREH\V+RRNHhVODZWKHZRUNGRQHLVWKHDUHDRID
ULJKWDQJOHGWULDQJOHXQGHUWKHJUDSK
)RUWKHUHJLRQZKHUHWKHPDWHULDOGRHVQhWREH\+RRNHhVODZWKHDUHDLVWKHIXOOUHJLRQ
XQGHUWKHJUDSK7RFDOFXODWHWKLVDUHDVSOLWWKHJUDSKLQWRVHSDUDWHVHJPHQWVDQG
DGGXSWKHLQGLYLGXDODUHDVRIHDFK
/RDGLQJDQGXQORDGLQJ
7KHIRUFHH[WHQVLRQFXUYHIRUVWUHWFKLQJDQGFRQWUDFWLRQRIDPDWHULDOWKDWKDVH[FHHGHGLWV
HODVWLFOLPLWLVVKRZQEHORZ
7KHFXUYHIRUFRQWUDFWLRQLVDOZD\VEHORZWKHFXUYHIRUVWUHWFKLQJ
7KHDUHD;UHSUHVHQWVWKHQHWZRUNGRQHRUWKHWKHUPDOHQHUJ\GLVVLSDWHGLQWKHPDWHULDO
7KHDUHD;<LVWKHPLQLPXPHQHUJ\UHTXLUHGWRVWUHWFKWKHPDWHULDOWRH[WHQVLRQH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
0DNHVXUHWREHIDPLOLDUZLWKWKHIRUPXODIRUWKHDUHDRIFRPPRQ'VKDSHV

VXFKDVDULJKWDQJOHGWULDQJOHWUDSH]LXPVTXDUHDQGUHFWDQJOHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(ODVWLF3RWHQWLDO(QHUJ\
(ODVWLFSRWHQWLDOHQHUJ\LVGHmQHGDVWKHHQHUJ\VWRUHGZLWKLQDPDWHULDO HJLQDVSULQJ
ZKHQLWLVVWUHWFKHGRUFRPSUHVVHG
,WFDQEHIRXQGIURPWKHDUHDXQGHUWKHIRUFHH[WHQVLRQJUDSKIRUDPDWHULDOGHIRUPHG
ZLWKLQLWVOLPLWRISURSRUWLRQDOLW\
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DOFXODWLQJ(ODVWLF3RWHQWLDO(QHUJ\
$PDWHULDOZLWKLQLWhVOLPLWRISURSRUWLRQDOLW\REH\V+RRNHhVODZ7KHUHIRUHIRUDPDWHULDO
REH\LQJ+RRNHhV/DZHODVWLFSRWHQWLDOHQHUJ\FDQEHFDOFXODWHGXVLQJ
(ODVWLFSRWHQWLDOHQHUJ\FDQEHGHULYHGIURP+RRNHdVODZ
:KHUHNLVWKHVSULQJFRQVWDQW 1P DQG[LVWKHH[WHQVLRQ P
([DP7LS
7KHIRUPXODIRU(3( dN[LVRQO\WKHDUHDXQGHUWKHIRUFHH[WHQVLRQJUDSK
ZKHQLWLVDVWUDLJKWOLQHLHZKHQWKHPDWHULDOREH\V+RRNHhVODZDQGLV
ZLWKLQLWVHODVWLFOLPLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
&,($/HYHO3K\VLFV H[DPVIURP5HYLVLRQ1RWHV
RVFLOODWLRQV YLEUDWLRQV

5HVRXUFHV
:DYHVFDQEHVKRZQWKURXJKYLEUDWLRQVLQURSHVRUVSULQJV
SHUSHQGLFXODU WUDQVYHUVH
SDUDOOHO ORQJLWXGLQDO

5HVRXUFHV
:DYHHfHFWVFDQEHGHPRQVWUDWHGXVLQJDULSSOHWDQN

5HVRXUFHV
'LVSODFHPHQW [
$PSOLWXGH $
:DYHOHQJWK d
PHWUHV P
'LDJUDPVVKRZLQJWKHDPSOLWXGHDQGZDYHOHQJWKRIDZDYH

5HVRXUFHV
3HULRG 7
VHFRQGV V
'LDJUDPVVKRZLQJWKHWLPHSHULRGRIDZDYH
)UHTXHQF\ I +HUW] +]
V
)UHTXHQF\HTXDWLRQ
6SHHG Y PHWUHVSHU
VHFRQG PV

5HVRXUFHV
KRZPXFKDSRLQWRUDZDYHLVLQIURQWRUEHKLQGDQRWKHU
LQSKDVH
DQWLSKDVH
OHDGV
7ZRZDYHVcdRXWRISKDVH
ODJ
IUDFWLRQVRIDZDYHOHQJWKGHJUHHV UDGLDQV
,QSKDVH R
,QDQWLSKDVH R

5HVRXUFHV

5HVRXUFHV
YHU\WRS

5HVRXUFHV
HQHUJ\ SURJUHVVLYH
VWDWLRQDU\

5HVRXUFHV
WLPH YROWDJH \JDLQ
'LDJUDPRI&DWKRGH5D\2VFLOORVFRSHGLVSOD\VKRZLQJZDYHOHQJWKDQGWLPHEDVHVHWWLQJ
WLPHEDVH KRZPDQ\VHFRQGV
HDFKGLYLVLRQUHSUHVHQWV VGLY VFP

7
IUHTXHQF\ 7

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV
Y Ib

5HVRXUFHV
'HULYDWLRQRIY Id

5HVRXUFHV
7KH:DYH(TXDWLRQ
LQFUHDVHV GHFUHDVHV
GHFUHDVHV LQFUHDVHV
7KHUHODWLRQVKLSEHWZHHQIUHTXHQF\DQGZDYHOHQJWKRIDZDYH

5HVRXUFHV

5HVRXUFHV
F Ib F
F ฀

5HVRXUFHV
HQHUJ\
LQWHQVLW\
LQWHQVLW\ SRZHUSHUXQLWDUHD
,QWHQVLW\LVHTXDOWRWKHSRZHUSHUXQLWDUHD
,QWHQVLW\LVSURSRUWLRQDOWRWKHDPSOLWXGHDQGIUHTXHQF\

5HVRXUFHV
VXUIDFHDUHD eU
,QWHQVLW\LVSURSRUWLRQDOWRWKHDPSOLWXGHVTXDUHG
LQYHUVHVTXDUHODZ

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV
SHUSHQGLFXODU
FUHVWV WURXJKV
'LDJUDPRIDWUDQVYHUVHZDYH

5HVRXUFHV
FDQ
SDUDOOHO
FRPSUHVVLRQV UDUHIDFWLRQV
'LDJUDPRIDORQJLWXGLQDOZDYH
FDQQRW

5HVRXUFHV
:DYHOHQJWKVKRZQRQDORQJLWXGLQDOZDYH

5HVRXUFHV

5HVRXUFHV
SDUDOOHO SHUSHQGLFXODU

5HVRXUFHV
GRSSOHUHfHFW GRSSOHUVKLIW
VWDWLRQDU\ VDPH
6WDWLRQDU\VRXUFHDQGREVHUYHU
WRZDUGV
VKRUWHQHG KLJKHU

5HVRXUFHV
0RYLQJVRXUFHDQGVWDWLRQDU\REVHUYHU
EURDGHQLQJ
LQFUHDVHG WRZDUGV
GHFUHDVHG DZD\

5HVRXUFHV

5HVRXUFHV
'RSSOHUVKLIWHTXDWLRQ
WRZDUGV
DZD\

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV
WUDQVYHUVH
YDFXXP
VDPHVSHHG c
PV

2VFLOODWLQJHOHFWULFDQGPDJQHWLFgHOGVLQDQHOHFWURPDJQHWLFZDYH

5HVRXUFHV

5HVRXUFHV
(QHUJ\ZDYHOHQJWKDQGIUHTXHQF\IRUHDFKSDUWRIWKHHOHFWURPDJQHWLFVSHFWUXP

5HVRXUFHV
IUHTXHQF\ HQHUJ\
(0VSHFWUXPZDYHOHQJWKVDQGIUHTXHQFLHV
F Id F cPV

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV
DQ\SODQH
SRODULVHG
RQH
SHUSHQGLFXODU

5HVRXUFHV
'LDJUDPVKRZLQJWKHGLVSODFHPHQWRIXQSRODULVHGDQGSRODULVHGWUDQVYHUVHZDYHV

5HVRXUFHV
SRODULVHU SRODULVLQJgOWHU
'LDJUDPVKRZLQJDQXQSRODULVHGDQGSRODULVHGZDYHWUDYHOOLQJWKURXJKSRODULVHUV

5HVRXUFHV
& '

5HVRXUFHV
0DOXVeVODZHTXDWLRQ

5HVRXUFHV
:P
7DEOHRIWUDQVPLVVLRQGHSHQGLQJRQSRODULVHURULHQWDWLRQ

5HVRXUFHV

5HVRXUFHV

5HVRXUFHV
VTXDUH

5HVRXUFHV

5HVRXUFHV
<285127(6
6XSHUSRVLWLRQ j
&217(176
6WDWLRQDU\:DYHV
7KH3ULQFLSOHRI6XSHUSRVLWLRQ
6WDWLRQDU\:DYHV
'LkUDFWLRQ ,QWHUIHUHQFH
'LkUDFWLRQ
,QWHUIHUHQFH &RKHUHQFH
7ZR6RXUFH,QWHUIHUHQFH
<RXQJ V'RXEOH6OLW([SHULPHQW
7KH'LkUDFWLRQ*UDWLQJ
67$7,21$5<:$9(6
7+(35,1&,3/(2)683(5326,7,21
7KH3ULQFLSOHRI6XSHUSRVLWLRQ
7KHSULQFLSOHRIVXSHUSRVLWLRQVWDWHVWKDWZKHQWZRRUPRUHZDYHVZLWKWKHVDPH
IUHTXHQF\WUDYHOOLQJLQRSSRVLWHGLUHFWLRQVRYHUODSWKHUHVXOWDQWGLVSODFHPHQWLV
WKHVXPRIGLVSODFHPHQWVRIHDFKZDYH
7KLVSULQFLSOHGHVFULEHVKRZZDYHVZKLFKPHHWDWDSRLQWLQVSDFHLQWHUDFW
:KHQWZRZDYHVZLWKWKHVDPHIUHTXHQF\DQGDPSOLWXGHDUULYHDWDSRLQWWKH\VXSHUSRVH
HLWKHU
LQSKDVHFDXVLQJFRQVWUXFWLYHLQWHUIHUHQFH7KHSHDNVDQGWURXJKVOLQHXSRQ
ERWKZDYHV7KHUHVXOWDQWZDYHKDVGRXEOHWKHDPSOLWXGH
RULQDQWLSKDVHFDXVLQJGHVWUXFWLYHLQWHUIHUHQFH7KHSHDNVRQRQHZDYHOLQH
XSZLWKWKHWURXJKVRIWKHRWKHU7KHUHVXOWDQWZDYHKDVQRDPSOLWXGH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:DYHVLQVXSHUSRVLWLRQFDQXQGHUJRFRQVWUXFWLYHRUGHVWUXFWLYHLQWHUIHUHQFH
7KHSULQFLSOHRIVXSHUSRVLWLRQDSSOLHVWRDOOW\SHVRIZDYHVLHWUDQVYHUVHDQGORQJLWXGLQDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
7KHEHVWZD\WRGUDZWKHVXSHUSRVLWLRQRIWZRZDYHVLVWRlQGZKHUHWKH
VXSHULPSRVHGZDYHKDVLWVPD[LPXPDQGPLQLPXPDPSOLWXGHV,WLVWKHQD

FDVHRIMRLQLQJWKHPXSWRIRUPWKHZDYH:KHUHWKHZDYHVLQWHUVHFW
GHWHUPLQHVKRZPXFKFRQVWUXFWLYHRUGHVWUXFWLYHLQWHUIHUHQFHZLOORFFXU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
67$7,21$5<:$9(6
6WDWLRQDU\:DYHV
6WDWLRQDU\ZDYHVRUVWDQGLQJZDYHVDUHSURGXFHGE\WKHVXSHUSRVLWLRQRIWZRZDYHVRIWKH
VDPHIUHTXHQF\DQGDPSOLWXGHWUDYHOOLQJLQRSSRVLWHGLUHFWLRQV
7KLVLVXVXDOO\DFKLHYHGE\DWUDYHOOLQJZDYHDQGLWVUHmHFWLRQ7KHVXSHUSRVLWLRQSURGXFHVD
ZDYHSDWWHUQZKHUHWKHSHDNVDQGWURXJKVGRQRWPRYH
)RUPDWLRQRIDVWDWLRQDU\ZDYHRQDVWUHWFKHGVSULQJf[HGDWRQHHQG
,QWKLVVHFWLRQZHZLOOORRNDWVRPHIHZH[SHULPHQWVWKDWGHPRQVWUDWHVWDWLRQDU\ZDYHVLQ
HYHU\GD\OLIH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
6WUHWFKHGVWULQJV
9LEUDWLRQVFDXVHGE\VWDWLRQDU\ZDYHVRQDVWUHWFKHGVWULQJSURGXFHVRXQG
7KLVLVKRZVWULQJHGLQVWUXPHQWVVXFKDVJXLWDUVRUYLROLQVZRUN
7KLVFDQEHGHPRQVWUDWHGE\DOHQJWKRIVWULQJXQGHUWHQVLRQl[HGDWRQHHQGDQGYLEUDWLRQV
PDGHE\DQRVFLOODWRU
6WDWLRQDU\ZDYHRQDVWUHWFKHGVWULQJ
$VWKHIUHTXHQF\RIWKHRVFLOODWRUFKDQJHVVWDQGLQJZDYHVZLWKGLkHUHQWQXPEHUVRIPLQLPD
QRGHV DQGPD[LPD DQWLQRGHV IRUP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
0LFURZDYHV
$PLFURZDYHVRXUFHLVSODFHGLQOLQHZLWKDUHmHFWLQJSODWHDQGDVPDOOGHWHFWRUEHWZHHQWKH
WZR
7KHUHmHFWRUFDQEHPRYHGWRDQGIURPWKHVRXUFHWRYDU\WKHVWDWLRQDU\ZDYHSDWWHUQ
IRUPHG
%\PRYLQJWKHGHWHFWRULWFDQSLFNXSWKHPLQLPD QRGHV DQGPD[LPD DQWLQRGHV RIWKH

VWDWLRQDU\ZDYHSDWWHUQ
8VLQJPLFURZDYHVWRGHPRQVWUDWHVWDWLRQDU\ZDYHV
$LUFROXPQV
7KHIRUPDWLRQRIVWDWLRQDU\ZDYHVLQVLGHDQDLUFROXPQFDQEHSURGXFHGE\VRXQGZDYHV
7KLVLVKRZPXVLFDOLQVWUXPHQWVVXFKDVFODULQHWVDQGRUJDQVZRUN
7KLVFDQEHGHPRQVWUDWHGE\SODFLQJDlQHSRZGHULQVLGHWKHDLUFROXPQDQGDORXGVSHDNHU
DWWKHRSHQHQG
$WFHUWDLQIUHTXHQFLHVWKHSRZGHUIRUPVHYHQO\VSDFHGKHDSVDORQJWKHWXEHVKRZLQJ
ZKHUHWKHUHLV]HURGLVWXUEDQFHDVDUHVXOWRIWKHQRGHVRIWKHVWDWLRQDU\ZDYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
6WDWLRQDU\ZDYHLQDQDLUFROXPQ
,QRUGHUWRSURGXFHDVWDWLRQDU\ZDYHWKHUHPXVWEHDPLQLPD QRGH DWRQHHQGDQGD

PD[LPD DQWLQRGH DWWKHHQGZLWKWKHORXGVSHDNHU
([DP7LS
$OZD\VUHIHUEDFNWRWKHH[SHULPHQWRUVFHQDULRLQDQH[DPTXHVWLRQHJWKH
ZDYHSURGXFHGE\DORXGVSHDNHUUHmHFWVDWWKHHQGRIDWXEH7KLV

UHmHFWHGZDYHZLWKWKHVDPHIUHTXHQF\RYHUODSVWKHLQLWLDOZDYHWRFUHDWHD
VWDWLRQDU\ZDYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
)RUPDWLRQRI6WDWLRQDU\:DYHV
$VWDWLRQDU\ZDYHLVPDGHXSQRGHVDQGDQWLQRGHV
1RGHVDUHZKHUHWKHUHLVQRYLEUDWLRQ
$QWLQRGHVDUHZKHUHWKHYLEUDWLRQVDUHDWWKHLUPD[LPXPDPSOLWXGH
7KHQRGHVDQGDQWLQRGHVGRQRWPRYHDORQJWKHVWULQJ1RGHVDUHl[HGDQGDQWLQRGHVRQO\
PRYHLQWKHYHUWLFDOGLUHFWLRQ
%HWZHHQQRGHVDOOSRLQWVRQWKHVWDWLRQDU\DUHLQSKDVH
7KHLPDJHEHORZVKRZVWKHQRGHVDQGDQWLQRGHVRQDVQDSVKRWRIDVWDWLRQDU\ZDYHDWD
SRLQWLQWLPH
/LVWKHOHQJWKRIWKHVWULQJ
ZDYHOHQJWKcLVRQO\DSRUWLRQRIWKHOHQJWKRIWKHVWULQJ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
7KHOHQJWKVRIWKHVWULQJVZLOORQO\EHLQZKROHRUdZDYHOHQJWKV)RU
H[DPSOHDZDYHOHQJWKFRXOGEHPDGHXSRIQRGHVDQGDQWLQRGHVRU
QRGHVDQGDQWLQRGHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
0HDVXULQJ:DYHOHQJWK
6WDWLRQDU\ZDYHVKDYHGLkHUHQWZDYHSDWWHUQVGHSHQGLQJRQWKHIUHTXHQF\RIWKHYLEUDWLRQ
DQGWKHVLWXDWLRQLQZKLFKWKH\DUHFUHDWHG
7ZRl[HGHQGV
:KHQDVWDWLRQDU\ZDYHVXFKDVDYLEUDWLQJVWULQJLVl[HGDWERWKHQGVWKHVLPSOHVWZDYH
SDWWHUQLVDVLQJOHORRSPDGHXSRIWZRQRGHVDQGDQDQWLQRGH
7KLVLVFDOOHGWKHIXQGDPHQWDOPRGHRIYLEUDWLRQRUWKHeUVWKDUPRQLF
7KHSDUWLFXODUIUHTXHQFLHV LHUHVRQDQWIUHTXHQFLHV RIVWDQGLQJZDYHVSRVVLEOHLQWKHVWULQJ

GHSHQGRQLWVOHQJWK/DQGLWVVSHHGY
$V\RXLQFUHDVHWKHIUHTXHQF\WKHKLJKHUKDUPRQLFVEHJLQWRDSSHDU
7KHIUHTXHQFLHVFDQEHFDOFXODWHGIURPWKHVWULQJOHQJWKDQGZDYHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
'LDJUDPVKRZLQJWKHfUVWWKUHHPRGHVRIYLEUDWLRQRIDVWUHWFKHGVWULQJZLWK
FRUUHVSRQGLQJIUHTXHQFLHV
7KHQWKKDUPRQLFKDVQDQWLQRGHVDQGQQRGHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
2QHRUWZRRSHQHQGVLQDLUFROXPQ
:KHQDVWDWLRQDU\ZDYHLVIRUPHGLQDQDLUFROXPQZLWKRQHRUWZRRSHQHQGVZHVHH
VOLJKWO\GLkHUHQWZDYHSDWWHUQVLQHDFK
'LDJUDPVKRZLQJPRGHVRIYLEUDWLRQLQSLSHVZLWKRQHHQGFORVHGDQGWKHRWKHURSHQRU
ERWKHQGVRSHQ
,Q,PDJHRQO\RQHHQGRIWKHDLUFROXPQLVRSHQVRWKHIXQGDPHQWDOPRGHLVQRZPDGH
XSRIDTXDUWHURIDZDYHOHQJWKZLWKRQHQRGHDQGRQHDQWLQRGH
(YHU\KDUPRQLFDIWHUWKDWDGGVRQDQH[WUDQRGHRUDQWLQRGH
,Q,PDJHWKHFROXPQLVRSHQRQERWKHQGVVRWKHIXQGDPHQWDOPRGHLVPDGHXSRQHQRGH
DQGWZRDQWLQRGHV
,QVXPPDU\DFROXPQOHQJWK/IRUDZDYHZLWKZDYHOHQJWKcDQGUHVRQDQWIUHTXHQF\IIRU
VWDWLRQDU\ZDYHVWRDSSHDULVDVIROORZV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH
([DP7LS
7KHIXQGDPHQWDOFRXQWVDVWKHlUVWKDUPRQLFRUQ DQGLVWKHORZHVW
IUHTXHQF\ZLWKKDOIRUTXDUWHURIDZDYHOHQJWK$IXOOZDYHOHQJWKZLWKERWK

HQGVRSHQRUERWKHQGVFORVHGLVWKHVHFRQGKDUPRQLF0DNHVXUHWRPDWFK
WKHFRUUHFWZDYHOHQJWKZLWKWKHKDUPRQLFDVNHGIRULQWKHTXHVWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
',))5$&7,21 ,17(5)(5(1&(
',))5$&7,21
:KDWLV'LkUDFWLRQ"
'LkUDFWLRQLVWKHVSUHDGLQJRXWRIZDYHVZKHQWKH\SDVVDQREVWUXFWLRQ
7KLVREVWUXFWLRQLVW\SLFDOO\DQDUURZVOLW DQDSHUWXUH
7KHH[WHQWRIGLkUDFWLRQGHSHQGVRQWKHZLGWKRIWKHJDSFRPSDUHGZLWKWKHZDYHOHQJWKRI
WKHZDYHV
'LkUDFWLRQLVWKHPRVWSURPLQHQWZKHQWKHZLGWKRIWKHVOLWLVDSSUR[LPDWHO\HTXDOWR
WKHZDYHOHQJWK
'LeUDFWLRQZKHQDZDYHSDVVHVWKURXJKDQDUURZJDSLWVSUHDGVRXW
'LkUDFWLRQLVXVXDOO\UHSUHVHQWHGE\DZDYHIURQWDVVKRZQE\WKHYHUWLFDOOLQHVLQWKH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
GLDJUDPDERYH
7KHRQO\SURSHUW\RIDZDYHWKDWFKDQJHVZKHQLWVGLkUDFWHGLVLWVDPSOLWXGH
7KLVLVEHFDXVHVRPHHQHUJ\LVGLVVLSDWHGZKHQDZDYHLVGLkUDFWHGWKURXJKDJDS
'LkUDFWLRQFDQDOVRRFFXUZKHQZDYHVFXUYHDURXQGDQHGJH
:KHQDZDYHJRHVSDVWWKHHGJHRIDEDUULHUWKHZDYHVFDQFXUYHDURXQGLW
$Q\W\SHRIZDYHFDQEHGLkUDFWHGLHVRXQGOLJKWZDWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH
'LkUDFWLRQLVPRVWSURPLQHQWZKHQWKHZDYHOHQJWKLVFORVHWRWKHDSHUWXUHVL]H
89ZDYHVKDYHDZDYHOHQJWKEHWZHHQegePVRZRQiWEHGLkUDFWHGE\DJDWH
SRVW
6RXQGZDYHVKDYHDZDYHOHQJWKRIegPVRZRXOGQRWEHGLkUDFWHGE\WKH
GLkUDFWLRQJUDWLQJ
5DGLRZDYHVKDYHDZDYHOHQJWKRIgPVRZRXOGQRWEHGLkUDFWHGE\KXPDQKDLU
;UD\VKDYHDZDYHOHQJWKRIegePZKLFKLVURXJKO\WKHJDSEHWZHHQDWRPVLQ
DFU\VWDOOLQHVROLG
7KHUHIRUHWKHFRUUHFWDQVZHULV'
([DP7LS
:KHQGUDZLQJGLkUDFWHGZDYHVWDNHFDUHWRNHHSWKHZDYHOHQJWKFRQVWDQW,W

LVRQO\WKHDPSOLWXGHRIWKHZDYHWKDWFKDQJHVZKHQGLkUDFWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
'LkUDFWLRQ([SHULPHQWV
$VGLVFXVVHGDERYHWKHHkHFWVRIGLkUDFWLRQDUHPRVWSURPLQHQWZKHQWKHJDSVL]HLV
DSSUR[LPDWHO\WKHVDPHRUVPDOOHUWKDQWKHZDYHOHQJWKRIWKHZDYH
$VWKHJDSVL]HLQFUHDVHVWKHHkHFWJUDGXDOO\JHWVOHVVSURQRXQFHGXQWLOLQWKHFDVHWKDWWKH
JDSLVPXFKODUJHUWKDQWKHZDYHOHQJWKWKHZDYHVDUHQRORQJHUVSUHDGRXW
7KHVL]HRIWKHJDS FRPSDUHGWRWKHZDYHOHQJWK DeHFWVKRZPXFKWKHZDYHVVSUHDG

RXW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
5LSSOHWDQNVDUHXVHGDFRPPRQH[SHULPHQWWRGHPRQVWUDWHGLkUDFWLRQRIZDWHUZDYHV
:DYHHeHFWVPD\DOOEHGHPRQVWUDWHGXVLQJDULSSOHWDQN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
7KHGLDJUDPEHORZVKRZVKRZWKHZDYHOHQJWKVGLkHUZLWKIUHTXHQF\LQDULSSOHWDQN
7KHKLJKHUWKHIUHTXHQF\WKHVKRUWHUWKHZDYHOHQJWK
7KHORZHUWKHIUHTXHQF\WKHORQJHUWKHZDYHOHQJWK
5LSSOHWDQNSDWWHUQVIRUORZDQGKLJKIUHTXHQF\YLEUDWLRQ
([DP7LS
)DPLOLDULVLQJ\RXUVHOIZLWKWKHZDYHOHQJWKRIHOHFWURPDJQHWLFZDYHVLV
HVVHQWLDOIRULGHQWLI\LQJZKLFKZDYHZLOOFDXVHWKHJUHDWHVWGLkUDFWLRQHkHFW
IRUDJLYLQJJDSZLGWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
,17(5)(5(1&( &2+(5(1&(
,QWHUIHUHQFH &RKHUHQFH
,QWHUIHUHQFHRFFXUVZKHQZDYHVRYHUODSDQGWKHLUUHVXOWDQWGLVSODFHPHQWLVWKHVXPRIWKH
GLVSODFHPHQWRIHDFKZDYH
7KLVUHVXOWLVEDVHGRQWKHSULQFLSOHRIVXSHUSRVLWLRQDQGWKHUHVXOWDQWZDYHVPD\EHVPDOOHU
RUODUJHUWKDQHLWKHURIWKHWZRLQGLYLGXDOZDYHV
,QWHUIHUHQFHRIWZRZDYHVFDQHLWKHUEH
,QSKDVHFDXVLQJFRQVWUXFWLYHLQWHUIHUHQFH7KHSHDNVDQGWURXJKVOLQHXSRQ
ERWKZDYHV7KHUHVXOWDQWZDYHKDVGRXEOHWKHDPSOLWXGH
,QDQWLSKDVHFDXVLQJGHVWUXFWLYHLQWHUIHUHQFH7KHSHDNVRQRQHZDYHOLQHXS
ZLWKWKHWURXJKVRIWKHRWKHU7KHUHVXOWDQWZDYHKDVQRDPSOLWXGH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:DYHVLQVXSHUSRVLWLRQFDQXQGHUJRFRQVWUXFWLYHRUGHVWUXFWLYHLQWHUIHUHQFH
$WSRLQWVZKHUHWKHWZRZDYHVDUHQHLWKHULQSKDVHQRULQDQWLSKDVHWKHUHVXOWDQWDPSOLWXGH
LVVRPHZKHUHLQEHWZHHQWKHWZRH[WUHPHV
:DYHVDUHFRKHUHQWLIWKH\KDYHWKHVDPHIUHTXHQF\DQGFRQVWDQWSKDVHGLdHUHQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
&RKHUHQWYQRQFRKHUHQWZDYH7KHDEUXSWFKDQJHLQSKDVHFUHDWHVDQLQFRQVLVWHQW
SKDVHGLeHUHQFH
&RKHUHQFHLVYLWDOLQRUGHUWRSURGXFHDQREVHUYDEOHLQWHUIHUHQFHSDWWHUQ
/DVHUOLJKWLVDQH[DPSOHRIDFRKHUHQWOLJKWVRXUFHZKHUHDVlODPHQWODPSVSURGXFH
LQFRKHUHQWOLJKWZDYHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH
$WSRLQW;
%RWKSHDNVRIWKHZDYHVDUHRYHUODSSLQJ7KLVLVFRQVWUXFWLYHLQWHUIHUHQFHDQGUXOHV
RXWRSWLRQV&DQG'
$WSRLQW<
%RWKWURXJKVDUHRYHUODSSLQJDQGWKHUHFRQVWUXFWLYHLQWHUIHUHQFHRFFXUV
$WSRLQW=
$SHDNRIRQHRIWKHZDYHVPHHWVWKHWURXJKRIWKHRWKHU7KLVLVGHVWUXFWLYH
LQWHUIHUHQFH 5RZ%

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
7KLQNRIhFRQVWUXFWLYHiLQWHUIHUHQFHDVhEXLOGLQJiWKHZDYHDQGhGHVWUXFWLYHi

LQWHUIHUHQFHDVhGHVWUR\LQJiWKHZDYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
7:26285&(,17(5)(5(1&(
'HPRQVWUDWLQJ7ZR6RXUFH,QWHUIHUHQFH
,QWHUIHUHQFHRIVRXQGOLJKWDQGPLFURZDYHVFDQEHGHPRQVWUDWHGZLWKVOLWVRUGLkUDFWLRQ
JUDWLQJV
8VLQJ:DWHU:DYHV
7ZRVRXUFHLQWHUIHUHQFHLQFDQEHGHPRQVWUDWHGLQZDWHUXVLQJULSSOHWDQNV
7KHGLDJUDPEHORZVKRZVGLkUDFWHGFLUFOHVKDSHGZDWHUZDYHVIURPWZRSRLQWVRXUFHVHJ
GURSSLQJWZRSHEEOHVQHDUWRHDFKRWKHULQDSRQG
:DWHUZDYHVLQWHUIHUHQFHSDWWHUQIURPDULSSOHWDQN
7KHWZRZDYHVLQWHUIHUHFDXVLQJDUHDVRIFRQVWUXFWLYHDQGGHVWUXFWLYHLQWHUIHUHQFH
7KHOLQHVRIPD[LPXPGLVSODFHPHQWRFFXUZKHQDOOWKHSHDNVDQGWURXJKVOLQHXSZLWKWKRVH
RQDQRWKHUZDYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
8VLQJ6RXQG:DYHV
7ZRVRXUFHLQWHUIHUHQFHIRUVRXQGZDYHVORRNVYHU\VLPLODUWRZDWHUZDYHV
6RXQGZDYHLQWHUIHUHQFHIURPWZRVSHDNHUV
6RXQGZDYHVDUHORQJLWXGLQDOZDYHVVRDUHPDGHXSFRPSUHVVLRQVDQGUDUHIDFWLRQV
&RQVWUXFWLYHLQWHUIHUHQFHRFFXUVZKHQWKHFRPSUHVVLRQDQGUDUHIDFWLRQVOLQHXSDQGWKH
VRXQGDSSHDUVORXGHU
'HVWUXFWLYHLQWHUIHUHQFHRFFXUVZKHQWKHFRPSUHVVLRQOLQHVXSZLWKDUDUHIDFWLRQDQGYLFH
YHUVD7KHVRXQGLVTXLHWHU
7KLVLVWKHWHFKQRORJ\XVHGLQQRLVHFDQFHOOLQJKHDGSKRQHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
8VLQJ0LFURZDYHV
7ZRVRXUFHLQWHUIHUHQFHIRUPLFURZDYHVFDQEHGHWHFWHGZLWKDPRYHDEOHPLFURZDYH
GHWHFWRU
0LFURZDYHLQWHUIHUHQFHH[SHULPHQW
&RQVWUXFWLYHLQWHUIHUHQFHUHJLRQVZKHUHWKHGHWHFWRUSLFNVXSDPD[LPXPDPSOLWXGH
'HVWUXFWLYHLQWHUIHUHQFHUHJLRQVZKHUHWKHGHWHFWRUSLFNVXSQRVLJQDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
8VLQJ/LJKW:DYHV
)RUOLJKWUD\VVXFKDVDODVHUOLJKWWKURXJKWZRVOLWVDQLQWHUIHUHQFHSDWWHUQIRUPVRQWKH
VFUHHQ
/DVHUOLJKWLQWHUIHUHQFHH[SHULPHQW
&RQVWUXFWLYHLQWHUIHUHQFHLVVKRZQDVEULJKWIULQJHVRQWKHVFUHHQ
7KHKLJKHVWLQWHQVLW\LVLQWKHPLGGOH
'HVWUXFWLYHLQWHUIHUHQFHLVVKRZQDVWKHGDUNIULQJHVRQWKHVFUHHQ
7KHVHKDYH]HURLQWHQVLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
7ZR6RXUFH,QWHUIHUHQFH)ULQJHV
)RUWZRVRXUFHLQWHUIHUHQFHIULQJHVWREHREVHUYHGWKHVRXUFHVRIWKHZDYHPXVWEH
&RKHUHQW FRQVWDQWSKDVHGLkHUHQFH
0RQRFKURPDWLF VLQJOHZDYHOHQJWK
:KHQWZRZDYHVLQWHUIHUHWKHUHVXOWDQWZDYHGHSHQGVRQWKHSKDVHGLdHUHQFHEHWZHHQ
WKHWZRZDYHV
7KLVLVSURSRUWLRQDOWRWKHSDWKGLdHUHQFHEHWZHHQWKHZDYHVZKLFKFDQEHZULWWHQLQWHUPV
RIWKHZDYHOHQJWKcRIWKHZDYH
$VVHHQIURPWKHGLDJUDPWKHZDYHIURPVOLW6KDVWRWUDYHOVOLJKWO\IXUWKHUWKDQWKDWIURP6
WRUHDFKWKHVDPHSRLQWRQWKHVFUHHQ7KHGLkHUHQFHLQGLVWDQFHLVWKHSDWKGLkHUHQFH
3DWKGLeHUHQFHRIFRQVWUXFWLYHDQGGHVWUXFWLYHLQWHUIHUHQFHLVGHWHUPLQHGE\ZDYHOHQJWK
)RUFRQVWUXFWLYHLQWHUIHUHQFH RUPD[LPD WKHGLkHUHQFHLQZDYHOHQJWKVZLOOEHDQLQWHJHU

QXPEHURIZKROHZDYHOHQJWKV
)RUGHVWUXFWLYHLQWHUIHUHQFH RUPLQLPD LWZLOOEHDQLQWHJHUQXPEHURIZKROH

ZDYHOHQJWKVSOXVDKDOIZDYHOHQJWK
QLVWKHRUGHURIWKHPD[LPDPLQLPDVLQFHWKHUHLVXVXDOO\PRUHWKDQRQHRIWKHVH
SURGXFHGE\WKHLQWHUIHUHQFHSDWWHUQ
$QH[DPSOHRIWKHRUGHUVRIPD[LPDLVVKRZQEHORZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
,QWHUIHUHQFHSDWWHUQRIOLJKWZDYHVVKRZQZLWKRUGHUVRIPD[LPD
Q LVWDNHQIURPWKHPLGGOHQ LVRQHHLWKHUVLGHDQGVRRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
7KHSDWKGLkHUHQFHLVPRUHVSHFLlFDOO\KRZPXFKORQJHURUVKRUWHURQHSDWK
LVWKDQWKHRWKHU,QRWKHUZRUGVWKHGLdHUHQFHLQWKHGLVWDQFHV0DNHVXUH
QRWWRFRQIXVHWKLVZLWKWKHGLVWDQFHEHWZHHQWKHWZRSDWKV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
<281* 6'28%/(6/,7(;3(5,0(17
'RXEOH6OLW,QWHUIHUHQFH
<RXQJiVGRXEOHVOLWH[SHULPHQWGHPRQVWUDWHVKRZOLJKWZDYHVSURGXFHGDQLQWHUIHUHQFH
SDWWHUQ
7KHH[SHULPHQWLVVKRZQEHORZ
<RXQJdVGRXEOHVOLWH[SHULPHQWDUUDQJHPHQW
:KHQDPRQRFKURPDWLFOLJKWVRXUFHLVSODFHGEHKLQGDVLQJOHVOLWWKHOLJKWLVGLkUDFWHG
SURGXFLQJWZROLJKWVRXUFHVDWWKHGRXEOHVOLWV$DQG%
6LQFHERWKOLJKWVRXUFHVRULJLQDWHIURPWKHVDPHSULPDU\VRXUFHWKH\DUHFRKHUHQWDQGZLOO
WKHUHIRUHFUHDWHDQREVHUYDEOHLQWHUIHUHQFHSDWWHUQ
%RWKGLkUDFWHGOLJKWIURPWKHGRXEOHVOLWVFUHDWHDQLQWHUIHUHQFHSDWWHUQPDGHXSRIEULJKW
DQGGDUNIULQJHV
7KHZDYHOHQJWKRIWKHOLJKWFDQEHFDOFXODWHGIURPWKHLQWHUIHUHQFHSDWWHUQDQGH[SHULPHQW
VHWXS7KHVHDUHUHODWHGXVLQJWKHGRXEOHVOLWHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
'RXEOHVOLWLQWHUIHUHQFHHTXDWLRQZLWKD[DQG'UHSUHVHQWHGRQDGLDJUDP
7KHLQWHUIHUHQFHSDWWHUQRQDVFUHHQZLOOVKRZDVhIULQJHViZKLFKDUHGDUNRUEULJKWEDQGV
&RQVWUXFWLYHLQWHUIHUHQFHLVVKRZQWKURXJKEULJKWIULQJHVZLWKYDU\LQJLQWHQVLW\ PRVW
LQWHQVHLQWKHPLGGOH
'HVWUXFWLYHLQWHUIHUHQFHLVVKRZQIURPGDUNIULQJHVZKHUHQROLJKWLVVHHQ
$PRQRFKURPDWLFOLJKWVRXUFHPDNHVWKHVHIULQJHVFOHDUHUDQGWKHGLVWDQFHEHWZHHQIULQJHV
LVYHU\VPDOOGXHWRWKHVKRUWZDYHOHQJWKRIYLVLEOHOLJKW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
6LQFHD[DQG'DUHDOOGLVWDQFHVLWiVHDV\WRPL[XSZKLFKWKH\UHIHUWR
/DEHOOLQJWKHGRXEOHVOLWGLDJUDPLQWKHZD\JLYHQLQWKHQRWHVDERYHZLOOKHOS

WRUHPHPEHUWKHRUGHULHDDQG[LQWKHQXPHUDWRUDQG'XQGHUQHDWKLQWKH
GHQRPLQDWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
7+(',))5$&7,21*5$7,1*
7KH*UDWLQJ(TXDWLRQ
$GLkUDFWLRQJUDWLQJLVDSODWHRQZKLFKWKHUHLVDYHU\ODUJHQXPEHURISDUDOOHOLGHQWLFDO
FORVHVSDFHGVOLWV
:KHQPRQRFKURPDWLFOLJKWLVLQFLGHQWRQDJUDWLQJDSDWWHUQRIQDUURZEULJKWIULQJHVLV
SURGXFHGRQDVFUHHQ
'LDJUDPRIGLeUDFWLRQJUDWLQJXVHGWRREWDLQDIULQJHSDWWHUQ
7KHDQJOHVDWZKLFKWKHPD[LPDRILQWHQVLW\ FRQVWUXFWLYHLQWHUIHUHQFH DUHSURGXFHGFDQEH

GHGXFHGE\WKHGLkUDFWLRQJUDWLQJHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
'LeUDFWLRQJUDWLQJHTXDWLRQIRUWKHDQJOHRIEULJKWIULQJHV
$QJXODU6HSDUDWLRQ
7KHDQJXODUVHSDUDWLRQRIHDFKPD[LPDLVFDOFXODWHGE\UHDUUDQJLQJWKHJUDWLQJHTXDWLRQWR
PDNHfWKHVXEMHFW
7KHDQJOHfLVWDNHQIURPWKHFHQWUHPHDQLQJWKHKLJKHURUGHUVDUHDWJUHDWHUDQJOHV
$QJXODUVHSDUDWLRQ
7KHDQJXODUVHSDUDWLRQEHWZHHQWZRDQJOHVLVIRXQGE\VXEWUDFWLQJWKHVPDOOHUDQJOHIURP
WKHODUJHURQH
7KHDQJXODUVHSDUDWLRQEHWZHHQWKHlUVWDQGVHFRQGPD[LPDQDQGQLVbcb
7KHPD[LPXPDQJOHWRVHHRUGHUVRIPD[LPDLVZKHQWKHEHDPLVDWULJKWDQJOHVWRWKH
GLkUDFWLRQJUDWLQJ7KLVPHDQVf RDQGVLQ f

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP7LS
7DNHFDUHWKDWWKHDQJOHfLVWKHFRUUHFWDQJOHWDNHQIURPWKHFHQWUHDQGQRW

WKHDQJOHWDNHQEHWZHHQWZRRUGHUVRIPD[LPD
'HWHUPLQLQJWKH:DYHOHQJWKRI/LJKW
0HWKRG
7KHZDYHOHQJWKRIOLJKWFDQEHGHWHUPLQHGE\UHDUUDQJLQJWKHJUDWLQJHTXDWLRQWRPDNHWKH
ZDYHOHQJWKcWKHVXEMHFW
7KHYDOXHRIbWKHDQJOHWRWKHVSHFLlFRUGHURIPD[LPXPPHDVXUHGIURPWKHFHQWUHFDQEH
FDOFXODWHGWKURXJKWULJRQRPHWU\
7KHGLVWDQFHIURPWKHJUDWLQJWRWKHVFUHHQLVPDUNHGDV'
7KHGLVWDQFHEHWZHHQWKHFHQWUHDQGWKHRUGHURIPD[LPD HJQ LQWKHGLDJUDP RQWKH

VFUHHQLVODEHOOHGDVKdWKHIULQJHVSDFLQJ
0HDVXUHERWKWKHVHYDOXHVZLWKDUXOHU
7KLVPDNHVDULJKWDQJOHGWULDQJOHZLWKWKHDQJOHbDVWKHUDWLRRIWKHK' WDQc

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
7KHZDYHOHQJWKRIOLJKWLVFDOFXODWHGE\WKHDQJOHWRWKHRUGHURIPD[LPXP
5HPHPEHUWRlQGWKHLQYHUVHRIWDQWRlQGc WDQ K'

7KLVYDOXHRIbFDQWKHQEHVXEVWLWXWHGEDFNLQWRWKHGLkUDFWLRQJUDWLQJHTXDWLRQWRlQGWKH
YDOXHRIWKHZDYHOHQJWK ZLWKWKHFRUUHVSRQGLQJRUGHUQ
,PSURYLQJH[SHULPHQWDQGUHGXFLQJXQFHUWDLQWLHV
7KHIULQJHVSDFLQJFDQEHVXEMHFWLYHGHSHQGLQJRQLWVLQWHQVLW\RQWKHVFUHHQ7DNHPXOWLSOH
PHDVXUHPHQWVRIK EHWZHHQ DQGlQGLQJWKHDYHUDJH
8VHD9HUQLHUVFDOHWRUHFRUGKLQRUGHUWRUHGXFHSHUFHQWDJHXQFHUWDLQW\
5HGXFHWKHXQFHUWDLQW\LQKE\PHDVXULQJDFURVVDOOIULQJHVDQGGLYLGLQJE\WKHQXPEHURI
IULQJHV
,QFUHDVHWKHJUDWLQJWRVFUHHQGLVWDQFH'WRLQFUHDVHWKHIULQJHVHSDUDWLRQ DOWKRXJKWKLV
PD\GHFUHDVHWKHLQWHQVLW\RIOLJKWUHDFKLQJWKHVFUHHQ
&RQGXFWWKHH[SHULPHQWLQDGDUNHQHGURRPVRWKHIULQJHVDUHFOHDUHU
8VHJUDWLQJZLWKPRUHOLQHVSHUPPVRYDOXHVRIKDUHJUHDWHUWRORZHUSHUFHQWDJH
XQFHUWDLQW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6XSHUSRVLWLRQ j
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
&217(176
&XUUHQW 3RWHQWLDO'LmHUHQFH
(OHFWULF&XUUHQW
(OHFWULF&XUUHQW&DOFXODWLRQV
3RWHQWLDO'LmHUHQFH
(OHFWULFDO3RZHU
5HVLVWDQFH
5HVLVWDQFH
2KP V/DZ
,9&KDUDFWHULVWLFV
5HVLVWDQFHLQD)LODPHQW/DPS
5HVLVWLYLW\
5HVLVWLYLW\
5HVLVWDQFHLQ6HQVRU\5HVLVWRUV
&855(17 327(17,$/',))(5(1&(
(/(&75,&&855(17
'HnQLQJ(OHFWULF&XUUHQW
(OHFWULFFXUUHQWLVWKHeRZRIFKDUJHFDUULHUVDQGLVPHDVXUHGLQXQLWVRIDPSHUHV $ RU
DPSV
&KDUJHFDQEHHLWKHUSRVLWLYHRUQHJDWLYH
:KHQWZRRSSRVLWHO\FKDUJHGFRQGXFWRUVDUHFRQQHFWHGWRJHWKHU E\DOHQJWKRIZLUH
FKDUJHZLOOoRZEHWZHHQWKHWZRFRQGXFWRUVFDXVLQJDFXUUHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
&KDUJHFDQfRZEHWZHHQWZRFRQGXFWRUV
,QHOHFWULFDOZLUHVWKHFXUUHQWLVDoRZRIHOHFWURQV
(OHFWURQVDUHQHJDWLYHO\FKDUJHGWKH\oRZDZD\IURPWKHQHJDWLYHWHUPLQDORIDFHOOWRZDUGV
WKHSRVLWLYHWHUPLQDO
&RQYHQWLRQDOFXUUHQWLVGHnQHGDVWKHoRZRISRVLWLYHFKDUJHIURPWKHSRVLWLYHWHUPLQDORI
DFHOOWRWKHQHJDWLYHWHUPLQDO
7KLVLVWKHRSSRVLWHWRWKHGLUHFWLRQRIHOHFWURQoRZDVFRQYHQWLRQDOFXUUHQWZDV
GHVFULEHGEHIRUHHOHFWULFFXUUHQWZDVUHDOO\XQGHUVWRRG
%\GHeQLWLRQFRQYHQWLRQDOFXUUHQWDOZD\VJRHVIURPSRVLWLYHWRQHJDWLYH HYHQWKURXJK
HOHFWURQVJRWKHRWKHUZD\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
7KHUHDUHVHYHUDOH[DPSOHVRIHOHFWULFFXUUHQWVLQFOXGLQJLQKRXVHKROGZLULQJDQGHOHFWULFDO
DSSOLDQFHV
&XUUHQWLVPHDVXUHGXVLQJDQDPPHWHU
$PPHWHUVVKRXOGDOZD\VEHFRQQHFWHGLQVHULHVZLWKWKHSDUWRIWKHFLUFXLW\RXZLVKWR
PHDVXUHWKHFXUUHQWWKURXJK
$QDPPHWHUFDQEHXVHGWRPHDVXUHWKHFXUUHQWDURXQGDFLUFXLWDQGDOZD\VFRQQHFWHG
LQVHULHV
4XDQWLVDWLRQRI&KDUJH
7KHFKDUJHRQFKDUJHFDUULHUVLVTXDQWLVHG
&KDUJHFRPHVLQGHnQLWHELWVfHJDVLQJOHSURWRQKDVDVLQJOHSRVLWLYHFKDUJHZKHUHDVD
VLQJOHHOHFWURQKDVDVLQJOHQHJDWLYHFKDUJH
,QWKLVZD\WKHTXDQWLW\RIFKDUJHFDQEHTXDQWLVHGGHSHQGHQWRQKRZPDQ\SURWRQVRU
HOHFWURQVDUHSUHVHQWfSRVLWLYHDQGQHJDWLYHFKDUJHKDVDGHnQLWHPLQLPXPPDJQLWXGH
DQGDOZD\VFRPHVLQPXOWLSOHVRIWKDWPDJQLWXGH
7KLVPHDQVWKDWLIZHVD\VRPHWKLQJKDVDJLYHQFKDUJHWKHFKDUJHLVDOZD\VDPXOWLSOHRI
WKHFKDUJHRIDQHOHFWURQE\FRQYHQWLRQ
7KHFKDUJHRIDQHOHFWURQLVd&
7KHFKDUJHRIDSURWRQE\FRPSDULVRQLVd& WKLVLVNQRZQDVWKH
HOHPHQWDU\FKDUJHGHQRWHGE\HDQGPHDVXUHGLQ&RXORPEV &

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
(/(&75,&&855(17&$/&8/$7,216
&DOFXODWLQJ(OHFWULF&KDUJH
&XUUHQWFDQDOVREHGHnQHGDVWKHFKDUJHSDVVLQJWKURXJKDFLUFXLWSHUXQLWWLPH
(OHFWULFFKDUJHLVPHDVXUHGLQXQLWVRIFRXORPEV &
&KDUJHFXUUHQWDQGWLPHDUHUHODWHGE\WKHIROORZLQJHTXDWLRQ
&KDUJHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH
([DP7LS
$OWKRXJKHOHFWULFFKDUJHFDQEHSRVLWLYHRUQHJDWLYHVLQFHWKHFRQYHQWLRQDO
GLUHFWLRQRIFXUUHQWLVWKHoRZRISRVLWLYHFKDUJHWKHFXUUHQWVKRXOGDOZD\V
EHDSRVLWLYHYDOXHIRU\RXUH[DPDQVZHUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
&DOFXODWLQJ&XUUHQWLQD&XUUHQW&DUU\LQJ&RQGXFWRU
,QDFRQGXFWRUFXUUHQWLVGXHWRWKHPRYHPHQWRIFKDUJHFDUULHUV
7KHVHFKDUJHFDUULHUVFDQEHQHJDWLYHRUSRVLWLYHKRZHYHUWKHFXUUHQWLVDOZD\VWDNHQWREH
LQWKHVDPHGLUHFWLRQ
,QFRQGXFWRUVWKHFKDUJHFDUULHULVXVXDOO\IUHHHOHFWURQV
,QWKHLPDJHEHORZWKHFXUUHQWLQHDFKFRQGXFWRULVIURPULJKWWROHIWEXWWKHFKDUJHFDUULHUV
PRYHLQRSSRVLWHGLUHFWLRQVVKRZQE\WKHGLUHFWLRQRIWKHGULIWVSHHGY
,QGLDJUDP$ SRVLWLYHFKDUJHFDUULHUV WKHGULIWVSHHGLVLQWKHVDPHGLUHFWLRQDVWKH
FXUUHQW
,QGLDJUDP% QHJDWLYHFKDUJHFDUULHUV WKHGULIWVSHHGLVLQWKHRSSRVLWHGLUHFWLRQWR

WKHFXUUHQW
&RQGXFWLRQLQDFXUUHQWFDUU\LQJFRQGXFWRU
7KHGULIWVSHHGLVWKHDYHUDJHVSHHGWKHFKDUJHFDUULHUVDUHWUDYHOOLQJWKURXJKWKHFRQGXFWRU
<RXZLOOnQGWKLVYDOXHLVTXLWHVORZ+RZHYHUVLQFHWKHQXPEHUGHQVLW\RIFKDUJHFDUULHUVLV
VRODUJHZHVWLOOVHHFXUUHQWoRZKDSSHQLQVWDQWDQHRXVO\
7KHFXUUHQWFDQEHH[SUHVVHGLQWHUPVRIWKHQXPEHUGHQVLW\ QXPEHURIFKDUJHFDUULHUVSHU
XQLWYROXPH QWKHFURVVVHFWLRQDODUHD$WKHGULIWVSHHGYDQGWKHFKDUJHRIWKHFKDUJH
FDUULHUVT

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
&XUUHQWLQDFRQGXFWRUHTXDWLRQ
7KHVDPHHTXDWLRQLVXVHGZKHWKHUWKHFKDUJHFDUULHUVDUHSRVLWLYHRUQHJDWLYH
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
327(17,$/',))(5(1&(
'HnQLQJ3RWHQWLDO'LmHUHQFH
$FHOOPDNHVRQHHQGRIWKHFLUFXLWSRVLWLYHDQGWKHRWKHUQHJDWLYH7KLVVHWVXSDSRWHQWLDO
GLdHUHQFH G DFURVVWKHFLUFXLW
7KHSRWHQWLDOGLmHUHQFHDFURVVDFRPSRQHQWLQDFLUFXLWLVGHnQHGDVWKHHQHUJ\
WUDQVIHUUHGSHUXQLWFKDUJHeRZLQJIURPRQHSRLQWWRDQRWKHU
7KHHQHUJ\WUDQVIHULVIURPHOHFWULFDOHQHUJ\LQWRRWKHUIRUPV
3RWHQWLDOGLmHUHQFHLVPHDVXUHGLQYROWV 9 7KLVLVWKHVDPHDVD-RXOHSHUFRXORPE -
&
,IDEXOEKDVDYROWDJHRI9HYHU\FRXORPERIFKDUJHSDVVLQJWKURXJKWKHEXOEZLOO
ORVH-RIHQHUJ\
7KHSRWHQWLDOGLmHUHQFHRIDSRZHUVXSSO\FRQQHFWHGLQVHULHVLVDOZD\VVKDUHGEHWZHHQDOO
WKHFRPSRQHQWVLQWKHFLUFXLW
7KHSRWHQWLDOGLdHUHQFHLVWKHYROWDJHDFURVVHDFKFRPSRQHQWLQDFLUFXLW
3RWHQWLDOGLmHUHQFHRUYROWDJHLVPHDVXUHGXVLQJDYROWPHWHU
$YROWPHWHULVDOZD\VVHWXSLQSDUDOOHOWRWKHFRPSRQHQW\RXDUHPHDVXULQJWKHYROWDJHIRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
3RWHQWLDOGLdHUHQFHFDQEHPHDVXUHGE\FRQQHFWLQJDYROWPHWHULQVHULHVEHWZHHQWZR
SRLQWVLQDFLUFXLW
&DOFXODWLQJ3RWHQWLDO'LmHUHQFH
7KHSRWHQWLDOGLmHUHQFHLVGHnQHGDVWKHHQHUJ\WUDQVIHUUHGSHUXQLWFKDUJH
$QRWKHUPHDVXUHRIHQHUJ\WUDQVIHULVZRUNGRQH
7KHUHIRUHSRWHQWLDOGLmHUHQFHFDQDOVREHGHnQHGDVWKHZRUNGRQHSHUXQLWFKDUJH
3RWHQWLDOGLdHUHQFHLVWKHZRUNGRQHSHUXQLWFKDUJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH
%RWKODPSVKDYHWKHVDPHFXUUHQWZKLFKPHDQVFKDUJHoRZVDWWKHVDPHUDWHLQERWK
7KH9ODPSKDVWLPHVPRUHYROWDJHWKDQWKH9ODPS
9ROWDJHLVWKHHQHUJ\WUDQVIHUUHG ZRUNGRQH SHUXQLWFKDUJH
7KLVPHDQVWKHHQHUJ\WUDQVIHUUHGWRHDFKFRXORPERIFKDUJHLQWKH9ODPSLVWLPHV
JUHDWHUWKDQIRUWKH9ODPS
7KLVPDNHVWKH9ODPSVKLQHPXFKEULJKWHUWKDQWKH9ODPS
([DP7LS
7KLQNRISRWHQWLDOGLmHUHQFHDVEHLQJWKHHQHUJ\SHUFRXORPERIFKDUJH

WUDQVIHUUHGEHWZHHQWZRSRLQWVLQDFLUFXLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
(/(&75,&$/32:(5
&DOFXODWLQJ(OHFWULFDO3RZHU
,Qi:RUN(QHUJ\DQG3RZHUj3RZHU3ZDVGHnQHGDVWKHUDWHRIGRLQJZRUN
3RWHQWLDOGLmHUHQFHLVWKHZRUNGRQHSHUXQLWFKDUJH
&XUUHQWLVWKHUDWHRIeRZRIFKDUJH
6RWKHSRZHUGLVVLSDWHG SURGXFHG E\DQHOHFWULFDOGHYLFHFDQEHZULWWHQDV
3RZHURIDFRPSRQHQWLQDQHOHFWULFDOFLUFXLW
8VLQJ9 ,5WRUHDUUDQJHIRUHLWKHU9RU,DQGVXEVWLWXWLQJLQWRWKHSRZHUHTXDWLRQPHDQV
ZHDOVRZULWHSRZHULQWHUPVRIUHVLVWDQFH5
3RZHUHTXDWLRQLQWHUPVRIUHVLVWDQFH
7KLVPHDQVIRUDJLYHQUHVLVWRUIRUH[DPSOHLIWKHFXUUHQWRUYROWDJHGRXEOHVWKHSRZHUZLOO
EHIRXUWLPHVDVJUHDW
:KLFKHTXDWLRQWRXVHZLOOGHSHQGRQZKHWKHUWKHYDOXHRIFXUUHQWRUYROWDJHKDVEHHQJLYHQ
LQWKHTXHVWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP7LS
<RXFDQXVHWKHSQHXPRQLFi7ZLQNOH7ZLQNOH/LWWOH6WDU3RZHUHTXDOV,
VTXDUHG5jWRUHPHPEHUZKHWKHUWRPXOWLSO\RUGLYLGHE\UHVLVWDQFHLQWKH
SRZHUHTXDWLRQV
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5(6,67$1&(
5(6,67$1&(
'HnQLQJ5HVLVWDQFH
5HVLVWDQFHLVGHnQHGDVWKHRSSRVLWLRQWRFXUUHQW
)RUDJLYHQSRWHQWLDOGLmHUHQFH7KHKLJKHUWKHUHVLVWDQFHWKHORZHUWKHFXUUHQW
:LUHVDUHRIWHQPDGHIURPFRSSHUEHFDXVHFRSSHUKDVDORZHOHFWULFDOUHVLVWDQFH7KLVLVDOVR
NQRZQDVDJRRGFRQGXFWRU
7KHUHVLVWDQFH5RIDFRQGXFWRULVGHnQHGDVWKHUDWLRRIWKHSRWHQWLDOGLmHUHQFH9DFURVVWR
WKHFXUUHQW,LQLW
5HVLVWDQFHRIDFRPSRQHQWLVWKHUDWLRRIWKHSRWHQWLDOGLdHUHQFHDQGFXUUHQW
5HVLVWDQFHLVPHDVXUHGLQ2KPV b
$Q2KPLVGHnQHGDVRQHYROWSHUDPSHUH
7KHUHVLVWDQFHFRQWUROVWKHVL]HRIWKHFXUUHQWLQDFLUFXLW
$KLJKHUUHVLVWDQFHPHDQVDVPDOOHUFXUUHQW
$ORZHUUHVLVWDQFHPHDQVDODUJHUFXUUHQW
$OOHOHFWULFDOFRPSRQHQWVLQFOXGLQJZLUHVKDYHVRPHYDOXHRIUHVLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
&DOFXODWLQJ5HVLVWDQFH
'HWHUPLQLQJ5HVLVWDQFH
7RnQGWKHUHVLVWDQFHRIDFRPSRQHQWZHFDQVHWXSDFLUFXLWOLNHWKHRQHVKRZQEHORZ
$FLUFXLWWRGHWHUPLQHWKHUHVLVWDQFHRIDFRPSRQHQW
7KHSRZHUVXSSO\VKRXOGEHVHWWRDORZYROWDJHWRDYRLGKHDWLQJWKHFRPSRQHQWW\SLFDOO\
9
0HDVXUHPHQWVRIWKHSRWHQWLDOGLmHUHQFHDQGFXUUHQWVKRXOGWKHQEHWDNHQIURPWKH
YROWPHWHUDQGDPPHWHUUHVSHFWLYHO\
)LQDOO\WKHVHUHDGLQJVVKRXOGEHVXEVWLWXWHGLQWRWKHUHVLVWDQFHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
2+0 6/$:
2KP V/DZ
2KPhVODZVWDWHVWKDWIRUDFRQGXFWRUDWDFRQVWDQWWHPSHUDWXUHWKHFXUUHQWWKURXJKLWLV
SURSRUWLRQDOWRWKHSRWHQWLDOGLdHUHQFHDFURVVLW
&RQVWDQWWHPSHUDWXUHLPSOLHVFRQVWDQWUHVLVWDQFH
7KLVLVVKRZQWKHHTXDWLRQEHORZ
2KPcVODZ
7KHUHODWLRQEHWZHHQSRWHQWLDOGLmHUHQFHDFURVVDQHOHFWULFDOFRPSRQHQW LQWKLVFDVHDn[HG
UHVLVWRU DQGWKHFXUUHQWFDQEHLQYHVWLJDWHGWKURXJKDFLUFXLWVXFKDVWKHRQHEHORZ
&LUFXLWIRUSORWWLQJJUDSKVRIFXUUHQWDJDLQVWYROWDJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
%\DGMXVWLQJWKHUHVLVWDQFHRQWKHYDULDEOHUHVLVWRUWKHFXUUHQWDQGSRWHQWLDOGLmHUHQFHZLOO
YDU\LQWKHFLUFXLW0HDVXULQJWKHYDULDWLRQRIFXUUHQWZLWKSRWHQWLDOGLmHUHQFHWKURXJKWKH
n[HGUHVLVWRUZLOOSURGXFHWKHVWUDLJKWOLQHJUDSKEHORZ
&LUFXLWIRUSORWWLQJJUDSKVRIFXUUHQWDJDLQVWYROWDJH
6LQFHWKHJUDGLHQWLVFRQVWDQWWKHUHVLVWDQFH5RIWKHUHVLVWRUFDQEHFDOFXODWHGE\XVLQJe
JUDGLHQWRIWKHJUDSK
$QHOHFWULFDOFRPSRQHQWREH\V2KPhVODZLILWVJUDSKRIFXUUHQWDJDLQVWSRWHQWLDOGLmHUHQFH
LVDVWUDLJKWOLQHWKURXJKWKHRULJLQ
$UHVLVWRUREH\V2KPhVODZ
$nODPHQWODPSGRHVQRWREH\2KPhVODZ
7KLVDSSOLHVWRDQ\PHWDOZLUHVSURYLGHGWKDWWKHFXUUHQWLVQhWODUJHHQRXJKWRLQFUHDVHWKHLU
WHPSHUDWXUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP7LS
k,QPDWKVWKHJUDGLHQWLVWKHVORSHRIWKHJUDSK
k7KHJUDSKVEHORZVKRZDVXPPDU\RIKRZWKHVORSHRIWKHJUDSKUHSUHVHQWVWKHJUDGLHQW

*UDSKVVKRZLQJYDU\LQJJUDGLHQWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
,9&+$5$&7(5,67,&6
,f9&KDUDFWHULVWLFV
$VWKHSRWHQWLDOGLmHUHQFH YROWDJH DFURVVDFRPSRQHQWLVLQFUHDVHGWKHFXUUHQWDOVR

LQFUHDVHV E\2KPhVODZ
7KHSUHFLVHUHODWLRQVKLSEHWZHHQYROWDJHDQGFXUUHQWLVGLmHUHQFHIRUGLmHUHQWFRPSRQHQWV
DQGFDQEHVKRZQRQDQ,9JUDSK
,9FKDUDFWHULVWLFVIRUPHWDOOLFFRQGXFWRU HJUHVLVWRU DQGVHPLFRQGXFWRUGLRGH
7KH,9JUDSKIRUDPHWDOOLFFRQGXFWRUDWFRQVWDQWWHPSHUDWXUHHJDUHVLVWRULVYHU\VLPSOH
7KHFXUUHQWLVGLUHFWO\SURSRUWLRQDOWRWKHSRWHQWLDOGLmHUHQFH
7KLVLVGHPRQVWUDWHGE\WKHVWUDLJKWOLQHJUDSKWKURXJKWKHRULJLQ
7KH,9JUDSKIRUDVHPLFRQGXFWRUGLRGHLVVOLJKWO\GLmHUHQW$GLRGHLVXVHGLQDFLUFXLWWR
DOORZFXUUHQWWRoRZRQO\LQDVSHFLnFGLUHFWLRQ
:KHQWKHFXUUHQWLVLQWKHGLUHFWLRQRIWKHDUURZKHDGV\PEROWKLVLVIRUZDUGELDV
7KLVLVVKRZQE\WKHVKDUSLQFUHDVHLQSRWHQWLDOGLmHUHQFHDQGFXUUHQWRQWKHULJKW
VLGHRIWKHJUDSK
:KHQWKHGLRGHLVVZLWFKHGDURXQGLWGRHVQRWFRQGXFWDQGLVFDOOHGUHYHUVHELDV
7KLVLVVKRZQE\D]HURUHDGLQJRIFXUUHQWRUSRWHQWLDOGLmHUHQFHRQWKHOHIWVLGHRI
WKHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH
7KH,9JUDSK;LVOLQHDU
7KLVPHDQVWKHJUDSKKDVDFRQVWDQWJUDGLHQW,9DQGWKHUHVLVWDQFHLVWKHUHIRUHDOVR
FRQVWDQW VLQFHJUDGLHQW 5
7KLVLVWKH,9JUDSKIRUDFRQGXFWRUDWFRQVWDQWWHPSHUDWXUHHJDUHVLVWRU
7KH,9JUDSK<VWDUWVZLWK]HURJUDGLHQWDQGWKHQWKHJUDGLHQWLQFUHDVHVUDSLGO\
7KLVPHDQVLWKDVLQnQLWHUHVLVWDQFHDWWKHVWDUWZKLFKWKHQGHFUHDVHVUDSLGO\
7KLVLVFKDUDFWHUVRIDGHYLFHWKDWRQO\KDVFXUUHQWLQRQHGLUHFWLRQHJD
VHPLFRQGXFWRUGLRGH
7KHUHIRUHWKHDQVZHULV&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5(6,67$1&(,1$),/$0(17/$03
5HVLVWDQFHLQD)LODPHQW/DPS
7KH,9JUDSKIRUDnODPHQWODPSVKRZVWKHFXUUHQWLQFUHDVLQJDWDSURSRUWLRQDOO\VORZHUUDWH
WKDQWKHSRWHQWLDOGLmHUHQFH
,9FKDUDFWHULVWLFVIRUDeODPHQWODPS
7KLVLVEHFDXVH
$VWKHFXUUHQWLQFUHDVHVWKHWHPSHUDWXUHRIWKHnODPHQWLQWKHODPSLQFUHDVHV
6LQFHWKHnODPHQWLVDPHWDOWKHKLJKHUWHPSHUDWXUHFDXVHVDQLQFUHDVHLQUHVLVWDQFH
5HVLVWDQFHRSSRVHVWKHFXUUHQWFDXVLQJWKHFXUUHQWWRLQFUHDVHDWDVORZHUUDWH
:KHUHWKHJUDSKLVDVWUDLJKWOLQHWKHUHVLVWDQFHLVFRQVWDQW
7KHUHVLVWDQFHLQFUHDVHVDVWKHJUDSKFXUYHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5HVLVWDQFHDQGWHPSHUDWXUH
$OOVROLGVDUHPDGHXSRIYLEUDWLQJDWRPV
7KHKLJKHUWKHWHPSHUDWXUHWKHIDVWHUWKHVHDWRPVYLEUDWH
(OHFWULFFXUUHQWLVWKHoRZRIIUHHHOHFWURQVLQDPDWHULDO
7KHHOHFWURQVFROOLGHZLWKWKHYLEUDWLQJDWRPVZKLFKLPSHGHVWKHLUoRZKHQFHWKH
FXUUHQWGHFUHDVHV
6RLIWKHFXUUHQWGHFUHDVHVWKHQWKHUHVLVWDQFHZLOOLQFUHDVH 9 ,5
7KHUHIRUHDQLQFUHDVHLQWHPSHUDWXUHFDXVHVDQLQFUHDVHLQUHVLVWDQFH
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5(6,67,9,7<
5(6,67,9,7<
5HVLVWLYLW\
$OOPDWHULDOVKDYHVRPHUHVLVWDQFHWRWKHoRZRIFKDUJH
$VIUHHHOHFWURQVPRYHWKURXJKDPHWDOZLUHWKH\FROOLGHZLWKLRQVZKLFKJHWLQWKHLUZD\
$VDUHVXOWWKH\WUDQVIHUVRPHRUDOORIWKHLUNLQHWLFHQHUJ\RQFROOLVLRQZKLFKFDXVHV
HOHFWULFDOKHDWLQJ
)UHHHOHFWURQVFROOLGHZLWKLRQVZKLFKUHVLVWWKHLUfRZ
6LQFHFXUUHQWLVWKHeRZRIFKDUJHWKHLRQVUHVLVWLQJWKHLUoRZFDXVHVUHVLVWDQFH
5HVLVWDQFHGHSHQGVRQWKHOHQJWKRIWKHZLUHWKHFURVVVHFWLRQDODUHDWKURXJKZKLFKWKH
FXUUHQWLVSDVVLQJDQGWKHUHVLVWLYLW\RIWKHPDWHULDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
(OHFWULFDOUHVLVWDQFHHTXDWLRQ
7KHUHVLVWLYLW\HTXDWLRQVKRZVWKDW
7KHORQJHUWKHZLUHWKHJUHDWHULWVUHVLVWDQFH
7KHWKLFNHUWKHZLUHWKHVPDOOHULWVUHVLVWDQFH
7KHOHQJWKDQGZLGWKRIWKHZLUHDdHFWLWVUHVLVWDQFH
5HVLVWLYLW\LVDSURSHUW\WKDWGHVFULEHVWKHH[WHQWWRZKLFKDPDWHULDORSSRVHVWKHoRZRI
HOHFWULFFXUUHQWWKURXJKLW
,WLVDSURSHUW\RIWKHPDWHULDODQGLVGHSHQGHQWRQWHPSHUDWXUH
5HVLVWLYLW\LVPHDVXUHGLQcP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5HVLVWLYLW\RIVRPHPDWHULDOVDWURRPWHPSHUDWXUH
7KHKLJKHUWKHUHVLVWLYLW\RIDPDWHULDOWKHKLJKHULWVUHVLVWDQFH
7KLVLVZK\FRSSHUZLWKLWVUHODWLYHO\ORZUHVLVWLYLW\DWURRPWHPSHUDWXUHLVXVHGIRU
HOHFWULFDOZLUHVgFXUUHQWoRZVWKURXJKLWYHU\HDVLO\
,QVXODWRUVKDYHVXFKDKLJKUHVLVWLYLW\WKDWYLUWXDOO\QRFXUUHQWZLOOoRZWKURXJKWKHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP7LS
k<RXZRQhWQHHGWRPHPRULVHWKHYDOXHRIWKHUHVLVWLYLW\RIDQ\PDWHULDO
WKHVHZLOOEHJLYHQLQWKHH[DPTXHVWLRQ
k5HPHPEHULIWKHFURVVVHFWLRQDODUHDLVDFLUFOHHJLQDZLUHLWLV
SURSRUWLRQDOWRWKHGLDPHWHUVTXDUHG7KLVPHDQVLIWKHGLDPHWHUGRXEOHVWKH
DUHDTXDGUXSOHVFDXVLQJWKHUHVLVWDQFHWRGURSE\DTXDUWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5(6,67$1&(,16(1625<5(6,67256
5HVLVWDQFHLQD/LJKW'HSHQGHQW5HVLVWRU
$OLJKWGHSHQGHQWUHVLVWRU /'5 LVDQRQRKPLFFRQGXFWRUDQGVHQVRU\UHVLVWRU
,WVUHVLVWDQFHDXWRPDWLFDOO\FKDQJHVGHSHQGLQJRQWKHOLJKWHQHUJ\IDOOLQJRQWRLW
LOOXPLQDWLRQ
$VWKHOLJKWLQWHQVLW\LQFUHDVHVWKHUHVLVWDQFHRIDQ/'5GHFUHDVHV
7KLVLVVKRZQE\WKHIROORZLQJJUDSK
*UDSKRIOLJKWLQWHQVLW\DQGUHVLVWDQFHIRUDQ/'5

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
/'5VFDQEHXVHGDVOLJKWVHQVRUVVRWKH\DUHXVHIXOLQFLUFXLWVZKLFKDXWRPDWLFDOO\VZLWFK
RQOLJKWVZKHQLWJHWVGDUNIRUH[DPSOHVWUHHWOLJKWLQJDQGJDUGHQOLJKWV
,QWKHGDUNLWVUHVLVWDQFHLVYHU\ODUJH PLOOLRQVRIRKPV
,QEULJKWOLJKWLWVUHVLVWDQFHLVVPDOO WHQVRIRKPV
5HVLVWDQFHRIDQ/'5GHSHQGVRQWKHOLJKWLQWHQVLW\IDOOLQJRQLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH
$VWKHSRWHQWLDOGLmHUHQFHDFURVVWKH/'5LQFUHDVHVWKHOLJKWLQWHQVLW\LQFUHDVHVFDXVLQJLWV
UHVLVWDQFHWRGHFUHDVH
2KPhVODZVWDWHVWKDW9 ,5
7KHUHVLVWDQFHLVHTXDOWR9,RU5 ,9 JUDGLHQWRIWKHJUDSK
6LQFH5GHFUHDVHVWKHYDOXHRI5LQFUHDVHVVRWKHJUDGLHQWPXVWLQFUHDVH
7KHUHIRUH,LQFUHDVHVZLWKWKHSGZLWKDQLQFUHDVLQJJUDGLHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
5HVLVWDQFHLQD7KHUPLVWRU
$WKHUPLVWRULVDQRQRKPLFFRQGXFWRUDQGVHQVRU\UHVLVWRU
,WVUHVLVWDQFHFKDQJHVGHSHQGLQJRQLWVWHPSHUDWXUH
$VWKHWHPSHUDWXUHLQFUHDVHVWKHUHVLVWDQFHRIDWKHUPLVWRUGHFUHDVHV
7KLVLVVKRZQE\WKHIROORZLQJJUDSK
*UDSKRIWHPSHUDWXUHDQGUHVLVWDQFHIRUDWKHUPLVWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
7KHUPLVWRUVDUHWHPSHUDWXUHVHQVRUVDQGDUHDUHXVHGLQFLUFXLWVLQRYHQVnUHDODUPVDQG
GLJLWDOWKHUPRPHWHUV
$VWKHWKHUPLVWRUJHWVKRWWHULWVUHVLVWDQFHGHFUHDVHV
$VWKHWKHUPLVWRUJHWVFRROHULWVUHVLVWDQFHLQFUHDVHV
7KHUHVLVWDQFHWKURXJKDWKHUPLVWRULVGHSHQGHQWRQWKHWHPSHUDWXUHRILW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
:RUNHGH[DPSOH
7KHUHVLVWDQFHRIWKHWKHUPLVWRULQFUHDVHVDVWKHWHPSHUDWXUHGHFUHDVHV
6LQFHWKHWKHUPLVWRUDQGUHVLVWRU5DUHFRQQHFWHGLQVHULHVWKHFXUUHQW,LQERWKRIWKHPLV
WKHVDPH
2KPhVODZVWDWHVWKDW9 ,5
6LQFHWKHUHVLVWDQFHRIWKHWKHUPLVWRULQFUHDVHVDQG,LVWKHVDPHWKHSRWHQWLDOGLmHUHQFH9
DFURVVLWLQFUHDVHV
7KHUHIRUHVWDWHPHQW$LVFRUUHFW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULFLW\ l
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
&217(176
'&3UDFWLFDO&LUFXLWV .LUFKKRj V/DZV
&LUFXLW6\PEROV
(OHFWURPRWLYH)RUFH
,QWHUQDO5HVLVWDQFH
.LUFKKRj V)LUVW/DZ
.LUFKKRj V6HFRQG/DZ
6ROYLQJ3UREOHPVZLWK.LUFKKRj V/DZV
5HVLVWRUVLQ6HULHV
5HVLVWRUVLQ3DUDOOHO
'&3RWHQWLDO'LYLGHUV
3RWHQWLDO'LYLGHUV
3RWHQWLDO'LYLGHU&RPSRQHQWV
'&35$&7,&$/&,5&8,76 .,5&++2)) 6/$:6
&,5&8,76<0%2/6
&LUFXLW6\PEROV
7KHGLDJUDPVEHORZVKRZWKHYDULRXVFLUFXLWV\PEROVWKDWFRXOGEHXVHGLQFLUFXLWGLDJUDPV
<RXZLOOEHH[SHFWHGWRUHFRJQLVHDQGGUDZDOORIWKHVH
7KHPRVWFRPPRQV\PEROVDUHDVIROORZV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
&RPPRQFLUFXLWV\PEROV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
7KHIXQFWLRQRIWKHPRVWFRPPRQFRPSRQHQWVDUH
6ZLWFK7XUQWKHFLUFXLWRQ FORVHG RURj RSHQ
)L[HGUHVLVWRU$UHVLVWRUOLPLWVWKHlRZRIFXUUHQW$k[HGUHVLVWRUKDVDUHVLVWDQFH
LWFDQQRWFKDQJH
9DULDEOHUHVLVWRU$UHVLVWRUZLWKDVOLGHUWKDWFDQEHXVHGWRFKDQJHLWVUHVLVWDQFH
8VHGRIWHQLQGLPPHUVZLWFKHVDQGYROXPHFRQWUROV
7KHUPLVWRU7KHUHVLVWDQFHRIDWKHUPLVWRUGHSHQGVRQLWVWHPSHUDWXUH$VLWV
WHPSHUDWXUHLQFUHDVHVLWVUHVLVWDQFHGHFUHDVHVDQGYLFHYHUVD
/LJKWGHSHQGHQWUHVLVWRU /'5 7KHUHVLVWDQFHRIDQ/'5GHSHQGVRQWKHOLJKW

LQWHQVLW\$VWKHOLJKWLQWHQVLW\LQFUHDVHVLWVUHVLVWDQFHGHFUHDVHVDQGYLFHYHUVD
'LRGH$GLRGHDOORZVFXUUHQWWRlRZLQRQHGLUHFWLRQRQO\7KH\DUHXVHGWRFRQYHUW
$&WR'&FXUUHQW
/LJKWHPLWWLQJGLRGH /(' 7KLVLVHTXLYDOHQWWRDGLRGHDQGHPLWVOLJKWZKHQD

FXUUHQWSDVVHVWKURXJKLW7KHVHDUHXVHGIRUDYLDWLRQOLJKWLQJDQGGLVSOD\V 79VURDG
VLJQV
$PPHWHU8VHGWRPHDVXUHWKHFXUUHQWLQDFLUFXLW&RQQHFWHGLQVHULHVZLWKRWKHU
FRPSRQHQW
9ROWPHWHU8VHWRPHDVXUHWKHSRWHQWLDOGLjHUHQFHRIDQHOHFWULFDOFRPSRQHQW
&RQQHFWHGLQSDUDOOHOZLWKFRPSRQHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
7KHPRUHXQFRPPRQ\HWUHOHYDQWV\PEROVDUHDVIROORZV
2WKHUFLUFXLWV\PEROV
([DP7LS
<RXPXVWPHPRULVHDOORIWKHVHFLUFXLWV\PEROVIRUWKHH[DP7RPDNHLW
HDVLHUIRU\RXZHKDYHVHSDUDWHGWKHV\PEROVLQWRWKHPRVWFRPPRQ

V\PEROVDQGWKHV\PEROVWKDWGRQgWFRPHXSDVRIWHQKRZHYHU\RXVKRXOG
EHDZDUHRIDOORIWKHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
,QWHUSUHWLQJ&LUFXLW'LDJUDPV
%HLQJDEOHWRGUDZDQGLQWHUSUHWFLUFXLWGLDJUDPVXVLQJFLUFXLWV\PEROVLVDQHVVHQWLDOVNLOOLQ
(OHFWURQLFV
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
)RUDFLUFXLWWREHFRQQHFWHGWKHVZLWFKPXVWEHFORVHG
7KLVLVHLWKHUFLUFXLW%RU'
7KHRWKHUFLUFXLWV\PEROLVDGLRGH
'LRGHVRQO\DOORZFXUUHQWWRlRZLQRQHGLUHFWLRQ
6LQFHFXUUHQWlRZLVIURPSRVLWLYHWRQHJDWLYHDIRUZDUGELDVHGGLRGHPXVWSRLQWLQWKLV
GLUHFWLRQLQRUGHUIRUWKHFXUUHQWWRlRZ
7KLVLVVHHQLQFLUFXLW%

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
(/(&752027,9()25&(
(OHFWURPRWLYH)RUFH
:KHQFKDUJHSDVVHVWKURXJKDSRZHUVXSSO\VXFKDVDEDWWHU\LWJDLQVHOHFWULFDOHQHUJ\
7KHHOHFWURPRWLYHIRUFH HPI LVWKHDPRXQWRIFKHPLFDOHQHUJ\FRQYHUWHGWR

HOHFWULFDOHQHUJ\SHUFRXORPERIFKDUJH & ZKHQFKDUJHSDVVHVWKURXJKDSRZHUVXSSO\
HPILVPHDVXUHGLQ9ROWV 9
'HeQLWLRQRIHPIZLWKUHJDUGVWRHQHUJ\WUDQVIHU
HPILVDOVRWKHSRWHQWLDOGLjHUHQFHDFURVVWKHFHOOZKHQQRFXUUHQWLVlRZLQJ
HPIFDQEHPHDVXUHGE\FRQQHFWLQJDKLJKUHVLVWDQFHYROWPHWHUDURXQGWKHWHUPLQDOVRIWKH
FHOOLQDQRSHQFLUFXLW
HPILVPHDVXUHGXVLQJDYROWPHWHUFRQQHFWHGLQSDUDOOHOZLWKWKHFHOO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
(0) 3RWHQWLDO'LjHUHQFH
7KHGLjHUHQFHEHWZHHQSRWHQWLDOGLgHUHQFHDQGHPILVWKHW\SHRIHQHUJ\WUDQVIHUSHU
XQLWFKDUJH
'HeQLWLRQRISRWHQWLDOGLdHUHQFHZLWKUHJDUGVWRHQHUJ\WUDQVIHU
:KHQFKDUJHSDVVHVWKURXJKDUHVLVWRUIRUH[DPSOHLWVHOHFWULFDOHQHUJ\LVFRQYHUWHGWR
KHDWLQWKHUHVLVWRU
7KHUHVLVWRUWKHUHIRUHKDVDSRWHQWLDOGLgHUHQFHDFURVVLW
3RWHQWLDOGLjHUHQFHGHVFULEHVWKHORVVRIHQHUJ\IURPFKDUJHVLHZKHQHOHFWULFDOHQHUJ\LV
WUDQVIHUUHGWRRWKHUIRUPVRIHQHUJ\LQDFRPSRQHQW
HPIGHVFULEHVWKHWUDQVIHURIHQHUJ\IURPWKHSRZHUVXSSO\WRHOHFWULFDOFKDUJHV
ZLWKLQWKHFLUFXLW
([DP7LS
$OWKRXJKYROWDJHDQGSRWHQWLDOGLjHUHQFHDUHWKHVDPHWKLQJPDNHVXUHQRW

WRFRQIXVHWKHPZLWKHPIZKLFKLVVOLJKWO\GLjHUHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
,17(51$/5(6,67$1&(
,QWHUQDO5HVLVWDQFH
$OOSRZHUVXSSOLHVKDYHVRPHUHVLVWDQFHEHWZHHQWKHLUWHUPLQDOV
7KLVLVFDOOHGLQWHUQDOUHVLVWDQFH U
7KLVLQWHUQDOUHVLVWDQFHFDXVHVWKHFKDUJHFLUFXODWLQJWRGLVVLSDWHVRPHHOHFWULFDOHQHUJ\
IURPWKHSRZHUVXSSO\LWVHOI
7KLVLVZK\WKHFHOOEHFRPHVZDUPDIWHUDSHULRGRIWLPH
7KHLQWHUQDOUHVLVWDQFHWKHUHIRUHFDXVHVORVVRIYROWDJHRUHQHUJ\ORVVLQDSRZHUVXSSO\
$FHOOFDQEHWKRXJKWRIDVDVRXUFHRIHPIZLWKDQLQWHUQDOUHVLVWDQFHFRQQHFWHGLQVHULHV
7KLVLVVKRZQLQWKHFLUFXLWGLDJUDPEHORZ
&LUFXLWVKRZLQJWKHHPIDQGLQWHUQDOUHVLVWDQFHRIDSRZHUVXSSO\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
95LVWKHWHUPLQDOSRWHQWLDOGLgHUHQFH
7KLVLVWKHYROWDJHDYDLODEOHLQWKHFLUFXLWLWVHOI
7HUPLQDOSG ,c5 2KPgVODZ
:KHQDORDGUHVLVWRULVFRQQHFWHGFXUUHQWlRZVWKURXJKWKHFHOODQGDSRWHQWLDOGLjHUHQFH
GHYHORSVDFURVVWKHLQWHUQDOUHVLVWDQFH7KLVYROWDJHLVQRWDYDLODEOHWRWKHUHVWRIWKHFLUFXLW
VRLVFDOOHGWKHfORVWYROWVg
9ULVWKHORVWYROWV
7KLVLVWKHYROWDJHORVWLQWKHFHOOGXHWRLQWHUQDOUHVLVWDQFHVRIURPFRQVHUYDWLRQRI
HQHUJ\
/RVWYROWV HPIhWHUPLQDOSG
/RVWYROWV ,cU 2KPgVODZ
7KHHPILVWKHVXPRIWKHVHSRWHQWLDOGLjHUHQFHVJLYLQJWKHHTXDWLRQEHORZ
HPIHTXDWLRQ
HPILVWKHUHIRUHWKHWRWDORUPD[LPXPYROWDJHDYDLODEOHWRWKHFLUFXLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
.,5&++2)) 6),567/$:
.LUFKKRj V)LUVW/DZ
.LUFKKRjgVkUVWODZVWDWHVWKDW
7KHVXPRIWKHFXUUHQWVHQWHULQJDMXQFWLRQDOZD\VHTXDOWKHVXPRIWKH
FXUUHQWVRXWRIWKHMXQFWLRQ
7KLVLVDFRQVHTXHQFHRIFRQVHUYDWLRQRIFKDUJHeFXUUHQWVKRXOGQgWGHFUHDVHRULQFUHDVHLQ
DFLUFXLWZKHQLWVSOLWV
,QDFLUFXLW
$MXQFWLRQLVDSRLQWZKHUHDWOHDVWWKUHHFLUFXLWSDWKVPHHW
$EUDQFKLVDSDWKFRQQHFWLQJWZRMXQFWLRQV
,IDFLUFXLWVSOLWVLQWRWZREUDQFKHVWKHQWKHFXUUHQWEHIRUHWKHFLUFXLWVSOLWVVKRXOGEHHTXDO
WRWKHFXUUHQWDIWHULWKDVVSOLW
, ,,ZKHUH,UHSUHVHQWVWKHFXUUHQWLQWKHFLUFXLWEHIRUHLWEUDQFKHVDQG,DQG,
UHSUHVHQWWKHFXUUHQWLQWKHUHVSHFWLYHWZREUDQFKHV
7KHFXUUHQW,LQWRWKHMXQFWLRQLVHTXDOWRWKHVXPRIWKHFXUUHQWVRXWRIWKHMXQFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
7KHFKDUJHLVFRQVHUYHGRQERWKVLGHVRIWKHMXQFWLRQ
,QDVHULHVFLUFXLWWKHFXUUHQWLVWKHVDPHDWDQ\SRLQW
7KHFXUUHQWLVWKHVDPHDWHDFKLQDVHULHVFLUFXLW
,QDSDUDOOHOFLUFXLWWKHFXUUHQWGLYLGHVDWWKHMXQFWLRQVDQGHDFKEUDQFKKDVDGLjHUHQW
YDOXH.LUFKKRjgVkUVWODZDSSOLHVDWHDFKMXQFWLRQ
7KHFXUUHQWGLYLGHVDWHDFKMXQFWLRQLQDSDUDOOHOFLUFXLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP7LS
-XQFWLRQVRQO\DSSHDULQSDUDOOHOFLUFXLWVDQGDVFLUFXLWVEHFRPHPRUH
FRPSOH[LWFDQEHFRQIXVLQJDVWRZKLFKFXUUHQWVDUHLQWRWKHMXQFWLRQDQG
ZKLFKDUHRXW

'UDZLQJDUURZVRQWKHGLDJUDPIRUWKHFXUUHQWlRZ PDNLQJVXUHLWgVIURP
SRVLWLYHWRQHJDWLYH DWHDFKMXQFWLRQOLNHLQWKHZRUNHGH[DPSOHZLOOKHOSZLWK
WKLV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
.,5&++2)) 66(&21'/$:
.LUFKKRj V6HFRQG/DZ
.LUFKKRjgVVHFRQGODZVWDWHVWKDW
7KHVXPRIWKHHPIfVLQDFORVHGFLUFXLWHTXDOVWKHVXPRIWKHSRWHQWLDO
GLgHUHQFHV
7KLVLVDFRQVHTXHQFHRIFRQVHUYDWLRQRIHQHUJ\
%HORZLVDFLUFXLWH[SODLQLQJ.LUFKKRjgVVHFRQGODZZLWKWKHVXPRIWKHYROWDJHVLQWKHFORVHG
VHULHVFLUFXLWHTXDOWRWKHVXPRIWKHHPIgV
7KHVXPRIWKHYROWDJHVDUHHTXDOWRWKHVXPRIWKHHPIIURPWKHEDWWHULHV
,QDVHULHVFLUFXLWWKHYROWDJHLVVSOLWDFURVVDOOFRPSRQHQWVGHSHQGLQJRQWKHLUUHVLVWDQFH
7KHVXPRIWKHYROWDJHVLVHTXDOWRWKHWRWDOHPIRIWKHSRZHUVXSSO\
,QDSDUDOOHOFLUFXLWWKHYROWDJHLVWKHVDPHDFURVVHDFKFORVHGORRS
7KHVXPRIWKHYROWDJHVLQHDFKFORVHGFLUFXLWORRSLVHTXDOWRWKHWRWDOHPIRIWKH
SRZHUVXSSO\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
$FORVHGFLUFXLWORRSDFWVDVLWVRZQLQGHSHQGHQWVHULHVFLUFXLWDQGHDFKRQHVHSDUDWHVDWD
MXQFWLRQ$SDUDOOHOFLUFXLWLVPDGHXSRIWZRRUPRUHRIWKHVHORRSV
(DFKFLUFXLWORRSVDFWVDVDVHSDUDWHLQGHSHQGHQWVHULHVFLUFXLW
7KLVPDNHVSDUDOOHOFLUFXLWVLQFUHGLEO\XVHIXOIRUKRPHZLULQJV\VWHPVDVLQJOHSRZHUVRXUFH
VXSSOLHVDOOOLJKWVDQGDSSOLDQFHVZLWKWKHVDPHYROWDJH
,IRQHOLJKWEUHDNVYROWDJHDQGFXUUHQWFDQVWLOOlRZWKURXJKIRUWKHUHVWRIWKHOLJKWVDQG
DSSOLDQFHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
62/9,1*352%/(06:,7+.,5&++2)) 6/$:6
6ROYLQJ3UREOHPVZLWK.LUFKKRj V/DZV
.LUFKKRjgVODZVFDQEHXVHGWRVROYHVLPSOHFLUFXLWSUREOHPV
.LUFKKRjgV)LUVW/DZ:RUNHG([DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
.LUFKKRjgV6HFRQG/DZ:RUNHG([DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
5(6,67256,16(5,(6
'HULYLQJWKH(TXDWLRQIRU5HVLVWRUVLQ6HULHV
,QDVHULHVFLUFXLWWKHFRPELQHGUHVLVWDQFHRIWZRRUPRUHUHVLVWRUVLVWKHVXPRIWKH
LQGLYLGXDOUHVLVWDQFHV
,QDVHULHVFLUFXLW
7KHFXUUHQWLVWKHVDPHWKURXJKDOOUHVLVWRUV
7KHSRWHQWLDOGLjHUHQFHLVVSOLWEHWZHHQDOOWKHUHVLVWRUV
7KHHTXDWLRQIRUFRPELQHGUHVLVWRUVLQVHULHVLVGHULYHGXVLQJ.LUFKKRjgVODZV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
5HVLVWRUVLQ6HULHV
:KHQWZRRUPRUHFRPSRQHQWVDUHFRQQHFWHGLQVHULHV
7KHFRPELQHGUHVLVWDQFHRIWKHFRPSRQHQWVLVHTXDOWRWKHVXPRI
LQGLYLGXDOUHVLVWDQFHV
5HVLVWRUVFRQQHFWHGLQVHULHV
&RPELQHGUHVLVWDQFHRIWZRRUPRUHUHVLVWRUVLQVHULHVHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
5(6,67256,13$5$//(/
'HULYLQJWKH(TXDWLRQIRU5HVLVWRUVLQ3DUDOOHO
,QDSDUDOOHOFLUFXLWWKHUHFLSURFDORIWKHFRPELQHGUHVLVWDQFHRIWZRRUPRUHUHVLVWRUVLVWKH
VXPRIWKHUHFLSURFDORIWKHLQGLYLGXDOUHVLVWDQFHV
,QDSDUDOOHOFLUFXLW
7KHFXUUHQWLVWKHVSOLWDWWKHMXQFWLRQ DQGWKHUHIRUHEHWZHHQUHVLVWRUV
7KHSRWHQWLDOGLjHUHQFHLVWKHVDPHWKURXJKDOOUHVLVWRUV
7KHHTXDWLRQIRUFRPELQHGUHVLVWRUVLQSDUDOOHOLVGHULYHGXVLQJ.LUFKKRjgVODZV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
5HVLVWRUVLQ3DUDOOHO
:KHQWZRRUFRPSRQHQWDUHFRQQHFWHGLQSDUDOOHO
7KHUHFLSURFDORIWKHFRPELQHGUHVLVWDQFHLVWKHVXPRIWKHUHFLSURFDOVRI
WKHLQGLYLGXDOUHVLVWDQFHV
5HVLVWRUVFRQQHFWHGLQSDUDOOHO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
&RPELQHGUHVLVWDQFHRIWZRRUPRUHUHVLVWRUVLQSDUDOOHOHTXDWLRQ
7KLVPHDQVWKHFRPELQHGUHVLVWDQFHGHFUHDVHVDQGLVOHVVWKDQWKHUHVLVWDQFHRIDQ\RIWKH
LQGLYLGXDOFRPSRQHQWV
)RUH[DPSOH,IWZRUHVLVWRUVRIHTXDOUHVLVWDQFHDUHFRQQHFWHGLQSDUDOOHOWKHQWKHFRPELQHG
UHVLVWDQFHZLOOKDOYH
0DWKVWLS
7KHUHFLSURFDORIDYDOXHLVYDOXH
)RUH[DPSOHWKHUHFLSURFDORIDZKROHQXPEHUVXFKDVHTXDOVd
7KHUHFLSURFDORIdLV
,IWKHQXPEHULVDOUHDG\DIUDFWLRQWKHQXPHUDWRUDQGGHQRPLQDWRUDUHflLSSHGgURXQG
7KHUHFLSURFDORIDQXPEHULVcQXPEHU
,QWKHFDVHIRUWKHUHVLVWDQFH5WKLVEHFRPHV57RJHWWKHYDOXHRI5IURP5\RXPXVW
GRd\RXUDQVZHU
<RXFDQDOVRXVHWKHUHFLSURFDOEXWWRQRQ\RXUFDOFXODWRU ODEHOOHGHLWKHU[RU[GHSHQGLQJ
RQ\RXUFDOFXODWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH
([DP7LS
7KHPRVWFRPPRQPLVWDNHLVWRIRUJHWWRkQG57DQGQRW575HPHPEHUWR

GRDQVZHUWRJHWWKLVYDOXH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
'&327(17,$/',9,'(56
327(17,$/',9,'(56
3RWHQWLDO'LYLGHU&LUFXLW
:KHQWZRUHVLVWRUVDUHFRQQHFWHGLQVHULHVWKURXJK.LUFKRjgVVHFRQGODZWKHSRWHQWLDO
GLjHUHQFHDFURVVWKHSRZHUVRXUFHLVGLYLGHGEHWZHHQWKHP
3RWHQWLDOGLYLGHUVDUHFLUFXLWVZKLFKSURGXFHDQRXWSXWYROWDJHDVDIUDFWLRQRILWVLQSXW
YROWDJH7KLVVSOLWVWKHSRWHQWLDOGLjHUHQFHRIDSRZHUVRXUFHEHWZHHQWZRFRPSRQHQWV
7KH\DUHXVHGZLGHO\LQYROXPHFRQWUROVDQGVHQVRU\FLUFXLWVXVLQJ/'5VDQGWKHUPLVWRUV
3RWHQWLDOGLYLGHUFLUFXLWVDUHEDVHGRQWKHUDWLRRIYROWDJHEHWZHHQFRPSRQHQWV7KLVLVHTXDO
WRWKHUDWLRRIWKHUHVLVWDQFHVRIWKHUHVLVWRUVLQWKHGLDJUDPEHORZJLYLQJWKHIROORZLQJ
HTXDWLRQ
3RWHQWLDOGLYLGHUGLDJUDPDQGHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
7KHLQSXWYROWDJH9LQLVDSSOLHGWRWKHWRSDQGERWWRPRIWKHVHULHVUHVLVWRUV
7KHRXWSXWYROWDJH9RXWLVPHDVXUHGIURPWKHFHQWUHWRWKHERWWRPRIUHVLVWRU5
7KHSRWHQWLDOGLjHUHQFH9DFURVVHDFKUHVLVWRUGHSHQGVXSRQLWVUHVLVWDQFH5
7KHUHVLVWRUZLWKWKHODUJHVWUHVLVWDQFHZLOOKDYHDJUHDWHUSRWHQWLDOGLgHUHQFH
WKDQWKHRWKHURQHIURP9 ,5
,IWKHUHVLVWDQFHRIRQHRIWKHUHVLVWRUVLVLQFUHDVHGLWZLOOJHWDJUHDWHUVKDUHRIWKH
SRWHQWLDOGLjHUHQFHZKLOVWWKHRWKHUUHVLVWRUZLOOJHWDVPDOOHUVKDUH
,QSRWHQWLDOGLYLGHUFLUFXLWVWKHSGDFURVVDFRPSRQHQWLVSURSRUWLRQDOWRLWVUHVLVWDQFHIURP
9 ,5

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH
([DP7LS
$OZD\VPDNHVXUHWKHFRUUHFWUHVLVWDQFHLVLQWKHQXPHUDWRURIWKHSRWHQWLDO
GLYLGHUHTXDWLRQ7KLVZLOOEHWKHUHVLVWDQFHRIWKHFRPSRQHQW\RXZDQWWR
IRXQGWKHRXWSXWYROWDJHRI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
9DULDEOH5HVLVWDQFH&RPSRQHQWV
9DULDEOHDQGVHQVRU\UHVLVWRUVDUHXVHGLQSRWHQWLDOGLYLGHUVWRYDU\WKHRXWSXWYROWDJH
7KLVFRXOGFDXVHDQH[WHUQDOFRPSRQHQWWRVZLWFKRQRURjHJDKHDWHUVZLWFKLQJRj
DXWRPDWLFDOO\ZKHQLWVVXUURXQGLQJVDUHDWURRPWHPSHUDWXUH
6HQVRU\UHVLVWRUVXVHGDUH/LJKW'HSHQGHQW5HVLVWRUV /'5V DQGWKHUPLVWRUV
/'5DQGWKHUPLVWRULQDSRWHQWLDOGLYLGHUFLUFXLWZLWKDe[HGUHVLVWRU5
5HFDOOWKDWWKHUHVLVWDQFHRIDQ/'5YDULHVZLWKOLJKWLQWHQVLW\
7KHKLJKHUWKHOLJKWLQWHQVLW\WKHORZHUWKHUHVLVWDQFHDQGYLFHYHUVD
7KHUHVLVWDQFHRIDWKHUPLVWRUYDULHVZLWKWHPSHUDWXUH
7KHKRWWHUWKHWKHUPLVWRUWKHORZHUWKHUHVLVWDQFHDQGYLFHYHUVD
)URP2KPgVODZ9 ,5WKHSRWHQWLDOGLjHUHQFH9RXWIURPDUHVLVWRULQDSRWHQWLDOGLYLGHU
FLUFXLWLVSURSRUWLRQDOWRLWVUHVLVWDQFH
,IDQ/'5RUWKHUPLVWRUgVUHVLVWDQFHGHFUHDVHVWKHSRWHQWLDOGLjHUHQFHWKURXJKLW
DOVRGHFUHDVHV
,IDQ/'5RUWKHUPLVWRUgVUHVLVWDQFHLQFUHDVHVWKHSRWHQWLDOGLjHUHQFHWKURXJKLWDOVR
LQFUHDVHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
'XHWR2KPgV/DZ 9 ,5 ERWKWKHUHVLVWRUDQGWKHUPLVWRUDUHFRQQHFWHGLQVHULHVDQGKDYH

WKHVDPHFXUUHQW,
,IUHVLVWDQFH5LQFUHDVHVWKHSRWHQWLDOGLjHUHQFHDFURVVWKHWKHUPLVWRUDOVRLQFUHDVHV
,QVHULHVWKHSRWHQWLDOGLjHUHQFHLVVKDUHGHTXDOO\DPRQJVWWKHFRPSRQHQWV7KHLUVXP
HTXDOVWKHHPIRIWKHVXSSO\ .LUFKKRjgVVHFRQGODZ
,IWKHSRWHQWLDOGLjHUHQFHDFURVVWKHWKHUPLVWRULQFUHDVHVWKHSRWHQWLDOGLjHUHQFHDFURVV
WKHUHVLVWDQFH5PXVWGHFUHDVHVWRNHHSWKHVDPHRYHUDOOWRWDOHPI
7KLVLVURZ'

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
327(17,$/',9,'(5&20321(176
7KH3RWHQWLRPHWHU
$SRWHQWLRPHWHULVVLPLODUWRDYDULDEOHUHVLVWRUFRQQHFWHGDVDSRWHQWLDOGLYLGHUWRJLYHD
FRQWLQXRXVO\YDULDEOHRXWSXWYROWDJH
,WFDQEHXVHGDVDPHDQVRIFRPSDULQJSRWHQWLDOGLjHUHQFHVLQGLjHUHQWSDUWVRIWKHFLUFXLW
7KHFLUFXLWV\PEROLVUHFRJQLVHGE\DQDUURZQH[WWRWKHUHVLVWRU
3RWHQWLRPHWHUFLUFXLWGLDJUDP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
$SRWHQWLRPHWHULVDVLQJOHFRPSRQHQWWKDW LQLWVVLPSOHVWIRUP FRQVLVWVRIDFRLORIZLUH

ZLWKDVOLGLQJFRQWDFWPLGZD\DORQJLW
$SRWHQWLRPHWHULVDW\SHRIYDULDEOHUHVLVWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
,WLVUHFRJQLVHGRQDFLUFXLWGLDJUDPZLWKDUHVLVWRUkWWHGZLWKDVOLGLQJFRQWDFW
7KHVOLGLQJFRQWDFWKDVWKHHjHFWRIVHSDUDWLQJWKHSRWHQWLRPHWHULQWRWZRSDUWV DQXSSHU
SDUWDQGDORZHUSDUW ERWKRIZKLFKKDYHGLjHUHQWUHVLVWDQFHV
0RYLQJWKHVOLGHU WKHDUURZLQWKHGLDJUDP FKDQJHVWKHUHVLVWDQFH DQGKHQFHSRWHQWLDO

GLdHUHQFH RIWKHXSSHUDQGORZHUSDUWVRIWKHSRWHQWLRPHWHU
,IWKHVOLGHULQWKHDERYHGLDJUDPLVPRYHGXSZDUGVWKHUHVLVWDQFHRIWKHORZHUSDUWZLOO
LQFUHDVHDQGVRWKHSRWHQWLDOGLjHUHQFHDFURVVLWZLOODOVRLQFUHDVH
7KHUHIRUHWKHYDULDEOHUHVLVWRUREWDLQVDPD[LPXPRUPLQLPXPYDOXHIRUWKHRXWSXWYROWDJH
,IWKHUHVLVWDQFHLVe
0D[LPXPYROWDJHLVZKHQWKHUHVLVWDQFHLVe
0LQLPXPYROWDJHLVZKHQWKHUHVLVWDQFHLVe

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
7KH*DOYDQRPHWHU
$JDOYDQRPHWHULVDW\SHRIVHQVLWLYHDPPHWHUXVHGWRGHWHFWHOHFWULFFXUUHQW
,WLVXVHGLQDSRWHQWLRPHWHUWRPHDVXUHHPIEHWZHHQWZRSRLQWVLQDFLUFXLW
7KHFLUFXLWV\PEROLVUHFRJQLVHGE\DQDUURZLQDFLUFOH
*DOYDQRPHWHUFLUFXLWV\PERO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
$JDOYDQRPHWHULVPDGHIURPDFRLORIZLUHZUDSSHGDURXQGDQLURQFRUHWKDWURWDWHVLQVLGHD
PDJQHWLFkHOG
7KHJDOYDQRPHWHU
7KHDUURZUHSUHVHQWVDQHHGOHZKLFKGHlHFWVGHSHQGLQJRQWKHDPRXQWRIFXUUHQWSDVVLQJ
WKURXJK
:KHQWKHDUURZLVIDFLQJGLUHFWO\XSZDUGVWKHUHLVQRFXUUHQW
7KLVLVFDOOHGQXOOGHlHFWLRQ
2KPgVODZWHOOVXVWKDWWKHFXUUHQWWKURXJKDFRQGXFWRU ZLUH LVGLUHFWO\SURSRUWLRQDOWRWKH

SRWHQWLDOGLjHUHQFHWKURXJKLWLHQRSGPHDQVQRFXUUHQWlRZVWKURXJKWKH
JDOYDQRPHWHU
$JDOYDQRPHWHUKDVSGRI]HURZKHQWKHSRWHQWLDORQRQHVLGHHTXDOVWKHSRWHQWLDORQWKH
RWKHUVLGH
7KLVLVDWWKHSRVLWLRQDWZKLFKLWLVFRQQHFWHGRQWKHZLUH ZKLFKYDULHVZLWKWKH
VOLGLQJFRQWDFW JLYHVDSGHTXDOWRWKH(0)RIWKHFHOOFRQQHFWHGWRWKH
JDOYDQRPHWHU
7KHFHOOVKRXOGEHFRQQHFWHGVXFKWKDWLWVSRWHQWLDORSSRVHVWKHSRWHQWLDORQWKHZLUHLH
WKHSRVLWLYHWHUPLQDORIWKHSRZHUVXSSO\IDFHVWKHSRVLWLYHWHUPLQDORIWKHFHOO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:KHQWKHVOLGLQJFRQWDFWPRYHVDORQJWKHSRWHQWLRPHWHUZLUH\RXDGGRUUHPRYHUHVLVWDQFH
IURPWRWKHH[WHUQDOFLUFXLW7KLVFKDQJHVWKHSRWHQWLDOGURSDFURVV;DQG<
/RFDWLRQRIWKHVOLGLQJSRLQWLVDGMXVWHGXQWLOWKHJDOYDQRPHWHUUHDGV]HUR7KLVLVXQWLOWKH
SRWHQWLDOGLjHUHQFHHTXDOV(
7KHGLUHFWLRQRIWKHWZRHPIVRSSRVHHDFKRWKHUDQGWKHUHLVQRFXUUHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP7LS
,I\RXgUHXQVXUHDVWRZKHWKHUWKHSGZLOOLQFUHDVHDVWKHFRQWDFWVOLGHULV
PRYHGDORQJWKHZLUHUHPHPEHUSGLVSURSRUWLRQDOWRWKHOHQJWKRIWKH

ZLUH IURP2KPgVODZDQGWKHUHVLVWLYLW\HTXDWLRQ 7KHORQJHUWKHOHQJWKRID
ZLUHWKHKLJKHUWKHSG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP4XHVWLRQ(DV\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
'&&LUFXLWV i
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
&217(176
$WRPV1XFOHL 5DGLDWLRQ
$WRPLF6WUXFWXUH
1XFOHRQ 3URWRQ1XPEHU
$OSKD%HWD *DPPD3DUWLFOHV
'HFD\(TXDWLRQV
)XQGDPHQWDO3DUWLFOHV
)XQGDPHQWDO3DUWLFOHV
4XDUN&RPSRVLWLRQ
$720618&/(, 5$',$7,21
$720,&6758&785(
5XWKHUIRUG6FDWWHULQJ
(YLGHQFHIRUWKHVWUXFWXUHRIWKHDWRPZDVGLVFRYHUHGE\(UQHVW5XWKHUIRUGLQWKHEHJLQQLQJ
RIWKHWKFHQWXU\IURPWKHVWXG\RIdSDUWLFOHVFDWWHULQJ
7KHH[SHULPHQWDOVHWXSFRQVLVWVRIDOSKDSDUWLFOHVsUHGDWWKLQJROGIRLODQGDGHWHFWRURQWKH
RWKHUVLGHWRGHWHFWKRZPDQ\SDUWLFOHVGHtHFWHGDWGLrHUHQWDQJOHV
cSDUWLFOHVFDWWHULQJH[SHULPHQWVHWXS

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
eSDUWLFOHVDUHWKHQXFOHXVRIDKHOLXPDWRPDQGDUHSRVLWLYHO\FKDUJHG
:KHQcSDUWLFOHVDUHgUHGDWWKLQJROGIRLOPRVWRIWKHPJRVWUDLJKWWKURXJKEXWDVPDOO
QXPEHUERXQFHVWUDLJKWEDFN
)URPWKLVH[SHULPHQW5XWKHUIRUGUHVXOWVZHUH
7KHPDMRULW\RIdSDUWLFOHVZHQWVWUDLJKWWKURXJK $
7KLVVXJJHVWHGWKHDWRPLVPDLQO\HPSW\VSDFH
6RPHdSDUWLFOHVGHlHFWHGWKURXJKVPDOODQJOHVRIR
7KLVVXJJHVWHGWKHUHLVDSRVLWLYHQXFOHXVDWWKHFHQWUH VLQFHWZRSRVLWLYHFKDUJHV
ZRXOGUHSHO
2QO\DVPDOOQXPEHURIdSDUWLFOHVGHlHFWHGVWUDLJKWEDFNDWDQJOHVRI!R &
7KLVVXJJHVWHGWKHQXFOHXVLVH[WUHPHO\VPDOODQGWKLVLVZKHUHWKHPDVVDQGFKDUJH
RIWKHDWRPLVFRQFHQWUDWHG
,WZDVWKHUHIRUHFRQFOXGHGWKDWDWRPVFRQVLVWRIVPDOOGHQVHSRVLWLYHO\FKDUJHG
QXFOHLVXUURXQGHGE\QHJDWLYHO\FKDUJHGHOHFWURQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
$QDWRPDVPDOOSRVLWLYHQXFOHXVVXUURXQGHGE\QHJDWLYHHOHFWURQV
1RWH7KHDWRPLVDURXQGWLPHVODUJHUWKDQWKHQXFOHXV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH
7KH5XWKHUIRUGVFDWWHULQJH[SHULHQFHGLUHFWHGSDUDOOHOEHDPVRIeSDUWLFOHVDWJROGIRLO
7KHREVHUYDWLRQVZHUH
0RVWRIWKHeSDUWLFOHVZHQWVWUDLJKWWKURXJKWKHIRLO
7KHODUJHVWYDOXHRIQZLOOWKHUHIRUHEHDWVPDOODQJOHV
6RPHRIWKHeSDUWLFOHVZHUHGHtHFWHGWKURXJKVPDOODQJOHV
QGURSVTXLFNO\ZLWKLQFUHDVLQJDQJOHRIGHtHFWLRQg
7KHVHREVHUYDWLRQVsWZLWKJUDSK$

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
$WRPLF6WUXFWXUH
7KHDWRPVRIDOOHOHPHQWVDUHPDGHXSRIWKUHHW\SHVRISDUWLFOHVSURWRQVQHXWURQVDQG
HOHFWURQV
3URWRQVDQGQHXWURQVDUHIRXQGLQWKHQXFOHXVRIDQDWRPZKLOHHOHFWURQVRUELWWKH
QXFOHXV
7KHSURSHUWLHVRIHDFKSDUWLFOHDUHVKRZQLQWKHWDEOHEHORZ
$VWDEOHDWRPLVQHXWUDO LWKDVQRFKDUJH
6LQFHSURWRQVDQGHOHFWURQVKDYHWKHVDPHFKDUJHEXWRSSRVLWHVLJQVDVWDEOHDWRPKDVDQ
HTXDOQXPEHURIERWKIRUWKHRYHUDOOFKDUJHWRUHPDLQQHXWUDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP7LS
5HPHPEHUQRWWRPL[XSWKHiDWRPjDQGWKHiQXFOHXVj7KHiDWRPjFRQVLVWVRI
WKHQXFOHXVDQGHOHFWURQV7KHiQXFOHXVjMXVWFRQVLVWVRIWKHSURWRQVDQG
QHXWURQVLQWKHPLGGOHRIWKHDWRPQRWWKHHOHFWURQV
$QWLPDWWHU
:HOLYHLQDXQLYHUVHPDGHXSRIPDWWHUSDUWLFOHV SURWRQVQHXWURQVHOHFWURQVHWF
$OOPDWWHUSDUWLFOHVKDYHDQWLPDWWHUFRXQWHUSDUWV
$QWLPDWWHUSDUWLFOHVDUHLGHQWLFDOWRWKHLUPDWWHUFRXQWHUSDUWEXWZLWKWKH
RSSRVLWHFKDUJH
7KLVPHDQVLIDSDUWLFOHLVSRVLWLYHLWVDQWLPDWWHUSDUWLFOHLVQHJDWLYHDQGYLFHYHUVD
&RPPRQPDWWHUDQWLPDWWHUSDLUVDUHVKRZQLQWKHGLDJUDPEHORZ
$SDUWIURPHOHFWURQVWKHFRUUHVSRQGLQJDQWLSDUWLFOHSDLUKDVWKHVDPHQDPHZLWKWKHSUHs[
hDQWLiDQGDOLQHDERYHWKHFRUUHVSRQGLQJPDWWHUSDUWLFOHV\PERO
$QHXWUDOSDUWLFOHVXFKDVDQHXWURQRUQHXWULQRLVLWVRZQDQWLSDUWLFOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
$WRPLF0DVV8QLW X
7KHXQLsHGDWRPLFPDVVXQLW X LVURXJKO\HTXDOWRWKHPDVVRIRQHSURWRQRUQHXWURQ
X cjNJ
,WLVVRPHWLPHVDEEUHYLDWHGWRDPX
7KLVYDOXHZLOOEHJLYHQRQ\RXUGDWDVKHHWLQWKHH[DP
7KHDPXLVFRPPRQO\XVHGLQQXFOHDUSK\VLFVWRH[SUHVVWKHPDVVRIVXEDWRPLFSDUWLFOHV,W
LVHTXDOWRRIWKHPDVVRIWKHFDUERQDWRP
7DEOHRIFRPPRQSDUWLFOHVZLWKPDVVLQDPX
7KHPDVVRIDQDWRPLQDPXLVURXJKO\HTXDOWRWKHVXPRILWVSURWRQVDQGQHXWURQV
QXFOHRQQXPEHU
)RUH[DPSOHWKHPDVVRI8UDQLXPLVURXJKO\X

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
18&/(21 352721180%(5
1XFOHRQ 3URWRQ1XPEHU
7KHDWRPLFV\PERORIDQHOHPHQWLVXVHGWRGHVFULEHWKHFRQVWLWXHQWVRIWKHQXFOHL
$QH[DPSOHRIWKLVQRWDWLRQIRU/LWKLXPLV
$WRPLFV\PEROIRU/LWKLXP
:KHQJLYHQDQDWRPLFV\PERO\RXFDQsJXUHRXWWKHQXPEHURISURWRQVQHXWURQVDQG
HOHFWURQVLQWKHDWRP
3URWRQV7KHDWRPLFQXPEHU
(OHFWURQV$WRPVDUHQHXWUDOVVRWKHQXPEHURIQHJDWLYHHOHFWURQVLVHTXDOWRWKH
QXPEHURISRVLWLYHSURWRQV7KHUHIRUHWKLVLVDOVRWKHDWRPLFQXPEHU
1HXWURQV6XEWUDFWWKHSURWRQQXPEHUIURPWKHPDVVQXPEHU
)RUWKHOLWKLXPDWRPWKHVHQXPEHUVZRXOGEH
3URWRQV
(OHFWURQV
1HXWURQVp
7KHWHUPQXFOHRQLVWKHXVHGWRPHDQDSDUWLFOHLQWKHQXFOHXVhLHDSURWRQRUQHXWURQ
7KHWHUPQXFOLGHLVXVHGWRUHIHUWRDQXFOHXVZLWKDVSHFLsFFRPELQDWLRQRISURWRQVDQG
QHXWURQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
,VRWRSHV
$OWKRXJKDOODWRPVRIWKHVDPHHOHPHQWDOZD\VKDYHWKHVDPHQXPEHURISURWRQV DQG
KHQFHHOHFWURQV WKHQXPEHURIQHXWURQVFDQYDU\
$QLVRWRSHLVDQDWRP RIWKHVDPHHOHPHQW WKDWKDVDQHTXDOQXPEHURISURWRQV

EXWGLkHUHQWQXPEHURIQHXWURQV
7KHLVRWRSHVRIK\GURJHQDUHGHXWHULXPDQGWULWLXP
7KHWKUHHDWRPVVKRZQDERYHDUHDOOIRUPVRIK\GURJHQEXWWKH\HDFKKDYHGLfHUHQW
QXPEHUVRIQHXWURQV
5HPHPEHUWKHQHXWURQQXPEHURIDQDWRPLVIRXQGE\VXEWUDFWLQJWKHSURWRQQXPEHUIURP
WKHQXFOHRQQXPEHU
6LQFHQXFOHRQQXPEHULQFOXGHVWKHQXPEHURIQHXWURQVDQLVRWRSHRIDQHOHPHQWZLOODOVR
KDYHDGLkHUHQWQXFOHRQPDVVQXPEHU
6LQFHLVRWRSHVKDYHDQLPEDODQFHRIQHXWURQVDQGSURWRQVWKH\DUHXQVWDEOH7KLVPHDQV
WKH\FRQVWDQWO\GHFD\DQGHPLWUDGLDWLRQWRDFKLHYHDPRUHVWDEOHIRUP
7KLVFDQKDSSHQIURPDQ\ZKHUHEHWZHHQDIHZQDQRVHFRQGVWR\HDUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH
,VRWRSHVDUHQXFOHLZLWKWKHVDPHQXPEHURISURWRQVEXWGLrHUHQWQXPEHURIQHXWURQV
7KHQXFOHRQQXPEHULVWKHVXPRIWKHSURWRQVDQGQHXWURQV
7KHUHIRUHDQLVRWRSHKDVDGLrHUHQWQXFOHRQQXPEHUWRR
7KHsUVWQXFOHXV
1XFOHRQQXPEHU
1HXWURQV
3URWRQV p
7KHVHFRQGQXFOHXV
1XFOHRQQXPEHU
1HXWURQV
3URWRQV p
7KHUHIRUHWKH\KDYHWKHVDPHQXPEHURISURWRQVEXWGLrHUHQWQXPEHUVRIQHXWURQVDQGDUH
LVRWRSHVRIHDFKRWKHU
7KLVUHIHUVWRURZ%

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
$=;1RWDWLRQ
$WRPLFV\PEROVDUHZULWWHQLQDVSHFLsFQRWDWLRQFDOOHG$=;QRWDWLRQ
$WRPLFV\PEROVOLNHWKHRQHDERYHGHVFULEHWKHFRQVWLWXHQWVRIQXFOHL
7KHWRSQXPEHU$UHSUHVHQWVWKHQXFOHRQQXPEHURUWKHPDVVQXPEHU
1XFOHRQQXPEHU $ WRWDOQXPEHURISURWRQVDQGQHXWURQVLQWKHQXFOHXV
7KHORZHUQXPEHU=UHSUHVHQWVWKHSURWRQRUDWRPLFQXPEHU
3URWRQQXPEHU = WRWDOQXPEHURISURWRQVLQWKHQXFOHXV
1RWH,Q&KHPLVWU\WKHQXFOHRQQXPEHULVUHIHUUHGWRDVWKHPDVVQXPEHUDQGWKHSURWRQ
QXPEHUDVWKHDWRPLFQXPEHU7KHSHULRGLFWDEOHLVRUGHUHGE\DWRPLFQXPEHU
&RQVHUYDWLRQRI1XFOHRQ1XPEHU &KDUJH
1XFOHDUSURFHVVHVVXFKDVsVVLRQDQGIXVLRQDUHUHSUHVHQWHGXVLQJQXFOHDUHTXDWLRQV VLPLODU
WRFKHPLFDOUHDFWLRQVLQFKHPLVWU\
7KHQXPEHURISURWRQVDQGQHXWURQVLQDWRPLVNQRZQDVLWVFRQVWLWXHQWV
)RUH[DPSOH
1XFOHDUgVVLRQHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
7KHDERYHHTXDWLRQUHSUHVHQWVDsVVLRQUHDFWLRQLQZKLFKD8UDQLXPQXFOHXVLVKLWZLWKD
QHXWURQDQGVSOLWVLQWRWZRVPDOOHUQXFOHLhD6WURQWLXPQXFOHXVDQG;HQRQQXFOHXVUHOHDVLQJ
WZRQHXWURQVLQWKHSURFHVV
,QQXFOHDUHTXDWLRQVWKHQXFOHRQQXPEHUDQGFKDUJHDUHDOZD\VFRQVHUYHG
7KLVPHDQVWKDWWKHVXPRIWKHQXFOHRQVDQGFKDUJHRQWKHOHIWKDQGVLGHPXVWHTXDOWKH
VXPRIWKHQXPEHURIQXFOHRQVDQGFKDUJHRQWKHULJKWKDQGVLGH
,QWKHDERYHHTXDWLRQWKHVXPRIWKHQXFOHRQ WRS QXPEHUVRQERWKVLGHVDUHHTXDO
d
7KHVDPHLVWUXHIRUWKHSURWRQ ERWWRP QXPEHUV
d
%\EDODQFLQJHTXDWLRQVLQWKLVZD\\RXFDQGHWHUPLQHWKHQXFOHRQSURWRQQXPEHURUWKH
QXPEHURIPLVVLQJHOHPHQWV
)RUH[DPSOH
%DODQFLQJWKHQXPEHURIQXFOHRQVVKRZVWKDWQHXWURQVPXVWEHUHOHDVHGLQWKH
UHDFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
$/3+$%(7$ *$00$3$57,&/(6
$OSKD%HWD *DPPD3DUWLFOHV
6RPHHOHPHQWVKDYHQXFOHLWKDWDUHXQVWDEOH
7KLVWHQGVWREHZKHQWKHQXPEHURIQXFOHRQVGRHVQRWEDODQFH
,QRUGHUWREHFRPHPRUHVWDEOHWKH\HPLWSDUWLFOHVDQGRUHOHFWURPDJQHWLFUDGLDWLRQ
7KHVHQXFOHLDUHVDLGWREHUDGLRDFWLYH
7KHUHDUHWKUHHGLrHUHQWW\SHVRIUDGLRDFWLYHHPLVVLRQ
$OSKD d SDUWLFOHVDUHKLJKHQHUJ\SDUWLFOHVPDGHXSRISURWRQVDQGQHXWURQV WKH

VDPHDVDKHOLXPQXFOHXV
7KH\DUHXVXDOO\HPLWWHGIURPQXFOHLWKDWDUHWRRODUJH
%HWD ej SDUWLFOHVDUHKLJKHQHUJ\HOHFWURQVHPLWWHGIURPWKHQXFOHXV
%HWD e SDUWLFOHVDUHKLJKHQHUJ\SRVLWURQV DQWLPDWWHURIHOHFWURQV DOVRHPLWWHGIURP

WKHQXFOHXV
fpSDUWLFOHVDUHHPLWWHGE\QXFOHLWKDWKDYHWRRPDQ\QHXWURQV
fSDUWLFOHVDUHHPLWWHGE\QXFOHLWKDWKDYHWRRPDQ\SURWRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
*DPPD f UD\VDUHKLJKHQHUJ\HOHFWURPDJQHWLFZDYHV
7KH\DUHHPLWWHGE\QXFOHLWKDWQHHGWRORVHVRPHHQHUJ\
,IWKHVHSDUWLFOHVKLWRWKHUDWRPVWKH\FDQNQRFNRXWHOHFWURQVLRQLVLQJWKHDWRP
7KLVFDQFDXVHFKHPLFDOFKDQJHVLQPDWHULDOVDQGFDQGDPDJHRUNLOOOLYLQJFHOOV
:KHQUDGLDWLRQSDVVHVFORVHWRDWRPVLWFDQNQRFNRXWHOHFWURQVLRQLVLQJWKHDWRP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
7KHSURSHUWLHVRIWKHGLrHUHQWW\SHVRIUDGLDWLRQDUHVXPPDULVHGLQWKHWDEOHEHORZ
XLVWKHDWRPLFPDVVXQLW VHHk$WRPLF0DVV8QLW X l
HLVWKHFKDUJHRIWKHHOHFWURQd&
FLVWKHVSHHGRIOLJKWdPV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
'(&$<(48$7,216
1HXWULQR(PLVVLRQ
$QHOHFWURQQHXWULQRLVDW\SHRIVXEDWRPLFSDUWLFOHZLWKQRFKDUJHDQGQHJOLJLEOHPDVVZKLFK
LVDOVRHPLWWHGIURPWKHQXFOHXV
7KHDQWLQHXWULQRLVWKHDQWLSDUWLFOHRIDQHXWULQR
(OHFWURQDQWLQHXWULQRVDUHSURGXFHGGXULQJfhGHFD\
(OHFWURQQHXWULQRVDUHSURGXFHGGXULQJfGHFD\
([DP7LS
2QHZD\WRUHPHPEHUZKLFKSDUWLFOHGHFD\VLQWRZKLFKGHSHQGVRQWKHW\SH
RIEHWDHPLVVLRQWKLQNRIEHWDiSOXVjDVWKHiSURWRQjWKDWWXUQVLQWRWKH
QHXWURQ SOXVDQHOHFWURQQHXWULQR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
(QHUJ\RI$OSKD %HWD'HFD\
:KHQWKHQXPEHURIeSDUWLFOHVLVSORWWHGDJDLQVWNLQHWLFHQHUJ\WKHUHDUHFOHDUVSLNHVWKDW
DSSHDURQWKHJUDSK
7KLVGHPRQVWUDWHVWKDWdSDUWLFOHVKDYHGLVFUHWHHQHUJLHV RQO\FHUWDLQYDOXHV
$OSKDSDUWLFOHVKDYHGLVFUHWHHQHUJ\OHYHOVZKLOVWEHWDSDUWLFOHVKDYHDFRQWLQXRXVUDQJH
RIHQHUJLHV
:KHQWKHQXPEHURIfSDUWLFOHVLVSORWWHGDJDLQVWNLQHWLFHQHUJ\WKHJUDSKVKRZVDFXUYH
7KLVGHPRQVWUDWHVWKDWEHWDSDUWLFOHV HOHFWURQVRUSRVLWURQV KDYHDFRQWLQXRXV
UDQJHRIHQHUJLHV
7KLVLVEHFDXVHWKHHQHUJ\UHOHDVHGLQEHWDGHFD\LVVKDUHGEHWZHHQWKHEHWDSDUWLFOHV
HOHFWURQVRUSRVLWURQV DQGQHXWULQRV RUDQWLQHXWULQRV
7KLVZDVRQHRIWKHsUVWFOXHVRIWKHQHXWULQRjVH[LVWHQFH
7KHSULQFLSOHRIFRQVHUYDWLRQRIPRPHQWXPDQGHQHUJ\DSSOLHVLQERWKDOSKDDQGEHWD
HPLVVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
e f'HFD\(TXDWLRQV
$OSKD'HFD\
$OSKDGHFD\LVFRPPRQLQODUJHXQVWDEOHQXFOHLZLWKWRRPDQ\SURWRQV
7KHGHFD\LQYROYHVDQXFOHXVHPLWWLQJDQDOSKDSDUWLFOHDQGGHFD\LQJLQWRDGLrHUHQWQXFOHXV
$QDOSKDSDUWLFOHFRQVLVWVRISURWRQVDQGQHXWURQV WKHQXFOHXVRID+HOLXPDWRP
$OSKDGHFD\SURGXFHVDGDXJKWHUQXFOHXVDQGDQDOSKDSDUWLFOH KHOLXPQXFOHXV
:KHQDQXQVWDEOHQXFOHXV WKHSDUHQWQXFOHXV HPLWVUDGLDWLRQWKHFRQVWLWXWLRQRILWVQXFOHXV

FKDQJHV
$VDUHVXOWWKHLVRWRSHZLOOFKDQJHLQWRDGLrHUHQWHOHPHQW WKHGDXJKWHUQXFOHXV
$OSKDGHFD\FDQEHUHSUHVHQWHGE\WKHIROORZLQJUDGLRDFWLYHGHFD\HTXDWLRQ
$OSKDGHFD\HTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:KHQDQDOSKDSDUWLFOHLVHPLWWHGIURPDQXFOHXV
7KHQXFOHXVORVHVSURWRQVSURWRQQXPEHUGHFUHDVHVE\
7KHQXFOHXVORVHVQXFOHRQVQXFOHRQQXPEHUGHFUHDVHVE\
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
fhGHFD\
$fhSDUWLFOHLVDKLJKHQHUJ\HOHFWURQHPLWWHGIURPWKHQXFOHXV
fhGHFD\LVZKHQDQHXWURQWXUQVLQWRDSURWRQHPLWWLQJDQHOHFWURQDQGDQDQWL
HOHFWURQQHXWULQR
:KHQDfhLVHPLWWHGIURPDQXFOHXV
7KHQXPEHURISURWRQVLQFUHDVHVE\SURWRQQXPEHULQFUHDVHVE\
7KHWRWDOQXPEHURIQXFOHRQVVWD\VWKHVDPHQXFOHRQQXPEHUUHPDLQVWKHVDPH
(TXDWLRQIRUEHWDPLQXVHPLVVLRQ
7KHQHZQXFOHXVIRUPHGIURPWKHGHFD\LVFDOOHGWKHkGDXJKWHUlQXFOHXV QLWURJHQLQWKH
H[DPSOHDERYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
fGHFD\
$fSDUWLFOHLVDKLJKHQHUJ\SRVLWURQHPLWWHGIURPWKHQXFOHXV
fGHFD\LVZKHQDSURWRQWXUQVLQWRDQHXWURQHPLWWLQJDSRVLWURQ DQWLHOHFWURQ
DQGDQHOHFWURQQHXWULQR
:KHQDfLVHPLWWHGIURPDQXFOHXV
7KHQXPEHURISURWRQVGHFUHDVHVE\SURWRQQXPEHUGHFUHDVHVE\
7KHWRWDOQXPEHURIQXFOHRQVVWD\VWKHVDPHQXFOHRQQXPEHUUHPDLQVWKHVDPH
(TXDWLRQIRUEHWDSOXVHPLVVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP7LS
5HPHPEHUWRDYRLGWKHFRPPRQPLVWDNHRIFRQIXVLQJWKHQXPEHURIQHXWURQV
ZLWKQXFOHRQQXPEHU,QDOSKDGHFD\WKHQXFOHRQ SURWRQVDQGQHXWURQV
QXPEHUGHFUHDVHVE\EXWWKHQXPEHURIQHXWURQVRQO\GHFUHDVHVE\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
)81'$0(17$/3$57,&/(6
)81'$0(17$/3$57,&/(6
)XQGDPHQWDO3DUWLFOHV4XDUNV
4XDUNVDUHIXQGDPHQWDOSDUWLFOHVWKDWPDNHXSRWKHUVXEDWRPLFSDUWLFOHVVXFKDV
SURWRQVDQGQHXWURQV
3URWRQVDQGQHXWURQVDUHLQDFDWHJRU\RISDUWLFOHVFDOOHGKDGURQV
+DGURQVDUHGHsQHGDVDQ\SDUWLFOHPDGHXSRITXDUNV
)XQGDPHQWDOPHDQVWKDWTXDUNVDUHQRWPDGHXSRIDQ\RWKHUSDUWLFOHV$QRWKHUH[DPSOHLV
HOHFWURQV
4XDUNVKDYHQHYHUEHHQREVHUYHGRQWKHLURZQWKH\jUHHLWKHULQSDLUVRUJURXSVRIWKUHH
7KHUHDUHVL[tDYRXUV W\SHV RITXDUNVWKDWH[LVW
7KHVL[hDYRXUVRITXDUNV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
3URSHUWLHVRI4XDUNV
7KHFKDUJHRIDKDGURQLVGHWHUPLQHGE\WKHVXPRIWKHFKDUJHVRILWVTXDUNV
(DFKtDYRXURITXDUNKDVDFHUWDLQUHODWLYHFKDUJH
(DFKhDYRXURITXDUNKDVDFKDUJHRIHLWKHUeHRUdH
)RUH[DPSOHDSURWRQLVPDGHXSRIWZRXSTXDUNVDQGDGRZQTXDUN$GGLQJXSWKHLU
FKDUJHVJLYHVWKHFKDUJHRIDSURWRQ
oHoHhnH H
7KHHTXLYDOHQWDQWLSDUWLFOHRIWKHTXDUNLVWKHDQWLTXDUN
7KHVHDUHLGHQWLFDOWRTXDUNVH[FHSWZLWKRSSRVLWHUHODWLYHFKDUJHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
(DFKhDYRXURIDQWLTXDUNKDVDFKDUJHRIHLWKHUeHRUdH7KHTXDUNFRPSRVLWLRQRI
DQWLSURWRQVDQGDQWLQHXWURQVFKDQJHVWRDQWLTXDUNV
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP7LS
<RXZLOOEHH[SHFWHGWRUHPHPEHUWKHFKDUJHRIHDFKTXDUN+RZHYHU
LQVWHDGRIPHPRULVLQJWKHFKDUJHVRIDQWLTXDUNVWRRMXVWUHPHPEHUWKH\DUH
LGHQWLFDOEXWZLWKRSSRVLWHVLJQV
)XQGDPHQWDO3DUWLFOHV/HSWRQV
/HSWRQVDUHDJURXSRIIXQGDPHQWDO HOHPHQWDU\ SDUWLFOHV

7KLVPHDQVWKH\DUHQRWPDGHXSRIDQ\RWKHUSDUWLFOHV QRTXDUNV
7KHUHDUHVL[OHSWRQVDOWRJHWKHU
7KHVL[OHSWRQVDUHDOOIXQGDPHQWDOSDUWLFOHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
7KHPXRQDQGWDXSDUWLFOHDUHYHU\VLPLODUWRWKHHOHFWURQEXWZLWKVOLJKWO\ODUJHUPDVV
(OHFWURQVPXRQDQGWDXSDUWLFOHVDOOKDYHDFKDUJHRIHDQGDPDVVRIX
7KHUHDUHWKUHHlDYRXUV W\SHV RIQHXWULQRV HOHFWURQPXRQWDX
1HXWULQRVDUHWKHPRVWDEXQGDQWOHSWRQVLQWKHXQLYHUVH
7KH\KDYHQRFKDUJHDQGQHJOLJLEOHPDVV DOPRVW
/HSWRQVLQWHUDFWZLWKWKHZHDNLQWHUDFWLRQHOHFWURPDJQHWLFDQGJUDYLWDWLRQDOIRUFHV
+RZHYHUWKH\GRQRWLQWHUDFWZLWKWKHVWURQJIRUFH
$OWKRXJKTXDUNVDUHIXQGDPHQWDOSDUWLFOHVWRRWKH\DUHQRWFODVVHGDVOHSWRQV
/HSWRQVGRQRWLQWHUDFWZLWKWKHVWURQJIRUFHZKLOVWTXDUNVGR
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
48$5.&20326,7,21
4XDUN&RPSRVLWLRQ3URWRQV 1HXWURQV
3URWRQVDQGQHXWURQVDUHQRWIXQGDPHQWDOSDUWLFOHV7KH\DUHHDFKPDGHXSRIWKUHHTXDUNV
3URWRQVDUHPDGHXSRIWZRXSTXDUNVDQGDGRZQTXDUN
1HXWURQVDUHPDGHXSRIWZRGRZQTXDUNVDQGDQXSTXDUN
3URWRQVDQGQHXWURQVDUHPDGHXSRIWKUHHTXDUNV
<RXZLOOEHH[SHFWHGWRUHPHPEHUWKHVHTXDUNFRPELQDWLRQVIRUH[DPTXHVWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH
6WHS&DOFXODWHQXPEHURISURWRQV
7KHQXPEHURISURWRQVLVIURPWKHSURWRQQXPEHU SURWRQV
6WHS&DOFXODWHQXPEHURIQHXWURQV
7KHQXPEHURIQHXWURQV QXFOHRQQXPEHUhSURWRQQXPEHU h QHXWURQV
6WHS8STXDUNVLQDSURWRQ
3URWRQVDUHPDGHXSRIXXGTXDUNV XSTXDUNV
6WHS8STXDUNVLQDQHXWURQ
1HXWURQVDUHPDGHXSRIXGGTXDUNV XSTXDUN
6WHS7RWDOQXPEHURIXSTXDUNV
SURWRQV[XSTXDUNV XSTXDUNV
QHXWURQV[XSTXDUN XSTXDUNV
XSTXDUNV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
%DU\RQV 0HVRQV
+DGURQVDUHWKHJURXSRIVXEDWRPLFSDUWLFOHVWKDWDUHPDGHXSRITXDUNV
7KHVHPD\EHHLWKHUD
%DU\RQ TXDUNV
0HVRQ TXDUNDQGDQWLTXDUNSDLU
+DGURQVPD\EHHLWKHUDEDU\RQRUDPHVRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
4XDUNVKDYHQHYHUEHHQGLVFRYHUHGRQWKHLURZQDOZD\VLQSDLUVRUJURXSVRIWKUHH
$QWLKDGURQVFDQEHHLWKHU
$QWLEDU\RQV DQWLTXDUNV
$QWLPHVRQ TXDUNDQGDQWLTXDUNSDLU
$QWLKDGURQVPD\EHHLWKHUDQDQWLEDU\RQRUDQDQWLPHVRQ
1RWHWKDWDOOEDU\RQVRUPHVRQVKDYHLQWHJHU ZKROHQXPEHU FKDUJHVHJHHHWF

7KLVPHDQVTXDUNVLQDEDU\RQDUHHLWKHUDOOTXDUNVRUDOODQWLTXDUNV&RPELQDWLRQRITXDUNV
DQGDQWLTXDUNVGRQjWH[LVWLQDEDU\RQ
HJ
7KHDQWLSDUWLFOHRIDPHVRQLVVWLOODTXDUNDQWLTXDUNSDLU7KHGLrHUHQFHEHLQJWKHTXDUN
EHFRPHVWKHDQWLTXDUNDQGYLFHYHUVD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH
([DP7LS
m5HPHPEHULQJTXDUNFRPELQDWLRQVLVXVHIXOIRUWKHH[DP+RZHYHUDVORQJ
DV\RXFDQUHPHPEHUWKHFKDUJHVIRUHDFKTXDUNLWLVSRVVLEOHWRsJXUHRXW

WKHFRPELQDWLRQE\PDNLQJVXUHWKHFRPELQDWLRQRITXDUNVDGGXSWRWKH
FKDUJHRIWKHSDUWLFOH MXVWOLNHLQWKHZRUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
4XDUN&RPSRVLWLRQfh fGHFD\
%HWDGHFD\KDSSHQVYLDWKHZHDNLQWHUDFWLRQ
7KLVLVRQHRIWKHIRXUIXQGDPHQWDOIRUFHVDQGLWjVUHVSRQVLEOHIRUUDGLRDFWLYHGHFD\V
4XDUN&RPSRVLWLRQfhGHFD\
5HFDOOWKDWegGHFD\LVZKHQDQHXWURQWXUQVLQWRDSURWRQHPLWWLQJDQHOHFWURQDQG
DQWLHOHFWURQQHXWULQR
0RUHVSHFLsFDOO\DQHXWURQWXUQVLQWRDSURWRQEHFDXVHDGRZQTXDUNWXUQLQJLQWRDQXS
TXDUN
%HWDPLQXVGHFD\LVZKHQDGRZQTXDUNWXUQVLQWRDQXSTXDUN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
4XDUN&RPSRVLWLRQfGHFD\
5HFDOOWKDWeGHFD\LVZKHQDSURWRQWXUQVLQWRDQHXWURQHPLWWLQJDQSRVLWURQDQG
DQHOHFWURQQHXWULQR
0RUHVSHFLsFDOO\DSURWRQWXUQVLQWRDQHXWURQEHFDXVHDQXSTXDUNWXUQVLQWRDGRZQ
TXDUN
%HWDPLQXVGHFD\LVZKHQDQXSTXDUNWXUQVLQWRDGRZQTXDUN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP4XHVWLRQ(DV\
([DP4XHVWLRQ0HGLXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3DUWLFOH3K\VLFV q
([DP4XHVWLRQ+DUG
!&+(&.<285$16:(56$76$9(0<(;$06&28.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
&217(176
.LQHPDWLFVRI8QLIRUP&LUFXODU0RWLRQ
5DGLDQV $QJXODU'LVSODFHPHQW
$QJXODU6SHHG
&HQWULSHWDO$FFHOHUDWLRQ
&HQWULSHWDO$FFHOHUDWLRQ
&DOFXODWLQJ&HQWULSHWDO$FFHOHUDWLRQ
&DOFXODWLQJ&HQWULSHWDO)RUFH
.,1(0$7,&62)81,)250&,5&8/$5027,21
5$',$16 $1*8/$5',63/$&(0(17
5DGLDQV $QJXODU'LVSODFHPHQW
,QFLUFXODUPRWLRQLWLVPRUHFRQYHQLHQWWRPHDVXUHDQJXODUGLVSODFHPHQWLQXQLWVRIUDGLDQV
UDWKHUWKDQXQLWVRIGHJUHHV
7KHDQJXODUGLVSODFHPHQW b RIDERG\LQFLUFXODUPRWLRQLVGHpQHGDV
7KHFKDQJHLQDQJOHLQUDGLDQVRIDERG\DVLWURWDWHVDURXQGDFLUFOH
7KHDQJXODUGLVSODFHPHQWLVWKHUDWLRRI
1RWHERWKGLVWDQFHVPXVWEHPHDVXUHGLQWKHVDPHXQLWVHJPHWUHV
$UDGLDQ UDG LVGHpQHGDV
7KHDQJOHVXEWHQGHGDWWKHFHQWUHRIDFLUFOHE\DQDUFHTXDOLQOHQJWKWRWKH
UDGLXVRIWKHFLUFOH
$QJXODUGLVSODFHPHQWFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:KHQWKHDQJOHLVHTXDOWRRQHUDGLDQWKHOHQJWKRIWKHDUF cV LVHTXDOWRWKHUDGLXV U
RIWKHFLUFOH
:KHUH
db DQJXODUGLVSODFHPHQWRUDQJOHRIURWDWLRQ UDGLDQV
V OHQJWKRIWKHDUFRUWKHGLVWDQFHWUDYHOOHGDURXQGWKHFLUFOH P
U UDGLXVRIWKHFLUFOH P
5DGLDQVDUHFRPPRQO\ZULWWHQLQWHUPVRIf
7KHDQJOHLQUDGLDQVIRUDFRPSOHWHFLUFOH R LVHTXDOWR
,IDQDQJOHRIR fUDGLDQVWKHQUDGLDQLQGHJUHHVLVHTXDOWR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
8VHWKHIROORZLQJHTXDWLRQWRFRQYHUWIURPGHJUHHVWRUDGLDQV
7DEOHRIFRPPRQGHJUHHVWRUDGLDQVFRQYHUVLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:RUNHGH[DPSOH5DGLDQVFRQYHUVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
([DP7LS
m<RXZLOOQRWLFH\RXUFDOFXODWRUKDVDGHJUHH 'HJ DQGUDGLDQV 5DG PRGH

m7KLVLVVKRZQE\WKHk'lRUk5lKLJKOLJKWHGDWWKHWRSRIWKHVFUHHQ
m5HPHPEHUWRPDNHVXUHLWjVLQWKHULJKWPRGHZKHQXVLQJWULJRQRPHWULFIXQFWLRQV VLQFRV
WDQ GHSHQGLQJRQZKHWKHUWKHDQVZHULVUHTXLUHGLQGHJUHHVRUUDGLDQV
m,WLVH[WUHPHO\FRPPRQIRUVWXGHQWVWRJHWWKHZURQJDQVZHU DQGORVHPDUNV EHFDXVHWKHLU
FDOFXODWRULVLQWKHZURQJPRGHhPDNHVXUHWKLVGRHVQjWKDSSHQWR\RX


5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
$1*8/$563(('
$QJXODU6SHHG
$Q\REMHFWWUDYHOOLQJLQDXQLIRUPFLUFXODUPRWLRQDWWKHVDPHVSHHGWUDYHOVZLWKD
FRQVWDQWO\FKDQJLQJYHORFLW\
7KLVLVEHFDXVHLWLVFRQVWDQWO\FKDQJLQJGLUHFWLRQDQGLVWKHUHIRUHDFFHOHUDWLQJ
7KHDQJXODUVSHHG n RIDERG\LQFLUFXODUPRWLRQLVGHpQHGDV
7KHUDWHRIFKDQJHLQDQJXODUGLVSODFHPHQWZLWKUHVSHFWWRWLPH
$QJXODUVSHHGLVDVFDODUTXDQWLW\DQGLVPHDVXUHGLQUDGV
:KHQDQREMHFWLVLQXQLIRUPFLUFXODUPRWLRQYHORFLW\FRQVWDQWO\FKDQJHVGLUHFWLRQEXW
WKHVSHHGVWD\VWKHVDPH
&DOFXODWLQJ$QJXODU6SHHG
7DNLQJWKHDQJXODUGLVSODFHPHQWRIDFRPSOHWHF\FOHDVfWKHDQJXODUVSHHGnFDQEH
FDOFXODWHGXVLQJWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:KHUH
db FKDQJHLQDQJXODUGLVSODFHPHQW UDGLDQV
dW WLPHLQWHUYDO V
7 WKHWLPHSHULRG V
I IUHTXHQF\ +]
$QJXODUYHORFLW\LVWKHVDPHDVDQJXODUVSHHGEXWLWLVDYHFWRUTXDQWLW\
:KHQDQREMHFWWUDYHOVDWFRQVWDQWOLQHDUVSHHGYLQDFLUFOHRIUDGLXVUWKHDQJXODUYHORFLW\
LVHTXDOWR
:KHUH
YLVWKHOLQHDUVSHHG PV
ULVWKHUDGLXVRIRUELW P
7KLVHTXDWLRQWHOOVXV
7KHJUHDWHUWKHURWDWLRQDQJOHeLQDJLYHQDPRXQWRIWLPHWKHJUHDWHUWKHDQJXODU
YHORFLW\n
$QREMHFWURWDWLQJIXUWKHUIURPWKHFHQWUHRIWKHFLUFOH ODUJHUU PRYHVZLWKDIDVWHU

DQJXODUYHORFLW\ ODUJHUn

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:RUNHGH[DPSOH$QJXODUVSHHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
&(175,3(7$/$&&(/(5$7,21
&(175,3(7$/$&&(/(5$7,21
:KDW&DXVHV&HQWULSHWDO$FFHOHUDWLRQ"
9HORFLW\DQGDFFHOHUDWLRQDUHERWKYHFWRUTXDQWLWLHV
$QREMHFWLQXQLIRUPFLUFXODUPRWLRQLVFRQWLQXRXVO\FKDQJLQJGLUHFWLRQDQGWKHUHIRUHLV
FRQVWDQWO\FKDQJLQJYHORFLW\
7KHREMHFWPXVWWKHUHIRUHEHDFFHOHUDWLQJ
7KLVLVFDOOHGWKHFHQWULSHWDODFFHOHUDWLRQDQGLVSHUSHQGLFXODUWRWKHGLUHFWLRQRIWKH
OLQHDUVSHHG
&HQWULSHWDOPHDQVLWDFWVWRZDUGVWKHFHQWUHRIWKHFLUFXODUSDWK
&HQWULSHWDOIRUFHDQGDFFHOHUDWLRQDUHDOZD\VGLUHFWHGWRZDUGVWKHFHQWUHRIWKHFLUFOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
7KHFHQWULSHWDODFFHOHUDWLRQLVFDXVHGE\DFHQWULSHWDOIRUFHRIFRQVWDQWPDJQLWXGHWKDW
DOVRDFWVSHUSHQGLFXODUWRWKHGLUHFWLRQRIPRWLRQ WRZDUGVWKHFHQWUH
7KHUHIRUHWKHFHQWULSHWDODFFHOHUDWLRQDQGIRUFHDFWLQWKHVDPHGLUHFWLRQ
([DP7LS
m7KHOLQHDUVSHHGLVVRPHWLPHVUHIHUUHGWRDVWKHiWDQJHQWLDOjVSHHG
m$WDQJHQWLVDVWUDLJKWOLQHZKLFKWRXFKHVDFLUFOHRUFXUYHDWH[DFWO\RQH
SRLQW

m7KHNH\IHDWXUHRIDWDQJHQWRIDFLUFOHLVWKDWLWDOZD\VDFWV
SHUSHQGLFXODUWRLWVUDGLXV
m<RXFDQpQGRXWPRUHLQWKH$/HYHO0DWKVUHYLVLRQQRWHVRQ7DQJHQWV
5HODWLQJ&HQWULSHWDO$FFHOHUDWLRQ $QJXODU6SHHG
$QREMHFWWUDYHOOLQJLQXQLIRUPFLUFXODUPRWLRQKDVFHQWULSHWDODFFHOHUDWLRQ\HWLWVDQJXODU
VSHHG n LVFRQVWDQW
7KLVLVEHFDXVHVSHHGLVDVFDODUTXDQWLW\ZKLOVWYHORFLW\LVDYHFWRUTXDQWLW\
7KHUHIRUHDQJXODUVSHHGLVWKHPDJQLWXGH VL]H FRPSRQHQWRIDQJXODUYHORFLW\
.H\LGHDVWRUHPHPEHU
$QJXODUVSHHG PDJQLWXGH VWD\VFRQVWDQWDQJXODUYHORFLW\ GLUHFWLRQ LVFRQVWDQWO\
FKDQJLQJ
$QJXODUVSHHGGRHVQRWFKDQJHZLWKUDGLXVEXWOLQHDUVSHHGGRHV
7KHREMHFWjVFHQWULSHWDODFFHOHUDWLRQLVDOZD\VGLUHFWHGWRZDUGWKHFHQWUHRIWKH
FLUFOHDQGLVSHUSHQGLFXODUWRWKHREMHFWjVYHORFLW\DWDQ\RQHWLPH
9HORFLW\DQGDFFHOHUDWLRQDUHERWKGHpQHGE\DFKDQJHLQGLUHFWLRQQRWMXVWD
FKDQJHLQWKHPDJQLWXGH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
([DP7LS
:HDUHXVHGWRWKHLGHDRIDFFHOHUDWLRQPHDQLQJVRPHWKLQJLVVSHHGLQJXS
6RLWPLJKWVRXQGFRXQWHULQWXLWLYHWRVD\DQREMHFWWUDYHOOLQJLQDFLUFOHLV
DFFHOHUDWLQJ\HWLWDOVRKDVFRQVWDQWVSHHG7KLVLVZKHUHWKHLGHDRIVFDODUV
DQGYHFWRUVZRXOGEHXVHIXOWRUHYLVLWLI\RXDUHQRWFRQpGHQWZLWKWKLV
FRQFHSW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
&$/&8/$7,1*&(175,3(7$/$&&(/(5$7,21
&DOFXODWLQJ&HQWULSHWDO$FFHOHUDWLRQ
&HQWULSHWDODFFHOHUDWLRQFDQEHGHpQHGXVLQJWKHUDGLXVUDQGOLQHDUVSHHGY
8VLQJWKHHTXDWLRQUHODWLQJDQJXODUVSHHGgDQGOLQHDUVSHHGY
Y Ud
7KHVHHTXDWLRQVFDQEHFRPELQHGWRJLYHXVDQRWKHUIRUPRIWKHFHQWULSHWDODFFHOHUDWLRQ
HTXDWLRQ
7KLVHTXDWLRQWHOOVXVFHQWULSHWDODFFHOHUDWLRQLVHTXDOWRWKHUDGLXVWLPHVWKHVTXDUHRIWKH
DQJXODUVSHHG
$OWHUQDWLYHO\UHDUUDQJHIRUU
7KLVHTXDWLRQFDQEHFRPELQHGZLWKWKHpUVWRQHWRJLYHXVDQRWKHUIRUPRIWKHFHQWULSHWDO
DFFHOHUDWLRQHTXDWLRQ
7KLVHTXDWLRQWHOOVXVFHQWULSHWDODFFHOHUDWLRQLVHTXDOWRWKHOLQHDUVSHHGWLPHVWKHDQJXODU
VSHHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
&HQWULSHWDODFFHOHUDWLRQLVDOZD\VGLUHFWHGWRZDUGWKHFHQWUHRIWKHFLUFOHDQGLV
SHUSHQGLFXODUWRWKHREMHFWcVYHORFLW\
:KHUH
D FHQWULSHWDODFFHOHUDWLRQ PV
Y OLQHDUVSHHG PV
n DQJXODUVSHHG UDGV
U UDGLXVRIWKHRUELW P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:RUNHGH[DPSOH&HQWULSHWDODFFHOHUDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
&$/&8/$7,1*&(175,3(7$/)25&(
&DOFXODWLQJ&HQWULSHWDO)RUFH
$QREMHFWPRYLQJLQDFLUFOHLVQRWLQHTXLOLEULXPLWKDVDUHVXOWDQWIRUFHDFWLQJXSRQLW
7KLVLVNQRZQDVWKHFHQWULSHWDOIRUFHDQGLVZKDWNHHSVWKHREMHFWPRYLQJLQDFLUFOH
7KHFHQWULSHWDOIRUFH ) LVGHpQHGDV
7KHUHVXOWDQWSHUSHQGLFXODUIRUFHWRZDUGVWKHFHQWUHRIWKHWKHFLUFOHQHHGHGWR
NHHSDERG\LQXQLIRUPFLUFXODUPRWLRQ
&HQWULSHWDOIRUFHFDQEHFDOFXODWHGXVLQJ
&HQWULSHWDOIRUFHLVDOZD\VSHUSHQGLFXODUWRWKHGLUHFWLRQRIWUDYHO
:KHUH
) FHQWULSHWDOIRUFH 1
Y OLQHDUYHORFLW\ PV
n DQJXODUVSHHG UDGV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
1RWHFHQWULSHWDOIRUFHDQGFHQWULSHWDODFFHOHUDWLRQDFWLQWKHVDPHGLUHFWLRQ
7KLVLVGXHWR1HZWRQjV6HFRQG/DZ
7KHFHQWULSHWDOIRUFHLVQRWDVHSDUDWHIRUFHRILWVRZQ
,WFDQEHDQ\W\SHRIIRUFHGHSHQGLQJRQWKHVLWXDWLRQZKLFKNHHSVDQREMHFWPRYLQJ
LQDFLUFXODUSDWK
([DPSOHVRIFHQWULSHWDOIRUFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0RWLRQLQD&LUFOH o
:RUNHGH[DPSOH&HQWULSHWDOIRUFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*UDYLWDWLRQDO)LHOGV r
&217(176
8QLYHUVDO*UDYLWDWLRQ
*UDYLWDWLRQDO)LHOGV
*UDYLWDWLRQDO)RUFH%HWZHHQ3RLQW0DVVHV
&LUFXODU2UELWVLQ*UDYLWDWLRQDO)LHOGV
*HRVWDWLRQDU\2UELWV
*UDYLWDWLRQDO)LHOG6WUHQJWK
7KH9DOXHRIJRQ(DUWK
*UDYLWDWLRQDO3RWHQWLDO
81,9(56$/*5$9,7$7,21
*5$9,7$7,21$/),(/'6
'HtQLQJ*UDYLWDWLRQDO)LHOG
7KHUHLVDIRUFHRIDWWUDFWLRQEHWZHHQDOOPDVVHV
7KLVIRUFHLVNQRZQDVWKHkIRUFHGXHWRJUDYLW\lRUWKHZHLJKW
7KH(DUWKlVJUDYLWDWLRQDOtHOGLVUHVSRQVLEOHIRUWKHZHLJKWRIDOOREMHFWVRQ(DUWK
$JUDYLWDWLRQDOtHOGLVGHtQHGDV
$UHJLRQRIVSDFHZKHUHDPDVVH[SHULHQFHVDIRUFHGXHWRWKHJUDYLWDWLRQDO
DWWUDFWLRQRIDQRWKHUPDVV
7KHGLUHFWLRQRIWKHJUDYLWDWLRQDOtHOGLVDOZD\VWRZDUGVWKHFHQWUHRIWKHPDVV
*UDYLWDWLRQDOIRUFHVFDQQRWEHUHSXOVLYH
7KHVWUHQJWKRIWKLVJUDYLWDWLRQDOtHOG J DWDSRLQWLVWKHIRUFH )J SHUXQLWPDVV P RIDQ

REMHFWDWWKDWSRLQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:KHUH
J JUDYLWDWLRQDOtHOGVWUHQJWK 1NJ
)J IRUFHGXHWRJUDYLW\RUZHLJKW 1
P PDVV NJ
7KLVHTXDWLRQVWHOOVXV
2QSODQHWVZLWKDODUJHYDOXHRIJWKHJUDYLWDWLRQDOIRUFHSHUXQLWPDVVLVJUHDWHU
WKDQRQSODQHWVZLWKDVPDOOHUYDOXHRIJ
2QVXFKSODQHWVVXFKDV-XSLWHUDQREMHFWlVPDVVUHPDLQVWKHVDPHDWDOOSRLQWVLQVSDFH
+RZHYHUWKHLUZHLJKWZLOOEHDORWJUHDWHUPHDQLQJIRUH[DPSOHDKXPDQZLOOEHXQDEOHWR
IXOO\VWDQGXS
$SHUVRQcVZHLJKWRQ-XSLWHUZRXOGEHVRODUJHDKXPDQZRXOGEHXQDEOHWRIXOO\VWDQG
XS

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH*UDYLWDWLRQDOtHOG
([DP7LS
7KHUHLVDELJGLsHUHQFHEHWZHHQJDQG* VRPHWLPHVUHIHUUHGWRDVkOLWWOHJl
DQGkELJ*lUHVSHFWLYHO\ JLVWKHJUDYLWDWLRQDOtHOGVWUHQJWKDQG*LV
1HZWRQlVJUDYLWDWLRQDOFRQVWDQW0DNHVXUHQRWWRXVHWKHVHLQWHUFKDQJHDEO\
5HSUHVHQWLQJ*UDYLWDWLRQDO)LHOGV
7KHGLUHFWLRQRIDJUDYLWDWLRQDOtHOGLVUHSUHVHQWHGE\JUDYLWDWLRQDOtHOGOLQHV
7KHJUDYLWDWLRQDOtHOGOLQHVDURXQGDSRLQWPDVVDUHUDGLDOO\LQZDUGV
7KHJUDYLWDWLRQDOtHOGOLQHVRIDXQLIRUPtHOGZKHUHWKHtHOGVWUHQJWKLVWKHVDPHDWDOO
SRLQWVLVUHSUHVHQWHGE\HTXDOO\VSDFHGSDUDOOHOOLQHV
)RUH[DPSOHWKHtHOGVOLQHVRQWKH(DUWKlVVXUIDFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*UDYLWDWLRQDOdHOGOLQHVIRUDSRLQWPDVVDQGDXQLIRUPJUDYLWDWLRQDOdHOG
5DGLDOtHOGVDUHFRQVLGHUHGQRQXQLIRUPhHOGV
7KHJUDYLWDWLRQDOtHOGVWUHQJWKJLVGLsHUHQWGHSHQGLQJRQKRZIDU\RXDUHIURPWKH
FHQWUH
3DUDOOHOtHOGOLQHVRQWKH(DUWKlVVXUIDFHDUHFRQVLGHUHGDXQLIRUPhHOG
7KHJUDYLWDWLRQDOtHOGVWUHQJWKJLVWKHVDPHWKURXJKRXW
([DP7LS
$OZD\VODEHOWKHDUURZVRQWKHtHOGOLQHV*UDYLWDWLRQDOIRUFHVDUHDWWUDFWLYH
RQO\5HPHPEHU

o)RUDUDGLDOhHOGLWLVWRZDUGVWKHFHQWUHRIWKHVSKHUHRUSRLQWFKDUJH
o)RUDXQLIRUPhHOGWRZDUGVWKHVXUIDFHRIWKHREMHFWHJ(DUWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
3RLQW0DVV$SSUR[LPDWLRQ
)RUDSRLQWRXWVLGHDXQLIRUPVSKHUHWKHPDVVRIWKHVSKHUHPD\EHFRQVLGHUHGWREHD
SRLQWPDVVDWLWVFHQWUH
$XQLIRUPVSKHUHLVRQHZKHUHLWVPDVVLVGLVWULEXWHGHYHQO\
7KHJUDYLWDWLRQDOtHOGOLQHVDURXQGDXQLIRUPVSKHUHDUHWKHUHIRUHLGHQWLFDOWRWKRVH
DURXQGDSRLQWPDVV
$QREMHFWFDQEHUHJDUGHGDVSRLQWPDVVZKHQ
$ERG\FRYHUVDYHU\ODUJHGLVWDQFHDVFRPSDUHGWRLWVVL]HVRWRVWXG\LWV
PRWLRQLWVVL]HRUGLPHQVLRQVFDQEHQHJOHFWHG
$QH[DPSOHRIWKLVLVtHOGOLQHVDURXQGSODQHWV
*UDYLWDWLRQDOdHOGOLQHVDURXQGDXQLIRUPVSKHUHDUHLGHQWLFDOWRWKRVHRQDSRLQWPDVV
5DGLDOtHOGVDUHFRQVLGHUHGQRQXQLIRUPtHOGV
6RWKHJUDYLWDWLRQDOtHOGVWUHQJWKJLVGLsHUHQWGHSHQGLQJRQKRZIDU\RXDUHIURP
WKHFHQWUHRIPDVVRIWKHVSKHUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*5$9,7$7,21$/)25&(%(7:((132,170$66(6
1HZWRQ V/DZRI*UDYLWDWLRQ
7KHJUDYLWDWLRQDOIRUFHEHWZHHQWZRERGLHVRXWVLGHDXQLIRUPtHOGHJEHWZHHQWKH(DUWK
DQGWKH6XQLVGHtQHGE\1HZWRQlV/DZRI*UDYLWDWLRQ
5HFDOOWKDWWKHPDVVRIDXQLIRUPVSKHUHFDQEHFRQVLGHUHGWREHDSRLQWPDVVDWLWV
FHQWUH
1HZWRQlV/DZRI*UDYLWDWLRQVWDWHVWKDW
7KHJUDYLWDWLRQDOIRUFHEHWZHHQWZRSRLQWPDVVHVLVSURSRUWLRQDOWRWKHSURGXFWRI
WKHPDVVHVDQGLQYHUVHO\SURSRUWLRQDOWRWKHVTXDUHWKHLUVHSDUDWLRQ
,QHTXDWLRQIRUPWKLVFDQEHZULWWHQDV
7KHJUDYLWDWLRQDOIRUFHEHWZHHQWZRPDVVHVRXWVLGHDXQLIRUPdHOGLVGHdQHGE\
1HZWRQcV/DZRI*UDYLWDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:KHUH
)* JUDYLWDWLRQDOIRUFHEHWZHHQWZRPDVVHV 1
* 1HZWRQlVJUDYLWDWLRQDOFRQVWDQW
PDQGP WZRSRLQWVPDVVHV NJ
U GLVWDQFHEHWZHHQWKHFHQWUHRIWKHWZRPDVVHV P
$OWKRXJKSODQHWVDUHQRWSRLQWPDVVHVWKHLUVHSDUDWLRQLVPXFKODUJHUWKDQWKHLUUDGLXV
7KHUHIRUH1HZWRQlVODZRIJUDYLWDWLRQDSSOLHVWRSODQHWVRUELWLQJWKH6XQ
7KHUUHODWLRQLVFDOOHGWKHkLQYHUVHVTXDUHODZl
7KLVPHDQVWKDWZKHQDPDVVLVWZLFHDVIDUDZD\IURPDQRWKHULWVIRUFHGXHWRJUDYLW\
UHGXFHVE\ e d

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH1HZWRQlVODZRIJUDYLWDWLRQ
([DP7LS
$FRPPRQPLVWDNHLQH[DPVLVWRIRUJHWWRDGGWRJHWKHUWKHGLVWDQFHIURP
WKHVXUIDFHRIWKHSODQHWDQGLWVUDGLXVWRREWDLQWKHYDOXHRIU7KHGLVWDQFHU

LVPHDVXUHGIURPWKHFHQWUHRIWKHPDVVZKLFKLVIURPWKHFHQWUHRIWKH
SODQHW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&,5&8/$525%,76,1*5$9,7$7,21$/),(/'6
&LUFXODU2UELWVLQ*UDYLWDWLRQDO)LHOGV
6LQFHPRVWSODQHWVDQGVDWHOOLWHVKDYHDQHDUFLUFXODURUELWWKHJUDYLWDWLRQDOIRUFH)*
EHWZHHQWKHVXQRUDQRWKHUSODQHWSURYLGHVWKHFHQWULSHWDOIRUFHQHHGHGWRVWD\LQDQRUELW
%RWKWKHJUDYLWDWLRQDOIRUFHDQGFHQWULSHWDOIRUFHDUHSHUSHQGLFXODUWRWKHGLUHFWLRQRIWUDYHO
RIWKHSODQHW
&RQVLGHUDVDWHOOLWHZLWKPDVVPRUELWLQJ(DUWKZLWKPDVV0DWDGLVWDQFHUIURPWKHFHQWUH
WUDYHOOLQJZLWKOLQHDUVSHHGY
(TXDWLQJWKHJUDYLWDWLRQDOIRUFHWRWKHFHQWULSHWDOIRUFHIRUDSODQHWRUVDWHOOLWHLQRUELWJLYHV
7KHPDVVRIWKHVDWHOOLWHPZLOOFDQFHORXWRQERWKVLGHVWRJLYH
7KLVPHDQVWKDWDOOVDWHOOLWHVZKDWHYHUWKHLUPDVVZLOOWUDYHODWWKHVDPHVSHHGYLQD
SDUWLFXODURUELWUDGLXVU
5HFDOOWKDWVLQFHWKHGLUHFWLRQRIDSODQHWRUELWLQJLQFLUFXODUPRWLRQLVFRQVWDQWO\FKDQJLQJLW
KDVFHQWULSHWDODFFHOHUDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
$VDWHOOLWHLQRUELWDURXQGWKH(DUWKWUDYHOVLQFLUFXODUPRWLRQ
.HSOHUlV7KLUG/DZRI3ODQHWDU\0RWLRQ
)RUWKHRUELWDOWLPHSHULRG7WRWUDYHOWKHFLUFXPIHUHQFHRIWKHRUELWiUWKHOLQHDUVSHHGY
FDQEHZULWWHQDV
7KLVLVDUHVXOWRIWKHZHOONQRZQHTXDWLRQVSHHG GLVWDQFHWLPH
6XEVWLWXWLQJWKHYDOXHRIWKHOLQHDUVSHHGYLQWRWKHDERYHHTXDWLRQ
5HDUUDQJLQJOHDGVWR.HSOHUlVWKLUGODZHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHHTXDWLRQVKRZVWKDWWKHRUELWDOSHULRG7LVUHODWHGWRWKHUDGLXVURIWKHRUELW7KLVLV
NQRZQDV.HSOHUlVWKLUGODZ
)RUSODQHWVRUVDWHOOLWHVLQDFLUFXODURUELWDERXWWKHVDPHFHQWUDOERG\WKHVTXDUH
RIWKHWLPHSHULRGLVSURSRUWLRQDOWRWKHFXEHRIWKHUDGLXVRIWKHRUELW
.HSOHUlVWKLUGODZFDQEHVXPPDULVHGDV
0DWKV7LS
7KHpV\PEROPHDQVkSURSRUWLRQDOWRl
)LQGRXWPRUHDERXWSURSRUWLRQDOUHODWLRQVKLSVEHWZHHQWZRYDULDEOHVLQWKHmSURSRUWLRQDO
UHODWLRQVKLSVnVHFWLRQRIWKH$/HYHO0DWKVUHYLVLRQQRWHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH&LUFXODURUELWVLQJUDYLWDWLRQDOtHOGV
$ELQDU\VWDUV\VWHPFRQVWDQWRIWZRVWDUVRUELWLQJDERXWDh[HGSRLQW%
7KHVWDURIPDVV0KDVDFLUFXODURUELWRIUDGLXV5DQGPDVV0KDVDUDGLXVRI5
%RWKKDYHOLQHDUVSHHGYDQGDQDQJXODUVSHHGgDERXW%
6WDWHWKHIROORZLQJIRUPXODLQWHUPVRI*05DQG5
7KHDQJXODUVSHHGgRI0
7KHWLPHSHULRG7IRUHDFKVWDULQWHUPVRIDQJXODUVSHHGg
7KHDQJXODUVSHHGRIgRI0
6WHS(TXDWLQJWKHFHQWULSHWDOIRUFHRIPDVV0WRWKHJUDYLWDWLRQDOIRUFH
EHWZHHQ0DQG0
6WHS0FDQFHOVRQERWKVLGHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WHS5HDUUDQJHIRUDQJXODUYHORFLW\q
6WHS6TXDUHURRWERWKVLGHV
7KHWLPHSHULRG7IRUHDFKVWDULQWHUPVRIDQJXODUVSHHGg
6WHS$QJXODUVSHHGHTXDWLRQZLWKWLPHSHULRG7
6WHS5HDUUDQJHIRU7
6WHS6XEVWLWXWHLQq
([DP7LS
0DQ\RIWKHFDOFXODWLRQVLQWKH*UDYLWDWLRQTXHVWLRQVGHSHQGRQWKHHTXDWLRQV

IRUFLUFXODUPRWLRQ%HVXUHWRUHYLVLWWKHVHDQGXQGHUVWDQGKRZWRXVHWKHP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*(267$7,21$5<25%,76
*HRVWDWLRQDU\2UELWV
0DQ\FRPPXQLFDWLRQVDWHOOLWHVDURXQG(DUWKIROORZDJHRVWDWLRQDU\RUELW
7KLVLVDVSHFLtFW\SHRIRUELWLQZKLFKWKHVDWHOOLWH
5HPDLQVGLUHFWO\DERYHWKHHTXDWRUWKHUHIRUHLWDOZD\VRUELWVDWWKHVDPHSRLQW
DERYHWKH(DUWKlVVXUIDFH
0RYHVIURPZHVWWRHDVW VDPHGLUHFWLRQDVWKH(DUWKVSLQV
+DVDQRUELWDOWLPHSHULRGHTXDOWR(DUWKlVURWDWLRQDOSHULRGRIKRXUV
*HRVWDWLRQDU\VDWHOOLWHVDUHXVHGIRUWHOHFRPPXQLFDWLRQWUDQVPLVVLRQV HJUDGLR DQG

WHOHYLVLRQEURDGFDVW
$EDVHVWDWLRQRQ(DUWKVHQGVWKH79VLJQDOXSWRWKHVDWHOOLWHZKHUHLWLVDPSOLtHGDQG
EURDGFDVWEDFNWRWKHJURXQGWRWKHGHVLUHGORFDWLRQV
7KHVDWHOOLWHUHFHLYHUGLVKHVRQWKHVXUIDFHPXVWSRLQWWRZDUGVWKHVDPHSRLQWLQWKHVN\
6LQFHWKHJHRVWDWLRQDU\RUELWVRIWKHVDWHOOLWHVDUHt[HGWKHUHFHLYHUGLVKHVFDQEH
t[HGWRR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*HRVWDWLRQDU\VDWHOOLWHLQRUELW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH5DGLXVRIJHRVWDWLRQDU\RUELW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*5$9,7$7,21$/),(/'675(1*7+
'HULYLQJ*UDYLWDWLRQDO)LHOG6WUHQJWK J
7KHJUDYLWDWLRQDOtHOGVWUHQJWKDWDSRLQWGHVFULEHVKRZVWURQJRUZHDNDJUDYLWDWLRQDO
hHOGLVDWWKDWSRLQW
7KHJUDYLWDWLRQDOtHOGVWUHQJWKGXHWRDSRLQWPDVVFDQEHGHULYHGIURPFRPELQLQJWKH
HTXDWLRQVIRU1HZWRQlVODZRIJUDYLWDWLRQDQGJUDYLWDWLRQDOtHOGVWUHQJWK
)RUFDOFXODWLRQVLQYROYLQJJUDYLWDWLRQDOIRUFHVDVSKHULFDOPDVVFDQEHWUHDWHGDVD
SRLQWPDVVDWWKHFHQWUHRIWKHVSKHUH
1HZWRQlVODZRIJUDYLWDWLRQVWDWHVWKDWWKHDWWUDFWLYHIRUFH)EHWZHHQWZRPDVVHV0DQGP
ZLWKVHSDUDWLRQULVHTXDOWR
7KHJUDYLWDWLRQDOtHOGVWUHQJWKDWDSRLQWLVGHtQHGDVWKHIRUFH)SHUXQLWPDVVP
6XEVWLWXWLQJWKHIRUFH)ZLWKWKHJUDYLWDWLRQDOIRUFH)*OHDGVWR
&DQFHOOLQJPDVVPWKHHTXDWLRQEHFRPHV
:KHUH
J JUDYLWDWLRQDOtHOGVWUHQJWK 1NJ
* 1HZWRQlV*UDYLWDWLRQDO&RQVWDQW
0 PDVVRIWKHERG\SURGXFLQJWKHJUDYLWDWLRQDOtHOG NJ
U GLVWDQFHIURPWKHPDVVZKHUH\RXDUHFDOFXODWLQJWKHtHOGVWUHQJWK P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DOFXODWLQJJ
*UDYLWDWLRQDOtHOGVWUHQJWKJLVDYHFWRUTXDQWLW\
7KHGLUHFWLRQRIJLVDOZD\VWRZDUGVWKHFHQWUHRIWKHERG\FUHDWLQJWKHJUDYLWDWLRQDOtHOG
7KLVLVWKHVDPHGLUHFWLRQDVWKHJUDYLWDWLRQDOtHOGOLQHV
2QWKH(DUWKlVVXUIDFHJKDVDFRQVWDQWYDOXHRI1NJ
+RZHYHURXWVLGHWKH(DUWKfVVXUIDFHJLVQRWFRQVWDQW
JGHFUHDVHVDVULQFUHDVHVE\DIDFWRURIU
7KLVLVDQLQYHUVHVTXDUHODZUHODWLRQVKLSZLWKGLVWDQFH
:KHQJLVSORWWHGDJDLQVWWKHGLVWDQFHIURPWKHFHQWUHRIDSODQHWUKDVWZRSDUWV
:KHQU5WKHUDGLXVRIWKHSODQHWJLVGLUHFWO\SURSRUWLRQDOWRU
:KHQU!5JLVLQYHUVHO\SURSRUWLRQDOWRU WKLVLVDQk/lVKDSHGFXUYHDQGVKRZV
WKDWJGHFUHDVHVUDSLGO\ZLWKLQFUHDVLQJGLVWDQFHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*UDSKVKRZLQJKRZJUDYLWDWLRQDOdHOGVWUHQJWKYDULHVDWJUHDWHUGLVWDQFHIURPWKH
(DUWKcVVXUIDFH
6RPHWLPHVJLVUHIHUUHGWRDVWKHkDFFHOHUDWLRQGXHWRJUDYLW\lZLWKXQLWVRIPV
$Q\REMHFWWKDWIDOOVIUHHO\LQDXQLIRUPJUDYLWDWLRQDOtHOGRQ(DUWKKDVDQDFFHOHUDWLRQRI
PV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH*UDYLWDWLRQDOtHOGVWUHQJWK
6WHS:ULWHGRZQWKHNQRZQTXDQWLWLHV
J0 JUDYLWDWLRQDOtHOGVWUHQJWKRQWKH0RRQj0 PHDQGHQVLW\RIWKH0RRQ
J( JUDYLWDWLRQDOtHOGVWUHQJWKRQWKH(DUWKj( PHDQGHQVLW\RIWKH(DUWK
6WHS7KHYROXPHVRIWKH(DUWKDQG0RRQDUHHTXDOWRWKHYROXPHRIDVSKHUH
6WHS:ULWHWKHGHQVLW\HTXDWLRQDQGUHDUUDQJHIRUPDVV0
0 e9
6WHS:ULWHWKHJUDYLWDWLRQDOtHOGVWUHQJWKHTXDWLRQ
6WHS6XEVWLWXWH0LQWHUPVRIjDQG9

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WHS6XEVWLWXWHWKHYROXPHRIDVSKHUHHTXDWLRQIRU9DQGVLPSOLI\
6WHS)LQGWKHUDWLRRIWKHJUDYLWDWLRQDOtHOGVWUHQJWKV
6WHS5HDUUDQJHDQGFDOFXODWHWKHUDWLRRIWKH0RRQlVUDGLXVU0DQGWKH(DUWKlV
UDGLXVU(

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7+(9$/8(2)*21($57+
7KH9DOXHRIJRQ(DUWK
*UDYLWDWLRQDOtHOGVWUHQJWKJLVDSSUR[LPDWHO\FRQVWDQWIRUVPDOOFKDQJHVLQKHLJKWQHDUWKH
(DUWKlVVXUIDFH PV
7KLVLVEHFDXVHIURPWKHLQYHUVHVTXDUHODZUHODWLRQVKLS
7KHYDOXHRIJGHSHQGVRQWKHGLVWDQFHIURPWKHFHQWUHRI(DUWKU
2QWKH(DUWKlVVXUIDFHULVHTXDOWRWKHUDGLXVRIWKH(DUWK NP
6LQFHWKLVLVPXFKODUJHUWKDQWKHGLVWDQFHEHWZHHQWKHVXUIDFHRIWKHHDUWKDQGFHQWUHRI
PDVVRIDQREMHFWRQLWWKHVPDOOFKDQJHVLQKHLJKWQHDUWKH(DUWKlVVXUIDFHPDNHYHU\OLWWOH
GLsHUHQFHWRWKHYDOXHRIJ
,IZHWDNHDSRVLWLRQKDERYHWKH(DUWKlVVXUIDFHZKHUHLWLVUHDVRQDEOHWRDVVXPHKLVPXFK
VPDOOHUWKDQWKHUDGLXVRIWKH(DUWK K5
7KLVPHDQVJUHPDLQVDSSUR[LPDWHO\FRQVWDQWXQWLODVLJQLtFDQWGLVWDQFHDZD\IURPWKH
(DUWKlVVXUIDFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOHJRQ0RXQW(YHUHVW
7KHIROORZLQJZRUNHGH[DPSOHSURYHVWKDWJGHFUHDVHVE\YHU\OLWWOHHYHQRQWKHKLJKHVW
SRLQWRQ(DUWK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*5$9,7$7,21$/327(17,$/
*5$9,7$7,21$/327(17,$/
7KHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\ *3( LVWKHHQHUJ\DQREMHFWKDVZKHQOLIWHGRsWKH

JURXQGJLYHQE\WKHIDPLOLDUHTXDWLRQ
*3( PJdK
7KH*3(RQWKHVXUIDFHRIWKH(DUWKLVWDNHQWREH
7KLVPHDQVZRUNLVGRQHWROLIWWKHREMHFW
+RZHYHURXWVLGHWKH(DUWKlVVXUIDFH*3(FDQEHGHtQHGDV
7KHHQHUJ\DQREMHFWSRVVHVVGXHWRLWVSRVLWLRQLQDJUDYLWDWLRQDOdHOG
7KHJUDYLWDWLRQDOSRWHQWLDODWDSRLQWLVWKHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\SHUXQLWPDVVDW
WKDWSRLQW
7KHUHIRUHWKHJUDYLWDWLRQDOSRWHQWLDOLVGHtQHGDV
7KHZRUNGRQHSHUXQLWPDVVLQEULQJLQJDWHVWPDVVIURPLQdQLW\WRDGHdQHG
SRLQW
&DOFXODWLQJ*UDYLWDWLRQDO3RWHQWLDO
7KHHTXDWLRQIRUJUDYLWDWLRQDOSRWHQWLDOgLVGHtQHGE\WKHPDVV0DQGGLVWDQFHU
:KHUH
g JUDYLWDWLRQDOSRWHQWLDO -NJ
* 1HZWRQlVJUDYLWDWLRQDOFRQVWDQW
0 PDVVRIWKHERG\SURGXFLQJWKHJUDYLWDWLRQDOtHOG NJ
U GLVWDQFHIURPWKHFHQWUHRIWKHPDVVWRWKHSRLQWPDVV P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHJUDYLWDWLRQDOSRWHQWLDOLVQHJDWLYHQHDUDQLVRODWHGPDVVVXFKDVDSODQHWEHFDXVHWKH
SRWHQWLDOZKHQULVDWLQhQLW\LVGHhQHGDV
*UDYLWDWLRQDOIRUFHVDUHDOZD\VDWWUDFWLYHVRDVUGHFUHDVHVSRVLWLYHZRUNLVGRQHE\WKH
PDVVZKHQPRYLQJIURPLQtQLW\WRWKDWSRLQW
:KHQDPDVVLVFORVHUWRDSODQHWLWVJUDYLWDWLRQDOSRWHQWLDOEHFRPHVVPDOOHU PRUH
QHJDWLYH
$VDPDVVPRYHVDZD\IURPDSODQHWLWVJUDYLWDWLRQDOSRWHQWLDOEHFRPHVODUJHU OHVV
QHJDWLYH XQWLOLWUHDFKHVDWLQtQLW\
7KLVPHDQVZKHQWKHGLVWDQFHUEHFDXVHYHU\ODUJHWKHJUDYLWDWLRQDOIRUFHWHQGVUDSLGO\
WRZDUGVDWDSRLQWIXUWKHUDZD\IURPDSODQHW
*UDYLWDWLRQDOSRWHQWLDOLQFUHDVHVDQGGHFUHDVHVGHSHQGLQJRQZKHWKHUWKHREMHFWLV
WUDYHOOLQJWRZDUGVRUDJDLQVWWKHdHOGOLQHVIURPLQdQLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH&DOFXODWLQJJUDYLWDWLRQDOSRWHQWLDO
6WHS:ULWHWKHJUDYLWDWLRQDOSRWHQWLDOHTXDWLRQ
6WHS'HWHUPLQHWKHYDOXHRIU
ULVWKHGLVWDQFHIURPWKHFHQWUHRIWKHSODQHW
5DGLXVRIWKHSODQHW SODQHWGLDPHWHUf f NP
U NP cP
6WHS6XEVWLWXWHLQYDOXHV
([DP7LS
5HPHPEHUWRNHHSWKHQHJDWLYHVLJQLQ\RXUVROXWLRQIRUJUDYLWDWLRQDO
SRWHQWLDO+RZHYHULI\RXlUHDVNHGIRUWKHkFKDQJHLQlJUDYLWDWLRQDOSRWHQWLDO
QRQHJDWLYHVLJQVKRXOGEHLQFOXGHGVLQFH\RXDUHtQGLQJDGLsHUHQFHLQ
YDOXHV EHWZHHQDWLQtQLW\DQGWKHJUDYLWDWLRQDOSRWHQWLDOIURP\RXU
FDOFXODWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
*5$9,7$7,21$/327(17,$/(1(5*<
*UDYLWDWLRQDO3RWHQWLDO(QHUJ\%HWZHHQ7ZR3RLQW0DVVHV
7KHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\ *3( DWSRLQWLQDJUDYLWDWLRQDOtHOGLVGHtQHGDV
7KHZRUNGRQHLQEULQJLQJDPDVVIURPLQdQLW\WRWKDWSRLQW
7KHHTXDWLRQIRU*3(RIWZRSRLQWPDVVHVPDQG0DWDGLVWDQFHULV
7KHFKDQJHLQ*3(LVJLYHQE\
d*3( PJdK
:KHUH
P PDVVRIWKHREMHFW NJ
g JUDYLWDWLRQDOSRWHQWLDODWWKDWSRLQW -NJ
hK FKDQJHLQKHLJKW P
5HFDOOWKDWDWLQtQLW\g DQGWKHUHIRUH*3(
,WLVPRUHXVHIXOWRtQGWKHFKDQJHLQ*3(HJDVDWHOOLWHOLIWHGLQWRVSDFHIURPWKH(DUWKlV
VXUIDFH
7KHFKDQJHLQ*3(IURPIRUDQREMHFWRIPDVVPDWDGLVWDQFHUIURPWKHFHQWUHRIPDVV0
WRDGLVWDQFHRIUIXUWKHUDZD\LV
&KDQJHLQJUDYLWDWLRQDOSRWHQWLDOHQHUJ\EHWZHHQWZRSRLQWV
7KHFKDQJHLQSRWHQWLDOhgLVWKHVDPHZLWKRXWWKHPDVVRIWKHREMHFWP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&KDQJHLQJUDYLWDWLRQDOSRWHQWLDOEHWZHHQWZRSRLQWV
*UDYLWDWLRQDOSRWHQWLDOHQHUJ\LQFUHDVHVDVDVDWHOOLWHOHDYHVWKHVXUIDFHRIWKH0RRQ
0DWKVWLS
0XOWLSO\LQJWZRQHJDWLYHQXPEHUVHTXDOVDSRVLWLYHQXPEHUIRUH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH*UDYLWDWLRQDOSRWHQWLDOHQHUJ\
6WHS'LsHUHQFHLQJUDYLWDWLRQDOSRWHQWLDOHQHUJ\HTXDWLRQ
6WHS'HWHUPLQHYDOXHVIRUUDQGU
ULVWKHUDGLXVRI0DUV NP cP
ULVWKHUDGLXVDOWLWXGH NP cP
d*3( c 0- VI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
([DP7LS
0DNHVXUHWRQRWFRQIXVHWKHh*3(HTXDWLRQZLWK
d*3( PJdK
7KHDERYHHTXDWLRQLVRQO\UHOHYDQWIRUDQREMHFWOLIWHGLQDXQLIRUP

JUDYLWDWLRQDOtHOG FORVHWRWKH(DUWKlVVXUIDFH 7KHQHZHTXDWLRQIRU*3(
ZLOOQRWLQFOXGHJEHFDXVHWKLVYDULHVIRUGLsHUHQWSODQHWVDQGLVQRORQJHUD
FRQVWDQW GHFUHDVHVE\U RXWVLGHWKHVXUIDFHRIDSODQHW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
&217(176
0HDVXULQJ7HPSHUDWXUH
7KHUPDO(QHUJ\7UDQVIHU
7KHUPDO(TXLOLEULXP
0HDVXUHPHQWRI7HPSHUDWXUH
7KH.HOYLQ6FDOH
3KDVH&KDQJHV
6SHFLoF+HDW&DSDFLW\
6SHFLoF/DWHQW+HDW&DSDFLW\
0($685,1*7(03(5$785(
7+(50$/(1(5*<75$16)(5
7KHUPDO(QHUJ\7UDQVIHU
7KHFRQVHUYDWLRQRIHQHUJ\VWDWHVWKDWHQHUJ\LVQHYHUFUHDWHGRUGHVWUR\HGRQO\WUDQVIHUUHG
IURPRQHIRUPWRDQRWKHU
:KHQDWKHUPRPHWHULVSODFHGLQDEHDNHURIERLOLQJZDWHUWKHWKHUPRPHWHUUHDGLQJ
LQFUHDVHV
7KLVLVEHFDXVHWKHWKHUPRPHWHULVDORWFRROHUWKDQWKHZDWHU
7KHWKHUPRPHWHUJUDGXDOO\EHFRPHVKRWWHUIURPWKHWKHUPDOHQHUJ\ RUKHDW WUDQVIHUULQJ

IURPWKHZDWHUWRWKHWKHUPRPHWHU
7KHUPDOHQHUJ\LVGHoQHGDV
7KHUPDOHQHUJ\LVWUDQVIHUUHGIURPDUHJLRQRIKLJKHUWHPSHUDWXUHWRDUHJLRQRI
ORZHUWHPSHUDWXUH
7KHHQHUJ\ZLOOFRQWLQXHWREHWUDQVIHUUHGXQWLOERWKWKHWKHUPRPHWHUDQGWKHZDWHUDUHDW
WKHVDPHWHPSHUDWXUH
7KLVPHDQVWHPSHUDWXUHWHOOVXVWKHGLUHFWLRQRIHQHUJ\jRZZKHQWZRUHJLRQVDUHLQ
FRQWDFW IURPKRWWHUWRFRROHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
7KHUPDOHQHUJ\LVWUDQVIHUUHGIURPWKHKRWFReHHWRWKHPXJDQGWRWKHFROGKDQGV
7KHPHFKDQLVPE\ZKLFKWKHWKHUPDOHQHUJ\LVWUDQVIHUUHGLVE\HLWKHUFRQGXFWLRQ
FRQYHFWLRQRUUDGLDWLRQ
([DP7LS
6RPHWLPHVWKHGLUHFWLRQRIKHDWWUDQVIHUPLJKWVHHPFRXQWHULQWXLWLYHWRZKDW
ZHREVHUYHLQHYHU\GD\OLIH:KHQLFHLVSODFHGLQURRPWHPSHUDWXUHZDWHULW

PHOWV7KLVLVEHFDXVHWKHZDWHUWUDQVIHUVKHDWHQHUJ\WRWKHLFH QRWWKHLFH
JLYLQJLWhVgFROGhWRWKHZDWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
7+(50$/(48,/,%5,80
'HoQLQJ7KHUPDO(TXLOLEULXP
7KHUPDOHQHUJ\LVDOZD\VWUDQVIHUUHGIURPDKRWWHUUHJLRQWRORZHUUHJLRQ
7KHUPDOHTXLOLEULXPLVGHoQHGDV
:KHQWZRVXEVWDQFHVLQSK\VLFDOFRQWDFWZLWKHDFKRWKHUQRORQJHUH[FKDQJHDQ\
KHDWHQHUJ\DQGERWKUHDFKDQHTXDOWHPSHUDWXUH
7KHUHLVQRORQJHUWKHUPDOHQHUJ\WUDQVIHUEHWZHHQWKHUHJLRQV
7KHWZRUHJLRQVQHHGWREHLQFRQWDFWIRUWKLVWRRFFXU
7KHKRWWHUUHJLRQZLOOFRROGRZQDQGWKHFRROHUUHJLRQZLOOKHDWXSXQWLOWKH\UHDFKWKHVDPH
WHPSHUDWXUH
7KHoQDOWHPSHUDWXUHZKHQWZRUHJLRQVDUHLQWKHUPDOHTXLOLEULXPGHSHQGVRQWKHLQLWLDO
WHPSHUDWXUHGLnHUHQFHEHWZHHQWKHP
$QH[DPSOHRIWKLVLVLFHLQURRPWHPSHUDWXUHZDWHU7KHLFHFXEHVKHDWXSIURPWKHHQHUJ\
WUDQVIHUIURPWKHZDWHUDQGWKHZDWHUFRROVGRZQGXHWRWKHLFHXQWLOWKHZDWHUhV
WHPSHUDWXUHLVLQWKHUPDOHTXLOLEULXP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
0($685(0(172)7(03(5$785(
0HDVXUHPHQWRI7HPSHUDWXUH
$WKHUPRPHWHULVDQ\GHYLFHWKDWLVXVHGWRPHDVXUHWHPSHUDWXUH
(DFKW\SHRIWKHUPRPHWHUXVHVDSK\VLFDOSURSHUW\RIDPDWHULDOWKDWYDULHVZLWK
WHPSHUDWXUHfH[DPSOHVRIVXFKSURSHUWLHVLQFOXGH
7KHGHQVLW\RIDOLTXLG
7KHYROXPHRIDJDVDWFRQVWDQWSUHVVXUH
5HVLVWDQFHRIDPHWDO
HPIRIDWKHUPRFRXSOH
,QHDFKFDVHWKHWKHUPRPHWHUPXVWEHFDOLEUDWHGDWWZRRUPRUHNQRZQWHPSHUDWXUHV
FRPPRQO\WKHERLOLQJDQGPHOWLQJSRLQWVRIZDWHUR&DQGR&UHVSHFWLYHO\ DQGWKHVFDOH
GLYLGHGLQWRHTXDOGLYLVLRQV
7KH'HQVLW\RID/LTXLG
$OLTXLGLQJODVVWKHUPRPHWHUGHSHQGVRQWKHGHQVLW\FKDQJHRIDOLTXLG FRPPRQO\PHUFXU\
,WFRQVLVWVRIDWKLQJODVVFDSLOODU\WXEHFRQWDLQLQJDOLTXLGWKDWH[SDQGVZLWKWHPSHUDWXUH
$VFDOHDORQJWKHVLGHRIWKHWXEHDOORZVWKHWHPSHUDWXUHWREHPHDVXUHGEDVHGRQWKH
OHQJWKRIOLTXLGZLWKLQWKHWXEH
9ROXPHRID*DVDW&RQVWDQW3UHVVXUH
7KHYROXPHRIDQLGHDOJDVLVGLUHFWO\SURSRUWLRQDOWRLWVWHPSHUDWXUHZKHQDWFRQVWDQW
SUHVVXUH &KDUOHVhVODZ
9h7
$VWKHWHPSHUDWXUHRIWKHJDVLQFUHDVHVLWVYROXPHLQFUHDVHVDQGYLFHYHUVD
$JDVWKHUPRPHWHUPXVWEHFDOLEUDWHGfE\NQRZLQJWKHWHPSHUDWXUHRIWKHJDVDWDFHUWDLQ
YROXPHDWHPSHUDWXUHVFDOHFDQEHGHWHUPLQHGGHSHQGLQJRQKRZTXLFNO\WKHJDVH[SDQGV
ZLWKWHPSHUDWXUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
5HVLVWDQFHRID0HWDO
5HFDOOWKDWHOHFWULFDOUHVLVWDQFHFKDQJHVZLWKWHPSHUDWXUHHJWKHUHVLVWDQFHRIDoODPHQW
ODPSLQFUHDVHVZKHQFXUUHQWLQFUHDVHVWKURXJKLW
)RUPHWDOVUHVLVWDQFHLQFUHDVHVZLWKWHPSHUDWXUHDWDVWHDG\UDWH
)RUWKHUPLVWRUVUHVLVWDQFHFKDQJHVUDSLGO\RYHUDQDUURZUDQJHRIWHPSHUDWXUHV
$VDWKHUPLVWRUJHWVKRWWHULWVUHVLVWDQFHGHFUHDVHV
7KLVPHDQVDWKHUPRPHWHUEDVHGRQDWKHUPLVWRUFDQEHXVHGWRPHDVXUHDUDQJHRI
WHPSHUDWXUHV
7KHUHODWLRQVKLSEHWZHHQWKHUHVLVWDQFHDQGWHPSHUDWXUHLVQRQOLQHDU
7KLVPHDQVWKHJUDSKRIWHPSHUDWXUHDJDLQVWUHVLVWDQFHZLOOEHDFXUYHGOLQHDQGWKH
WKHUPLVWRUZLOOKDYHWREHFDOLEUDWHG
(0)RID7KHUPRFRXSOH
$WKHUPRFRXSOHLVDQHOHFWULFDOGHYLFHXVHGDVWKHVHQVRURIDWKHUPRPHWHU
,WFRQVLVWVRIWZRZLUHVRIGLnHUHQWRUGLVVLPLODUPHWDOVDWWDFKHGWRHDFKRWKHUSURGXFLQJD
MXQFWLRQRQRQHHQG
7KHRSSRVLWHHQGVDUHFRQQHFWHGWRDYROWPHWHU
:KHQWKLVMXQFWLRQLVKHDWHGDQHPILVSURGXFHGEHWZHHQWKHWZRZLUHVZKLFKLVPHDVXUHG
RQWKHYROWPHWHU
7KHJUHDWHUWKHGLnHUHQFHLQWHPSHUDWXUHEHWZHHQWKHZLUHVWKHJUHDWHUWKHHPI
+RZHYHUDWKHUPRFRXSOHUHTXLUHVFDOLEUDWLRQVLQFHWKHHPIGRHVQRWYDU\OLQHDUO\ZLWK
WHPSHUDWXUH
7KHJUDSKDJDLQVWHPIDQGWHPSHUDWXUHLVDSRVLWLYHFXUYHGOLQH
([DP7LS
5HPHPEHUWRUHODWHKRZWKHWHPSHUDWXUHLVPHDVXUHGIRUGLnHUHQWW\SHVRI
WKHUPRPHWHUEDFNWRWKHVFHQDULRLQWKHTXHVWLRQ)RUH[DPSOHPDNHVXUH

\RXVD\WKHWHPSHUDWXUHLQFUHDVHVDVWKHYROXPHRIJDVLQFUHDVHVRUWKH
WHPSHUDWXUHLQFUHDVHVDVWKHHPIEHWZHHQWKHWZRZLUHVLQFUHDVHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
7+(.(/9,16&$/(
6FDOHRI7KHUPRG\QDPLF7HPSHUDWXUH
$VDQHYHU\GD\VFDOHRIWHPSHUDWXUH&HOVLXV R& LVWKHPRVWIDPLOLDU
7KLVVFDOHLVEDVHGRQWKHSURSHUWLHVRIZDWHUfWKHIUHH]LQJSRLQWRIZDWHUZDVWDNHQDV
WDNHQDVR&DQGWKHERLOLQJSRLQWDVR&
+RZHYHUWKHUHLVQRWKLQJVSHFLDODERXWWKHVHWZRWHPSHUDWXUHV
7KHIUHH]LQJDQGERLOLQJSRLQWRIZDWHUZLOODFWXDOO\FKDQJHDVLWVSUHVVXUHFKDQJHV
7KH&HOVLXVVFDOHLVXVHGWRPHDVXUHWKHWHPSHUDWXUHLQDOLTXLGLQJODVVWKHUPRPHWHU
+RZHYHUWKHH[SDQVLRQRIWKHOLTXLGPLJKWEHQRQOLQHDU
2WKHUWHPSHUDWXUHVFDOHVLQFOXGH
)DKUHQKHLWFRPPRQO\XVHGLQWKH86
.HOYLQXVHGLQWKHUPRG\QDPLFV
7KH.HOYLQVFDOHLVNQRZQDVWKHWKHUPRG\QDPLFVFDOHDQGZDVGHVLJQHGWRRYHUFRPHWKH
SUREOHPZLWKVFDOHVRIWHPSHUDWXUH
7KHWKHUPRG\QDPLFVFDOHLVVDLGWREHDQDEVROXWHVFDOHWKDWLVQRWGHoQHGLQWHUPVRID
SURSHUW\RIDQ\SDUWLFXODUVXEVWDQFH
7KLVLVEHFDXVHWKHUPRG\QDPLFWHPSHUDWXUHVGRQRWGHSHQGRQWKHSURSHUW\RIDQ\
SDUWLFXODUVXEVWDQFH
$EVROXWH=HUR
2QWKHWKHUPRG\QDPLF .HOYLQ WHPSHUDWXUHVFDOHDEVROXWH]HURLVGHoQHGDV
7KHORZHVWWHPSHUDWXUHSRVVLEOH(TXDOWR.RUc&
,WLVQRWSRVVLEOHWRKDYHDWHPSHUDWXUHORZHUWKDQ.
7KLVPHDQVDWHPSHUDWXUHLQ.HOYLQZLOOQHYHUEHDQHJDWLYHYDOXH
$EVROXWH]HURLVGHoQHGLQNLQHWLFWHUPVDV
7KHWHPSHUDWXUHDWZKLFKWKHDWRPVDQGPROHFXOHVLQDOOVXEVWDQFHVKDYH]HUR
NLQHWLFDQGSRWHQWLDOHQHUJ\
7KLVPHDQVIRUDV\VWHPDW.LWLVQRWSRVVLEOHWRUHPRYHDQ\PRUHHQHUJ\IURPLW
(YHQLQVSDFHWKHWHPSHUDWXUHLVURXJKO\.MXVWDERYHDEVROXWH]HUR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
8VLQJWKH.HOYLQ6FDOH
7RFRQYHUWEHWZHHQWHPSHUDWXUHVcLQWKH&HOVLXVVFDOHDQG7LQWKH.HOYLQVFDOHXVHWKH
IROORZLQJFRQYHUVLRQ
dR& 7.g
7. dR&
7KHGLYLVLRQVRQERWKVFDOHVDUHHTXDO7KLVPHDQV
$FKDQJHLQDWHPSHUDWXUHRI.LVHTXDOWRDFKDQJHLQWHPSHUDWXUHRIR&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
:RUNHGH[DPSOH.HOYLQFRQYHUVLRQ
6WHS.HOYLQWR&HOVLXVHTXDWLRQ
dR& 7.g
6WHS6XEVWLWXWHLQYDOXHRI.
.g R&
([DP7LS
,I\RXIRUJHWLQWKHH[DPZKHWKHULWhVRUlMXVWUHPHPEHU
WKDWR& .7KLVZD\ZKHQ\RXNQRZWKDW\RXQHHGWRWRD

WHPSHUDWXUHLQGHJUHHVWRJHWDWHPSHUDWXUHLQ.HOYLQ)RUH[DPSOHR&
.

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
3+$6(&+$1*(6
63(&,),&+($7&$3$&,7<
'HoQLQJ6SHFLoF+HDW&DSDFLW\
7KHVSHFLoFKHDWFDSDFLW\RIVXEVWDQFHLVGHoQHGDV
7KHDPRXQWRIWKHUPDOHQHUJ\UHTXLUHGWRUDLVHWKHWHPSHUDWXUHRINJRID
VXEVWDQFHE\c&
7KLVTXDQWLW\GHWHUPLQHVWKHDPRXQWRIHQHUJ\QHHGHGWRFKDQJHWKHWHPSHUDWXUHRID
VXEVWDQFH
7KHVSHFLoFKHDWFDSDFLW\LVPHDVXUHGLQXQLWVRI-RXOHVSHUNLORJUDPSHU.HOYLQ -NJ.
RU-RXOHVSHUNLORJUDPSHU&HOVLXV -NJR& DQGKDVWKHV\PEROF
'LnHUHQWVXEVWDQFHVKDYHGLnHUHQWVSHFLoFKHDWFDSDFLWLHV
6SHFLoFKHDWFDSDFLW\LVPDLQO\XVHGLQOLTXLGVDQGVROLGV
)URPWKHGHoQLWLRQRIVSHFLoFKHDWFDSDFLW\LWIROORZVWKDW
7KHKHDYLHUWKHPDWHULDOWKHPRUHWKHUPDOHQHUJ\WKDWZLOOEHUHTXLUHGWRUDLVHLWV
WHPSHUDWXUH
7KHODUJHUWKHFKDQJHLQWHPSHUDWXUHWKHKLJKHUWKHWKHUPDOHQHUJ\ZLOOEHUHTXLUHG
WRDFKLHYHWKLVFKDQJH
&DOFXODWLQJ6SHFLoF+HDW&DSDFLW\
7KHDPRXQWRIWKHUPDOHQHUJ\4QHHGHGWRUDLVHWKHWHPSHUDWXUHE\bcIRUDPDVVPZLWK
VSHFLoFKHDWFDSDFLW\FLVHTXDOWR
d4 PFde
:KHUH
d4 FKDQJHLQWKHUPDOHQHUJ\ -
P PDVVRIWKHVXEVWDQFH\RXDUHKHDWLQJXS NJ
F VSHFLoFKHDWFDSDFLW\RIWKHVXEVWDQFH -NJ.RU-NJR&
de FKDQJHLQWHPSHUDWXUH .RUR&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
,IDVXEVWDQFHKDVDORZVSHFLoFKHDWFDSDFLW\LWKHDWVXSDQGFRROVGRZQTXLFNO\
,IDVXEVWDQFHKDVDKLJKVSHFLoFKHDWFDSDFLW\LWKHDWVXSDQGFRROVGRZQVORZO\
7KHVSHFLoFKHDWFDSDFLW\RIGLnHUHQWVXEVWDQFHVGHWHUPLQHVKRZXVHIXOWKH\ZRXOGEHIRUD
VSHFLoFSXUSRVHHJFKRRVLQJWKHEHVWPDWHULDOIRUNLWFKHQDSSOLDQFHV
*RRGHOHFWULFDOFRQGXFWRUVVXFKDVFRSSHUDQGOHDGDUHDOVRH[FHOOHQWFRQGXFWRUVRIKHDW
GXHWRWKHLUORZVSHFLoFKHDWFDSDFLW\
:RUNHGH[DPSOH&DOFXODWLQJVSHFLoFKHDWFDSDFLW\
6WHS&DOFXODWHWKH(QHUJ\IURPWKHSRZHUDQGWLPH
(QHUJ\ 3RZHUc7LPH
3RZHU N: c:
7LPH PLQXWHV c V
(QHUJ\ cc c-
6WHS7KHUPDOHQHUJ\HTXDWLRQ
d4 PFde
6WHS5HDUUDQJHIRUVSHFLoFKHDWFDSDFLW\
P J cNJ
de f R&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
([DP7LS
7KHGLnHUHQFHLQWHPSHUDWXUHdeZLOOEHH[DFWO\WKHVDPHZKHWKHUWKH
WHPSHUDWXUHLVJLYHQLQ&HOVLXVRU.HOYLQ7KHUHIRUHWKHUHLVQRQHHGWR

FRQYHUWEHWZHHQWKHWZRVLQFHWKHGLiHUHQFHLQWHPSHUDWXUHZLOOEHWKH
VDPHIRUERWKXQLWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
63(&,),&/$7(17+($7&$3$&,7<
'HoQLQJ/DWHQW+HDW&DSDFLW\
(QHUJ\LVUHTXLUHGWRFKDQJHWKHVWDWHRIVXEVWDQFH
([DPSOHVRIFKDQJHVRIVWDWHDUH
0HOWLQJ VROLGWROLTXLG
(YDSRUDWLRQYDSRULVDWLRQERLOLQJ OLTXLGWRJDV
6XEOLPDWLRQ VROLGWRJDV
)UHH]LQJ OLTXLGWRVROLG
&RQGHQVDWLRQ JDVWROLTXLG
:KHQDVXEVWDQFHFKDQJHVVWDWHWKHUHLVQRWHPSHUDWXUHFKDQJH
7KHHQHUJ\VXSSOLHGWRFKDQJHWKHVWDWHLVFDOOHGWKHODWHQWKHDWDQGLVGHoQHGDV
7KHWKHUPDOHQHUJ\UHTXLUHGWRFKDQJHWKHVWDWHRINJRIPDVVRIDVXEVWDQFH
ZLWKRXWDQ\FKDQJHRIWHPSHUDWXUH
7KHUHDUHWZRW\SHVRIODWHQWKHDW
6SHFLoFODWHQWKHDWRIIXVLRQ PHOWLQJ
6SHFLoFODWHQWKHDWRIYDSRULVDWLRQ ERLOLQJ
7KHVSHFLoFODWHQWKHDWRIIXVLRQLVGHoQHGDV
7KHWKHUPDOHQHUJ\UHTXLUHGWRFRQYHUWNJRIVROLGWROLTXLGZLWKQRFKDQJHLQ
WHPSHUDWXUH
7KLVLVXVHGZKHQPHOWLQJDVROLGRUIUHH]LQJDOLTXLG
7KHVSHFLoFODWHQWKHDWRIYDSRULVDWLRQLVGHoQHGDV
7KHWKHUPDOHQHUJ\UHTXLUHGWRFRQYHUWNJRIOLTXLGWRJDVZLWKQRFKDQJHLQ
WHPSHUDWXUH
7KLVLVXVHGZKHQYDSRULVLQJDOLTXLGRUFRQGHQVLQJDJDV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
&DOFXODWLQJ6SHFLoF/DWHQW+HDW
7KHDPRXQWRIHQHUJ\4UHTXLUHGWRPHOWRUYDSRULVHDPDVVRIPZLWKODWHQWKHDW/LV
4 P/
:KHUH
4 DPRXQWRIWKHUPDOHQHUJ\WRFKDQJHWKHVWDWH -
P PDVVRIWKHVXEVWDQFHFKDQJLQJVWDWH NJ
/ ODWHQWKHDWRIIXVLRQRUYDSRULVDWLRQ -NJ
7KHYDOXHVRIODWHQWKHDWIRUZDWHUDUH
6SHFLoFODWHQWKHDWRIIXVLRQ N-NJ
6SHFLoFODWHQWKHDWRIYDSRULVDWLRQ 0-NJ
7KHUHIRUHHYDSRUDWLQJNJRIZDWHUUHTXLUHVURXJKO\VHYHQWLPHVPRUHHQHUJ\WKDQ
PHOWLQJWKHVDPHDPRXQWRILFHWRIRUPZDWHU
7KHUHDVRQIRUWKLVLVWRGRZLWKLQWHUPROHFXODUIRUFHV
:KHQLFHPHOWVHQHUJ\LVUHTXLUHGWRMXVWLQFUHDVHWKHPROHFXOHVHSDUDWLRQXQWLO
WKH\FDQpRZIUHHO\RYHUHDFKRWKHU
:KHQZDWHUERLOVHQHUJ\LVUHTXLUHGWRFRPSOHWHO\VHSDUDWHWKHPROHFXOHVXQWLO
WKHUHDUHQRORQJHUIRUFHVRIDWWUDFWLRQEHWZHHQWKHPROHFXOHVKHQFHWKLVUHTXLUHV
PXFKPRUHHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7HPSHUDWXUH m
:RUNHGH[DPSOH6SHFLoFODWHQWKHDW
6WHS:ULWHWKHWKHUPDOHQHUJ\UHTXLUHGWRFKDQJHVWDWHHTXDWLRQ
4 P/
6WHS5HDUUDQJHIRUODWHQWKHDW
P J cNJ
4 0- c-
/LVWKHODWHQWKHDWRIYDSRULVDWLRQEHFDXVHWKHFKDQJHLQVWDWHLVIURPOLTXLGWRJDV
ERLOLQJ
([DP7LS
8VHWKHVHUHPLQGHUVWRKHOS\RXUHPHPEHUZKLFKW\SHRIODWHQWKHDWLVEHLQJ
UHIHUUHGWR
k/DWHQWKHDWRIIXVLRQ LPDJLQHgIXVLQJhWKHOLTXLGPROHFXOHVWRJHWKHUWR

EHFRPHDVROLG
k/DWHQWKHDWRIYDSRULVDWLRQ iZDWHUYDSRXUjLVVWHDPVRLPDJLQH
YDSRULVLQJWKHOLTXLGPROHFXOHVLQWRDJDV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
&217(176
,GHDO*DV/DZ
7KH0ROH
,GHDO*DVHV
,GHDO*DV(TXDWLRQ
.LQHWLF7KHRU\
.LQHWLF7KHRU\RI*DVHV
'HULYDWLRQRIWKH.LQHWLF7KHRU\RI*DVHV(TXDWLRQ
$YHUDJH.LQHWLF(QHUJ\RID0ROHFXOH
,'($/*$6/$:
7+(02/(
$PRXQWRI6XEVWDQFH
,QWKHUPRG\QDPLFVWKHDPRXQWRIVXEVWDQFHLVPHDVXUHGLQWKH6,XQLWhPROHi
7KLVKDVWKHV\PEROPRO
7KHPROHLVDXQLWRIVXEVWDQFHQRWDXQLWRIPDVV
7KHPROHLVGHoQHGDV
7KH6,EDVHXQLWRIDQdDPRXQWRIVXEVWDQFHe,WLVWKHDPRXQWFRQWDLQLQJDVPDQ\
SDUWLFOHV HJDWRPVRUPROHFXOHV DVWKHUHDUHDWRPVLQJRIFDUERQ
7KHPROHLVDQLPSRUWDQWXQLWLQWKHUPRG\QDPLFV
,IZHFRQVLGHUWKHQXPEHURIPROHVRIWZRGLnHUHQWJDVHVXQGHUWKHVDPHFRQGLWLRQVWKHLU
SK\VLFDOSURSHUWLHVDUHWKHVDPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
7KH$YRJDGUR&RQVWDQW
,Q$63K\VLFVWKHDWRPLFPDVVXQLW X ZDVLQWURGXFHGDVDSSUR[LPDWHO\WKHPDVVRID
SURWRQRUQHXWURQ eNJ
7KLVPHDQVWKDWDQDWRPRUPROHFXOHKDVDPDVVDSSUR[LPDWHO\HTXDOWRWKHQXPEHURI
SURWRQVDQGQHXWURQVLWFRQWDLQV
$FDUERQDWRPKDVDPDVVRI
X c[ cNJ
7KHH[DFWQXPEHUIRUDPROHLVGHoQHGDVWKHQXPEHURIPROHFXOHVLQH[DFWO\JRIFDUERQ
$YRJDGURiVFRQVWDQW 1$ LVGHoQHGDV
7KHQXPEHURIDWRPVRIFDUERQLQJRIFDUERQHTXDOWRcPRO
)RUH[DPSOHPROHRIVRGLXP 1D FRQWDLQeDWRPVRIVRGLXP
7KHQXPEHURIDWRPVFDQEHGHWHUPLQHGLIWKHQXPEHURIPROHVLVNQRZQIRUH[DPSOH
PRORIQLWURJHQFRQWDLQVe1$ ee eDWRPV
0ROHDQGWKH$WRPLF0DVV
2QHPROHRIDQ\HOHPHQWLVHTXDOWRWKHUHODWLYHDWRPLFPDVVRIWKDWHOHPHQWLQJUDPV
HJKHOLXPKDVDQDWRPPDVVRIgWKLVPHDQVPROHRIKHOLXPKDVDPDVVRIJ
,IWKHVXEVWDQFHLVDFRPSRXQGDGGXSWKHUHODWLYHDWRPLFPDVVHVIRUH[DPSOHZDWHU +2
LVPDGHXSRI
K\GURJHQDWRPV DWRPLFPDVVRI DQGR[\JHQDWRP DWRPLFPDVVRI
6RPROHRIZDWHUZRXOGKDYHDPDVVRI e J

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
0RODU0DVV
7KHPRODUPDVVRIDVXEVWDQFHLVWKHPDVVLQJUDPVLQRQHPROH
,WVXQLWLVJPRO
7KHQXPEHURIPROHVIURPWKLVFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
:RUNHGH[DPSOH
6WHS&DOFXODWHWKHPDVVRIPROHRIPDJQHVLXP
2QHPROHRIDQ\HOHPHQWLVHTXDOWRWKHUHODWLYHDWRPLFPDVVRIWKDW
HOHPHQWLQJUDPV
PROH JRIPDJQHVLXP
6WHS&DOFXODWHWKHDPRXQWRIPROHVLQJ
6WHS&RQYHUWWKHPROHVWRQXPEHURIPROHFXOHV
PROH cPROHFXOHV
PROHV cc cPROHFXOHV
([DP7LS
,I\RXZDQWWRoQGRXWPRUHDERXWWKHPROHFKHFNRXWWKH&,($/HYHO

&KHPLVWU\UHYLVLRQQRWHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
,'($/*$6(6
,GHDO*DVHV
$QLGHDOJDVLVRQHZKLFKREH\VWKHUHODWLRQ
S9i7
:KHUH
S SUHVVXUHRIWKHJDV 3D
9 YROXPHRIWKHJDV P
7 WKHUPRG\QDPLFWHPSHUDWXUH .
7KHPROHFXOHVLQDJDVPRYHDURXQGUDQGRPO\DWKLJKVSHHGVFROOLGLQJZLWKVXUIDFHVDQG
H[HUWLQJSUHVVXUHXSRQWKHP
,PDJLQHPROHFXOHVRIJDVIUHHWRPRYHDURXQGLQDER[
7KHWHPSHUDWXUHRIDJDVLVUHODWHGWRWKHDYHUDJHVSHHGRIWKHPROHFXOHV
7KHKRWWHUWKHJDVWKHIDVWHUWKHPROHFXOHVPRYH
+HQFHWKHPROHFXOHVFROOLGHZLWKWKHVXUIDFHRIWKHZDOOVPRUHIUHTXHQWO\
6LQFHIRUFHLVWKHUDWHRIFKDQJHRIPRPHQWXP
(DFKFROOLVLRQDSSOLHVDIRUFHDFURVVWKHVXUIDFHDUHDRIWKHZDOOV
7KHIDVWHUWKHPROHFXOHVKLWWKHZDOOVWKHJUHDWHUWKHIRUFHRQWKHP
6LQFHSUHVVXUHLVWKHIRUFHSHUXQLWDUHD
+LJKHUWHPSHUDWXUHOHDGVWRKLJKHUSUHVVXUH
,IWKHYROXPH9RIWKHER[GHFUHDVHVDQGWKHWHPSHUDWXUH7VWD\VFRQVWDQW
7KHUHZLOOEHDVPDOOHUVXUIDFHDUHDRIWKHZDOOVDQGKHQFHPRUHFROOLVLRQV
7KLVDOVRFUHDWHVPRUHSUHVVXUH
6LQFHWKLVHTXDWHVWRDJUHDWHUIRUFHSHUXQLWDUHDSUHVVXUHLQDQLGHDOJDVLVWKHUHIRUH
GHoQHGE\
7KHIUHTXHQF\RIFROOLVLRQVRIWKHJDVPROHFXOHVSHUXQLWDUHDRIDFRQWDLQHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
%R\OHiV/DZ
,IWKHWHPSHUDWXUH7LVFRQVWDQWWKHQ%R\OHfV/DZLVJLYHQE\
7KLVOHDGVWRWKHUHODWLRQVKLSEHWZHHQWKHSUHVVXUHDQGYROXPHIRUDo[HGPDVVRIJDVDW
FRQVWDQWWHPSHUDWXUH
39 39
&KDUOHViV/DZ
,IWKHSUHVVXUH3LVFRQVWDQWWKHQ&KDUOHVfVODZLVJLYHQE\
9i7
7KLVOHDGVWRWKHUHODWLRQVKLSEHWZHHQWKHYROXPHDQGWKHUPRG\QDPLFWHPSHUDWXUHIRUD
o[HGPDVVRIJDVDWFRQVWDQWSUHVVXUH
3UHVVXUH/DZ
,IWKHYROXPH9LVFRQVWDQWWKHWKH3UHVVXUHODZLVJLYHQE\
3i7
7KLVOHDGVWRWKHUHODWLRQVKLSEHWZHHQWKHSUHVVXUHDQGWKHUPRG\QDPLFWHPSHUDWXUHIRUD
o[HGPDVVRIJDVDWFRQVWDQWYROXPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
:RUNHGH[DPSOH
6WHS,GHDOJDVUHODWLRQEHWZHHQSUHVVXUHYROXPHDQGWHPSHUDWXUH
S9i7
6WHS:ULWHWKHHTXDWLRQLQIXOO
S9 N7ZKHUHNLVWKHFRQVWDQWRISURSRUWLRQDOLW\
6WHS5HDUUDQJHIRUWKHFRQVWDQWRISURSRUWLRQDOLW\
6WHS&RQYHUWWHPSHUDWXUH7LQWR.HOYLQ
eR& 7.
R& .
6WHS6XEVWLWXWHLQNQRZQYDOXHLQWRFRQVWDQWRISURSRUWLRQDOLW\HTXDWLRQ
6WHS5HDUUDQJHLGHDOJDVUHODWLRQHTXDWLRQIRUSUHVVXUH
6WHS6XEVWLWXWHLQQHZYDOXHV
N g

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
9VWD\VWKHVDPH cP
7 R& .
([DP7LS
'RQiWURXQGWRRHDUO\LQ\RXUZRUNLQJRXW,QWKHZRUNHGH[DPSOHWKH
XQURXQGHGYDOXHRINLVUHSUHVHQWHGE\jlkWRVKRZLWVIXOOYDOXHLVWREH

FDUULHGRYHUWRWKHQH[WVWHSRIWKHFDOFXODWLRQ2Q\RXUFDOFXODWRUWKLVFDQEH
GRQHE\XVLQJWKHjDQVkEXWWRQLQVWHDGRIW\SLQJLQWKHZKROHQXPEHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
,'($/*$6(48$7,21
,GHDO*DV(TXDWLRQ
7KHHTXDWLRQRIVWDWHIRUDQLGHDOJDV RUWKHLGHDOJDVHTXDWLRQ FDQEHH[SUHVVHGDV
S9 Q57
7KHLGHDOJDVHTXDWLRQFDQDOVREHZULWWHQLQWKHIRUP
S9 1N7
$QLGHDOJDVLVWKHUHIRUHGHoQHGDV
$JDVZKLFKREH\VWKHHTXDWLRQRIVWDWHS9 Q57DWDOOSUHVVXUHVYROXPHVDQG
WHPSHUDWXUHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
:RUNHGH[DPSOH
6WHS:ULWHGRZQWKHLGHDOJDVHTXDWLRQ
6LQFHWKHQXPEHURIPROHV Q LVUHTXLUHGXVHWKHHTXDWLRQ
S9 Q57
6WHS5HDUUDQJHIRUWKHQXPEHURIPROHVQ
9 cFP cc cP
7 & .

R
([DP7LS
'RQiWZRUU\DERXWUHPHPEHULQJWKHYDOXHVRI5DQGNWKH\ZLOOERWKEHJLYHQ

LQWKHHTXDWLRQVKHHWLQ\RXUH[DP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
7KH%ROW]PDQQ&RQVWDQW
7KH%ROW]PDQQFRQVWDQWNLVXVHGLQWKHLGHDOJDVHTXDWLRQDQGLVGHoQHGE\WKHHTXDWLRQ
:KHUH
5 PRODUJDVFRQVWDQW
1$ $YRJDGURiVFRQVWDQW
%ROW]PDQQiVFRQVWDQWWKHUHIRUHKDVDYDOXHRI
7KH%ROW]PDQQFRQVWDQWUHODWHVWKHSURSHUWLHVRIPLFURVFRSLFSDUWLFOHV HJNLQHWLFHQHUJ\RI
JDVPROHFXOHV WRWKHLUPDFURVFRSLFSURSHUWLHV HJWHPSHUDWXUH
7KLVLVZK\WKHXQLWVDUH-.
,WVYDOXHLVYHU\VPDOOEHFDXVHWKHLQFUHDVHLQNLQHWLFHQHUJ\RIDPROHFXOHLVYHU\VPDOOIRU
HYHU\LQFUHPHQWDOLQFUHDVHLQWHPSHUDWXUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
.,1(7,&7+(25<
.,1(7,&7+(25<2)*$6(6
$VVXPSWLRQVRIWKH.LQHWLF7KHRU\RI*DVHV
*DVHVFRQVLVWRIDWRPVRUPROHFXOHVUDQGRPO\PRYLQJDURXQGDWKLJKVSHHGV
7KHNLQHWLFWKHRU\RIJDVHVPRGHOVWKHWKHUPRG\QDPLFEHKDYLRXURIJDVHVE\OLQNLQJWKH
PLFURVFRSLFSURSHUWLHVRISDUWLFOHV PDVVDQGVSHHG WRPDFURVFRSLFSURSHUWLHVRI
SDUWLFOHV SUHVVXUHDQGYROXPH
7KHWKHRU\LVEDVHGRQDVHWRIWKHIROORZLQJDVVXPSWLRQV
0ROHFXOHVRIJDVEHKDYHDVLGHQWLFDOKDUGSHUIHFWO\HODVWLFVSKHUHV
7KHYROXPHRIWKHPROHFXOHVLVQHJOLJLEOHFRPSDUHGWRWKHYROXPHRIWKHFRQWDLQHU
7KHWLPHRIDFROOLVLRQLVQHJOLJLEOHFRPSDUHGWRWKHWLPHEHWZHHQFROOLVLRQV
7KHUHDUHQRIRUFHVRIDWWUDFWLRQRUUHSXOVLRQEHWZHHQWKHPROHFXOHV
7KHPROHFXOHVDUHLQFRQWLQXRXVUDQGRPPRWLRQ
7KHQXPEHURIPROHFXOHVRIJDVLQDFRQWDLQHULVYHU\ODUJHWKHUHIRUHWKHDYHUDJH
EHKDYLRXU HJVSHHG LVXVXDOO\FRQVLGHUHG
([DP7LS
0DNHVXUHWRPHPRULVHDOOWKHDVVXPSWLRQVIRU\RXUH[DPVDVLWLVDFRPPRQ

H[DPTXHVWLRQWREHDVNHGWRUHFDOOWKHP
5RRW0HDQ6TXDUH6SHHG
7KHSUHVVXUHRIDQLGHDOJDVHTXDWLRQLQFOXGHVWKHPHDQVTXDUHVSHHGRIWKHSDUWLFOHV
F!
:KHUH
F DYHUDJHVSHHGRIWKHJDVSDUWLFOHV
F!KDVWKHXQLWVPV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
6LQFHSDUWLFOHVWUDYHOLQDOOGLUHFWLRQVLQ'VSDFHDQGYHORFLW\LVDYHFWRUVRPHSDUWLFOHVZLOO
KDYHDQHJDWLYHGLUHFWLRQDQGRWKHUVDSRVLWLYHGLUHFWLRQ
:KHQWKHUHDUHDODUJHQXPEHURISDUWLFOHVWKHWRWDOSRVLWLYHDQGQHJDWLYHYHORFLW\YDOXHV
ZLOOFDQFHORXWJLYLQJDQHW]HURYDOXHRYHUDOO
,QRUGHUWRoQGWKHSUHVVXUHRIWKHJDVWKHYHORFLWLHVPXVWEHVTXDUHG
7KLVLVDPRUHXVHIXOPHWKRGVLQFHDQHJDWLYHRUSRVLWLYHQXPEHUVTXDUHGLVDOZD\V
SRVLWLYH
7RFDOFXODWHWKHDYHUDJHVSHHGRIWKHSDUWLFOHVLQDJDVWDNHWKHVTXDUHURRWRIWKHPHDQ
VTXDUHVSHHG
FUPVLVNQRZQDVWKHURRWPHDQVTXDUHVSHHGDQGVWLOOKDVWKHXQLWVRIPV
7KHPHDQVTXDUHVSHHGLVQRWWKHVDPHDVWKHPHDQVSHHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
:RUNHGH[DPSOH5RRWPHDQVTXDUHVSHHG
6WHS:ULWHRXWWKHHTXDWLRQIRUWKHSUHVVXUHRIDQLGHDOJDVZLWKGHQVLW\
6WHS5HDUUDQJHIRUPHDQVTXDUHVSHHG
6WHS7RoQGWKHUPVYDOXHWDNHWKHVTXDUHURRWRIWKHPHDQVTXDUHVSHHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
'(5,9$7,212)7+(.,1(7,&7+(25<2)*$6(6(48$7,21
'HULYDWLRQRIWKH.LQHWLF7KHRU\RI*DVHV(TXDWLRQ
:KHQPROHFXOHVUHERXQGIURPDZDOOLQDFRQWDLQHUWKHFKDQJHLQPRPHQWXPJLYHVULVHWRD
IRUFHH[HUWHGE\WKHSDUWLFOHRQWKHZDOO
0DQ\PROHFXOHVPRYLQJLQUDQGRPPRWLRQH[HUWIRUFHVRQWKHZDOOVZKLFKFUHDWHDQDYHUDJH
RYHUDOOSUHVVXUHVLQFHSUHVVXUHLVWKHIRUFHSHUXQLWDUHD
3LFWXUHDVLQJOHPROHFXOHLQDFXEHVKDSHGER[ZLWKVLGHVRIHTXDOOHQJWKO
7KHPROHFXOHKDVDPDVVPDQGPRYHVZLWKVSHHGFSDUDOOHOWRRQHVLGHRIWKHER[
,WFROOLGHVDWUHJXODULQWHUYDOVZLWKWKHHQGVRIWKHER[H[HUWLQJDIRUFHDQGFRQWULEXWLQJWR
WKHSUHVVXUHRIWKHJDV
%\FDOFXODWLQJWKHSUHVVXUHWKLVRQHPROHFXOHH[HUWVRQRQHHQGRIWKHER[WKHWRWDO
SUHVVXUHSURGXFHGE\DOOWKHPROHFXOHVFDQEHGHGXFHG
6WHS'HULYDWLRQ
)LQGWKHFKDQJHLQPRPHQWXPDVDVLQJOHPROHFXOHKLWVDZDOOSHUSHQGLFXODUO\
2QHDVVXPSWLRQRIWKHNLQHWLFWKHRU\LVWKDWPROHFXOHVUHERXQGHODVWLFDOO\
7KLVPHDQVWKHUHLVQRNLQHWLFHQHUJ\ORVWLQWKHFROOLVLRQ
,IWKH\UHERXQGLQWKHRSSRVLWHGLUHFWLRQWRWKHLULQLWLDOYHORFLW\WKHLUoQDOYHORFLW\LVF
7KHFKDQJHLQPRPHQWXPLVWKHUHIRUH
dS hPFh PF hPFhPF hPF
&DOFXODWHWKHQXPEHURIFROOLVLRQVSHUVHFRQGE\WKHPROHFXOHRQDZDOO
7KHWLPHEHWZHHQFROOLVLRQVRIWKHPROHFXOHWUDYHOOLQJWRRQHZDOODQGEDFNLVFDOFXODWHGE\
WUDYHOOLQJDGLVWDQFHRIOZLWKVSHHGF
1RWHFLVQRWWDNHQDVWKHVSHHGRIOLJKWLQWKLVVFHQDULR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
)LQGWKHFKDQJHLQPRPHQWXPSHUVHFRQG
7KHIRUFHWKHPROHFXOHH[HUWVRQRQHZDOOLVIRXQGXVLQJ1HZWRQiVVHFRQGODZRIPRWLRQ
7KHFKDQJHLQPRPHQWXPLVPFVLQFHWKHIRUFHRQWKHPROHFXOHIURPWKHZDOOLVLQWKH
RSSRVLWHGLUHFWLRQWRLWVFKDQJHLQPRPHQWXP
&DOFXODWHWKHWRWDOSUHVVXUHIURP1PROHFXOHV
7KHDUHDRIRQHZDOOLVO
7KHSUHVVXUHLVGHoQHGXVLQJWKHIRUFHDQGDUHD
7KLVLVWKHSUHVVXUHH[HUWHGIURPRQHPROHFXOH
7RDFFRXQWIRUWKHODUJHQXPEHURI1PROHFXOHVWKHSUHVVXUHFDQQRZEHZULWWHQDV
(DFKPROHFXOHKDVDGLnHUHQWYHORFLW\DQGWKH\DOOFRQWULEXWHWRWKHSUHVVXUH
7KHPHDQVTXDUHGVSHHGRIFLVZULWWHQZLWKOHIWDQGULJKWDQJOHGEUDFNHWVF!
7KHSUHVVXUHLVQRZGHoQHGDV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
&RQVLGHUWKHHjHFWRIWKHPROHFXOHPRYLQJLQ'VSDFH
7KHSUHVVXUHHTXDWLRQVWLOODVVXPHVDOOWKHPROHFXOHVDUHWUDYHOOLQJLQWKHVDPHGLUHFWLRQDQG
FROOLGLQJZLWKWKHVDPHSDLURIRSSRVLWHIDFHVRIWKHFXEH
,QUHDOLW\DOOPROHFXOHVZLOOEHPRYLQJLQWKUHHGLPHQVLRQVHTXDOO\
6SOLWWLQJWKHYHORFLW\LQWRLWVFRPSRQHQWVF[F\DQGF]WRGHQRWHWKHDPRXQWLQWKH[\DQG]
GLUHFWLRQVFFDQEHGHoQHGXVLQJS\WKDJRUDViWKHRUHPLQ'
F F[F\F]
6LQFHWKHUHLVQRWKLQJVSHFLDODERXWDQ\SDUWLFXODUGLUHFWLRQLWFDQEHGHWHUPLQHGWKDW
F[! F\! F]!
7KHUHIRUHF[!FDQEHGHoQHGDV
7KHER[LVDFXEHDQGDOOWKHVLGHVDUHRIOHQJWKO
7KLVPHDQVOLVHTXDOWRWKHYROXPHRIWKHFXEH9
6XEVWLWXWLQJWKHQHZYDOXHVIRUF!DQGOEDFNLQWRWKHSUHVVXUHHTXDWLRQREWDLQVWKHoQDO
HTXDWLRQ
7KLVLVNQRZQDVWKH.LQHWLF7KHRU\RI*DVHVHTXDWLRQ
:KHUH
S SUHVVXUH 3D
9 YROXPH P
1 QXPEHURIPROHFXOHV
P PDVVRIRQHPROHFXOHRIJDV NJ
F! PHDQVTXDUHVSHHGRIWKHPROHFXOHV PV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
7KLVFDQDOVREHZULWWHQXVLQJWKHGHQVLW\bRIWKHJDV
5HDUUDQJLQJWKHSUHVVXUHHTXDWLRQIRUSDQGVXEVWLWXWLQJWKHGHQVLW\f
([DP7LS
0DNHVXUHWRUHYLVHDQGXQGHUVWDQGHDFKVWHSIRUWKHZKROHRIWKHGHULYDWLRQ
DV\RXPD\EHDVNHGWRGHULYHDOORUSDUWRIWKHHTXDWLRQLQDQH[DP
TXHVWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
$9(5$*(.,1(7,&(1(5*<2)$02/(&8/(
$YHUDJH.LQHWLF(QHUJ\RID0ROHFXOH
$QLPSRUWDQWSURSHUW\RIPROHFXOHVLQDJDVLVWKHLUDYHUDJHNLQHWLFHQHUJ\
7KLVFDQEHGHGXFHGIURPWKHLGHDOJDVHTXDWLRQVUHODWLQJSUHVVXUHYROXPHWHPSHUDWXUH
DQGVSHHG
5HFDOOWKHLGHDOJDVHTXDWLRQ
S9 1N7
$OVRUHFDOOWKHHTXDWLRQOLQNLQJSUHVVXUHDQGPHDQVTXDUHVSHHGRIWKHPROHFXOHV
7KHOHIWKDQGVLGHRIERWKHTXDWLRQVDUHHTXDO S9
7KLVPHDQVWKHULJKWKDQGVLGHVDUHDOVRHTXDO
1ZLOOFDQFHORXWRQERWKVLGHVDQGPXOWLSO\LQJE\REWDLQVWKHHTXDWLRQ
PF! N7
5HFDOOWKHIDPLOLDUNLQHWLFHQHUJ\HTXDWLRQIURPPHFKDQLFV
,QVWHDGRIYIRUWKHYHORFLW\RIRQHSDUWLFOHF!LVWKHDYHUDJHVSHHGRIDOOPROHFXOHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
0XOWLSO\LQJERWKVLGHVRIWKHHTXDWLRQE\dREWDLQVWKHDYHUDJHWUDQVODWLRQDONLQHWLF
HQHUJ\RIWKHPROHFXOHVRIDQLGHDOJDV
:KHUH
(. NLQHWLFHQHUJ\RIDPROHFXOH -
P PDVVRIRQHPROHFXOH NJ
F! PHDQVTXDUHVSHHGRIDPROHFXOH PV
N %ROW]PDQQFRQVWDQW
7 WHPSHUDWXUHRIWKHJDV .
1RWHWKLVLVWKHDYHUDJHNLQHWLFHQHUJ\IRURQO\RQHPROHFXOHRIWKHJDV
$NH\IHDWXUHRIWKLVHTXDWLRQLVWKDWWKHPHDQNLQHWLFHQHUJ\RIDQLGHDOJDVPROHFXOHLV
SURSRUWLRQDOWRLWVWKHUPRG\QDPLFWHPSHUDWXUH
(.i7
7UDQVODWLRQDONLQHWLFHQHUJ\LVGHoQHGDV
7KHHQHUJ\DPROHFXOHKDVDVLWPRYHVIURPRQHSRLQWWRDQRWKHU
$PRQDWRPLF RQHDWRP PROHFXOHRQO\KDVWUDQVODWLRQDOHQHUJ\ZKLOVWDGLDWRPLF WZR

DWRP PROHFXOHKDVERWKWUDQVODWLRQDODQGURWDWLRQDOHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
:RUNHGH[DPSOH$YHUDJHNLQHWLFHQHUJ\RIDPROHFXOH
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHDYHUDJHWUDQVODWLRQDONLQHWLFHQHUJ\
6WHS)LQGWKHUHODWLRQEHWZHHQFUPVDQGWHPSHUDWXUH7
6LQFHPDQGNDUHFRQVWDQWF!LVGLUHFWO\SURSRUWLRQDOWR7
F!i7
7KHUHIRUHWKHUHODWLRQEHWZHHQFUPVDQG7LV
6WHS:ULWHWKHHTXDWLRQLQIXOO
ZKHUHDLVWKHFRQVWDQWRISURSRUWLRQDOLW\
6WHS&DOFXODWHWKHFRQVWDQWRISURSRUWLRQDOLW\IURPYDOXHVJLYHQE\UHDUUDQJLQJIRU
D
7 R& .

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
,GHDO*DVHV m
6WHS&DOFXODWHFUPVDWR&E\VXEVWLWXWLQJWKHYDOXHRIDDQGQHZYDOXHRI7
7 R& .
([DP7LS
.HHSLQPLQGWKLVSDUWLFXODUHTXDWLRQIRUNLQHWLFHQHUJ\LVRQO\IRURQH
PROHFXOHLQWKHJDV,I\RXZDQWWRoQGWKHNLQHWLFHQHUJ\IRUDOOWKH
PROHFXOHVUHPHPEHUWRPXOWLSO\E\1WKHWRWDOQXPEHURIPROHFXOHV
<RXFDQUHPHPEHUWKHHTXDWLRQWKURXJKWKHUK\PHh$YHUDJH.(LVWKUHH
KDOYHVN7i

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
&217(176
7KH)LUVW/DZRI7KHUPRG\QDPLFV
,QWHUQDOHQHUJ\
:RUN'RQHE\D*DV
7+(),567/$:2)7+(502'<1$0,&6
,17(51$/(1(5*<
'HjQLQJ,QWHUQDO(QHUJ\
(QHUJ\FDQJHQHUDOO\EHFODVVLjHGLQWRWZRIRUPVNLQHWLFRUSRWHQWLDOHQHUJ\
7KHPROHFXOHVRIDOOVXEVWDQFHVFRQWDLQERWKNLQHWLFDQGSRWHQWLDOHQHUJLHV
7KHDPRXQWRINLQHWLFDQGSRWHQWLDOHQHUJ\DVXEVWDQFHFRQWDLQVGHSHQGVRQWKHSKDVHVRI
PDWWHU VROLGOLTXLGRUJDV WKLVLVNQRZQDVWKHLQWHUQDOHQHUJ\
7KHLQWHUQDOHQHUJ\RIDVXEVWDQFHLVGHjQHGDV
7KHVXPRIWKHUDQGRPGLVWULEXWLRQRINLQHWLFDQGSRWHQWLDOHQHUJLHVZLWKLQD
V\VWHPRIPROHFXOHV
7KHV\PEROIRULQWHUQDOHQHUJ\LV8ZLWKXQLWVRI-RXOHV -
7KHLQWHUQDOHQHUJ\RIDV\VWHPLVGHWHUPLQHGE\
7HPSHUDWXUH
7KHUDQGRPPRWLRQRIPROHFXOHV
7KHSKDVHRIPDWWHUJDVHVKDYHWKHKLJKHVWLQWHUQDOHQHUJ\VROLGVKDYHWKHORZHVW
7KHLQWHUQDOHQHUJ\RIDV\VWHPFDQLQFUHDVHE\
'RLQJZRUNRQLW
$GGLQJKHDWWRLW
7KHLQWHUQDOHQHUJ\RIDV\VWHPFDQGHFUHDVHE\
/RVLQJKHDWWRLWVVXUURXQGLQJV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
([DP7LS
:KHQDQH[DPTXHVWLRQDVNV\RXWRGHjQHfLQWHUQDOHQHUJ\g\RXFDQORVHD
PDUNIRUQRWPHQWLRQLQJWKHfUDQGRPPRWLRQgRIWKHSDUWLFOHVRUWKH

fUDQGRPGLVWULEXWLRQgRIWKHHQHUJLHVVRPDNHVXUH\RXLQFOXGHRQHRI
WKHVHLQ\RXUGHjQLWLRQ
,QWHUQDO(QHUJ\ 7HPSHUDWXUH
7KHLQWHUQDOHQHUJ\RIDQREMHFWLVLQWULQVLFDOO\UHODWHGWRLWVWHPSHUDWXUH
:KHQDFRQWDLQHUFRQWDLQLQJJDVPROHFXOHVLVKHDWHGXSWKHPROHFXOHVEHJLQWRPRYH
DURXQGIDVWHULQFUHDVLQJWKHLUNLQHWLFHQHUJ\
,IWKHREMHFWLVDVROLGZKHUHWKHPROHFXOHVDUHWLJKWO\SDFNHGZKHQKHDWHGWKHPROHFXOHV
EHJLQWRYLEUDWHPRUH
0ROHFXOHVLQOLTXLGVDQGVROLGVKDYHERWKNLQHWLFDQGSRWHQWLDOHQHUJ\EHFDXVHWKH\DUHFORVH
WRJHWKHUDQGERXQGE\LQWHUPROHFXODUIRUFHV
+RZHYHULGHDOJDVPROHFXOHVDUHDVVXPHGWRKDYHQRLQWHUPROHFXODUIRUFHV
7KLVPHDQVWKHUHKDYHQRSRWHQWLDOHQHUJ\RQO\NLQHWLFHQHUJ\
7KH FKDQJHLQ LQWHUQDOHQHUJ\RIDQLGHDOJDVLVHTXDOWR
7KHUHIRUHWKHFKDQJHLQLQWHUQDOHQHUJ\LVSURSRUWLRQDOWRWKHFKDQJHLQWHPSHUDWXUH
d8fd7
:KHUH
d8 FKDQJHLQLQWHUQDOHQHUJ\ -
d7 FKDQJHLQWHPSHUDWXUH .

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
:RUNHGH[DPSOH,QWHUQDOHQHUJ\ WHPSHUDWXUH
6WHS
:ULWHGRZQWKHUHODWLRQVKLSEHWZHHQLQWHUQDOHQHUJ\DQGWHPSHUDWXUH
7KHLQWHUQDOHQHUJ\RIDQLGHDOJDVLVGLUHFWO\SURSRUWLRQDOWRLWVWHPSHUDWXUH
d8fd7
6WHS
'HWHUPLQHZKHWKHUWKHFKDQJHLQWHPSHUDWXUH LQ. LQFUHDVHVE\WKUHHWLPHV
7KHWHPSHUDWXUHFKDQJHLVWKHWKHUPRG\QDPLFWHPSHUDWXUHLH.HOYLQ
7KHWHPSHUDWXUHFKDQJHLQGHJUHHVIURPR&WRR&LQFUHDVHVE\WKUHHWLPHV
7KHWHPSHUDWXUHFKDQJHLQ.HOYLQLV
R& .
R& .
7KHUHIRUHWKHWHPSHUDWXUHFKDQJHLQ.HOYLQGRHVQRWLQFUHDVHE\WKUHHWLPHV
6WHS
:ULWHDFRQFOXGLQJVWDWHPHQWUHODWLQJWKHWHPSHUDWXUHFKDQJHWRWKHLQWHUQDOHQHUJ\
7KHLQWHUQDOHQHUJ\LVGLUHFWO\SURSRUWLRQDOWRWKHWHPSHUDWXUH
7KHWKHUPRG\QDPLFWHPSHUDWXUHKDVQRWWUHEOHGWKHUHIRUHQHLWKHUKDVWKHLQWHUQDOHQHUJ\
7KHUHIRUHWKHVWXGHQWLVLQFRUUHFW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
([DP7LS
,IDQH[DPTXHVWLRQDERXWDQLGHDOJDVDVNVIRUWKHWRWDOLQWHUQDOHQHUJ\
UHPHPEHUWKDWWKLVLVHTXDOWRWKHWRWDONLQHWLFHQHUJ\VLQFHDQLGHDOJDV
KDV]HURSRWHQWLDOHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
:25.'21(%<$*$6
:RUN'RQHE\D*DV
:KHQDJDVH[SDQGVLWGRHVZRUNRQLWVVXUURXQGLQJVE\H[HUWLQJSUHVVXUHRQWKHZDOOVRI
WKHFRQWDLQHULWeVLQ
7KLVLVLPSRUWDQWIRUH[DPSOHLQDVWHDPHQJLQHZKHUHH[SDQGLQJVWHDPSXVKHVDSLVWRQWR
WXUQWKHHQJLQH
7KHZRUNGRQHZKHQDYROXPHRIJDVFKDQJHVDWFRQVWDQWSUHVVXUHLVGHjQHGDV
: Sd9
:KHUH
: ZRUNGRQH -
S H[WHUQDOSUHVVXUH 3D
9 YROXPHRIJDV P
)RUDJDVLQVLGHDF\OLQGHUHQFORVHGE\DPRYHDEOHSLVWRQWKHIRUFHH[HUWHGE\WKHJDV
SXVKHVWKHSLVWRQRXWZDUGV
7KHUHIRUHWKHJDVGRHVZRUNRQWKHSLVWRQ
7KHYROXPHRIJDVLVDWFRQVWDQWSUHVVXUH7KLVPHDQVWKHIRUFH)H[HUWHGE\WKHJDVRQWKH
SLVWRQLVHTXDOWR
) Sc$
:KHUH
S SUHVVXUHRIWKHJDV 3D
$ FURVVVHFWLRQDODUHDRIWKHF\OLQGHU P
7KHGHjQLWLRQRIZRUNGRQHLV
: )cG
:KHUH
) IRUFH 1
G SHUSHQGLFXODUGLVSODFHPHQWWRWKHIRUFH P
7KHGLVSODFHPHQWRIWKHJDVGPXOWLSOLHGE\WKHFURVVVHFWLRQDODUHD$LVWKHLQFUHDVHLQ
YROXPHd9RIWKHJDV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
: Sc$cG
7KLVJLYHVWKHHTXDWLRQIRUWKHZRUNGRQHZKHQWKHYROXPHRIDJDVFKDQJHVDWFRQVWDQW
SUHVVXUH
: Sd9
:KHUH
d9 LQFUHDVHLQYROXPHRIWKHJDVLQWKHSLVWRQZKHQH[SDQGLQJ P
7KLVLVDVVXPLQJWKDWWKHVXUURXQGLQJSUHVVXUHSGRHVQRWFKDQJHDVWKHJDVH[SDQGV
7KLVZLOOEHWUXHLIWKHJDVLVH[SDQGLQJDJDLQVWWKHSUHVVXUHRIWKHDWPRVSKHUHZKLFK
FKDQJHVYHU\VORZO\
:KHQWKHJDVH[SDQGV 9LQFUHDVHV ZRUNLVGRQHE\WKHJDV
:KHQWKHJDVLVFRPSUHVVHG 9GHFUHDVHV ZRUNLVGRQHRQWKHJDV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
:RUNHGH[DPSOH
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHZRUNGRQHE\DJDV
: Sd9
d9 gQDOYROXPHeLQLWLDOYROXPH e P
: c c -
([DP7LS
7KHSUHVVXUHSLQWKHZRUNGRQHE\DJDVHTXDWLRQLVQRWWKHSUHVVXUHRIWKH
JDVEXWWKHSUHVVXUHRIWKHVXUURXQGLQJV7KLVEHFDXVHZKHQDJDVH[SDQGV
LWGRHVZRUNRQWKHVXUURXQGLQJV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
7+(),567/$:2)7+(502'<1$0,&6
7KHjUVWODZRIWKHUPRG\QDPLFVLVEDVHGRQWKHSULQFLSOHRIFRQVHUYDWLRQRIHQHUJ\
:KHQHQHUJ\LVSXWLQWRDJDVE\KHDWLQJLWRUGRLQJZRUNRQLWLWVLQWHUQDOHQHUJ\PXVW
LQFUHDVH
7KHLQFUHDVHLQLQWHUQDOHQHUJ\ (QHUJ\VXSSOLHGE\KHDWLQJ:RUNGRQH
RQWKHV\VWHP
7KHjUVWODZRIWKHUPRG\QDPLFVLVWKHUHIRUHGHjQHGDV
d8 T:
:KHUH
d8 LQFUHDVHLQLQWHUQDOHQHUJ\ -
T HQHUJ\VXSSOLHGWRWKHV\VWHPE\KHDWLQJ -
: ZRUNGRQHRQWKHV\VWHP -
7KHjUVWODZRIWKHUPRG\QDPLFVDSSOLHVWRDOOVLWXDWLRQVQRWMXVWIRUJDVHV
7KHUHLVDQLPSRUWDQWVLJQFRQYHQWLRQXVHGIRUWKLVHTXDWLRQ
$SRVLWLYHYDOXHIRULQWHUQDOHQHUJ\ d8 PHDQV

7KHLQWHUQDOHQHUJ\d8LQFUHDVHV
+HDWTLVDGGHGWRWKHV\VWHP
:RUN:LVGRQHRQWKHV\VWHP RURQDJDV
$QHJDWLYHYDOXHIRULQWHUQDOHQHUJ\ hd8 PHDQV

7KHLQWHUQDOHQHUJ\d8GHFUHDVHV
+HDWTLVWDNHQDZD\IURPWKHV\VWHP
:RUN:LVGRQHE\WKHV\VWHP RUE\DJDV RQWKHVXUURXQGLQJV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
7KLVLVLPSRUWDQWZKHQWKLQNLQJDERXWWKHH[SDQVLRQRUFRPSUHVVLRQRIDJDV
:KHQWKHJDVH[SDQGVLWWUDQVIHUVVRPHHQHUJ\ GRHVZRUN WRLWVVXUURXQGLQJV
7KLVGHFUHDVHVWKHRYHUDOOHQHUJ\RIWKHJDV
7KHUHIRUHZKHQWKHJDVH[SDQGVZRUNLVGRQHE\WKHJDV h:
:KHQDJDVH[SDQGVZRUNGRQH:LVQHJDWLYH
:KHQWKHJDVLVFRPSUHVVHGZRUNLVGRQHRQWKHJDV :
:KHQDJDVLVFRPSUHVVHGZRUNGRQH:LVSRVLWLYH
*UDSKVRI&RQVWDQW3UHVVXUH 9ROXPH
*UDSKVRISUHVVXUHSDJDLQVWYROXPH9FDQSURYLGHLQIRUPDWLRQDERXWWKHZRUNGRQHDQG
LQWHUQDOHQHUJ\RIWKHJDV
7KHZRUNGRQHLVUHSUHVHQWHGE\WKHDUHDXQGHUWKHOLQH
$FRQVWDQWSUHVVXUHSURFHVVLVUHSUHVHQWHGDVDKRUL]RQWDOOLQH
,IWKHYROXPHLVLQFUHDVLQJ H[SDQVLRQ ZRUNLVGRQHE\WKHJDVDQGLQWHUQDOHQHUJ\
LQFUHDVHV
,IWKHDUURZLVUHYHUVHGDQGWKHYROXPHLVGHFUHDVLQJ FRPSUHVVLRQ ZRUNLVGRQHRQ

WKHJDVDQGLQWHUQDOHQHUJ\GHFUHDVHV
$FRQVWDQWYROXPHSURFHVVLVUHSUHVHQWHGDVDYHUWLFDOOLQH
,QDSURFHVVZLWKFRQVWDQWYROXPHWKHDUHDXQGHUWKHFXUYHLV]HUR
7KHUHIRUHQRZRUNLVGRQHZKHQWKHYROXPHVWD\VWKHVDPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
:RUNHGH[DPSOH
6WHS
:ULWHGRZQWKHjUVWODZRIWKHUPRG\QDPLFV
d8 T:
6WHS
:ULWHWKHYDOXHRIKHDWLQJTRIWKHV\VWHP
7KLVLVWKHODWHQWKHDWWKHKHDWUHTXLUHGWRYDSRULVHWKHOLTXLG c-

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
7KHUPRG\QDPLFV i
6WHS
&DOFXODWHWKHZRUNGRQH:
: Sd9
d9 jQDOYROXPHhLQLWLDOYROXPH cec P
S DWPRVSKHULFSUHVVXUH c3D
: c c c-
6LQFHWKHJDVLVH[SDQGLQJWKLVZRUNGRQHLVQHJDWLYH
: ec-
6WHS
6XEVWLWXWHWKHYDOXHVLQWRjUVWODZRIWKHUPRG\QDPLFV
d8 c ec - VI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
&217(176
6LPSOH+DUPRQLF0RWLRQ
'HVFULELQJ2VFLOODWLRQV
6LPSOH+DUPRQLF0RWLRQ
&DOFXODWLQJ$FFHOHUDWLRQ 'LVSODFHPHQWLQ6+0
&DOFXODWLQJ6SHHGLQ6+0
6+0*UDSKV
(QHUJ\LQ6+0
'DPSHG2VFLOODWLRQV
'DPSLQJ
5HVRQDQFH
6,03/(+$5021,&027,21
'(6&5,%,1*26&,//$7,216
'HVFULELQJ2VFLOODWLRQV
$QRVFLOODWLRQLVGHmQHGDV
5HSHDWHGEDFNDQGIRUWKPRYHPHQWVRQHLWKHUVLGHRIDQ\HTXLOLEULXP
SRVLWLRQ
:KHQWKHREMHFWVWRSVRVFLOODWLQJLWUHWXUQVWRLWVHTXLOLEULXPSRVLWLRQ
$QRVFLOODWLRQLVDPRUHVSHFLmFWHUPIRUDYLEUDWLRQ
$QRVFLOODWRULVDGHYLFHWKDWZRUNVRQWKHSULQFLSOHVRIRVFLOODWLRQV
2VFLOODWLQJV\VWHPVFDQEHUHSUHVHQWHGE\GLVSODFHPHQWWLPHJUDSKVVLPLODUWRWUDQVYHUVH
ZDYHV
7KHVKDSHRIWKHJUDSKLVDVLQHFXUYH
7KHPRWLRQLVGHVFULEHGDVVLQXVRLGDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
3URSHUWLHVRI2VFLOODWLRQV
'LVSODFHPHQW [ RIDQRVFLOODWLQJV\VWHPLVGHmQHGDV
7KHGLVWDQFHRIDQRVFLOODWRUIURPLWVHTXLOLEULXPSRVLWLRQ
$PSOLWXGH [ LVGHmQHGDV
7KHPD[LPXPGLVSODFHPHQWRIDQRVFLOODWRUIURPLWVHTXLOLEULXPSRVLWLRQ
$QJXODUIUHTXHQF\ k LVGHmQHGDV
7KHUDWHRIFKDQJHRIDQJXODUGLVSODFHPHQWZLWKUHVSHFWWRWLPH
7KLVLVDVFDODUTXDQWLW\PHDVXUHGLQUDGV DQGLVGHmQHGE\WKHHTXDWLRQ

)UHTXHQF\ I LVGHmQHGDV
7KHQXPEHURIFRPSOHWHRVFLOODWLRQVSHUXQLWWLPH
,WLVPHDVXUHGLQ+HUW] +] DQGLVGHmQHGE\WKHHTXDWLRQ
7LPHSHULRG 7 LVGHmQHGDV
7KHWLPHWDNHQIRURQHFRPSOHWHRVFLOODWLRQLQVHFRQGV
2QHFRPSOHWHRVFLOODWLRQLVGHmQHGDV
7KHWLPHWDNHQIRUWKHRVFLOODWRUWRSDVVWKHHTXLOLEULXPIURPRQHVLGHDQG
EDFNDJDLQIXOO\IURPWKHRWKHUVLGH
7KHWLPHSHULRGLVGHmQHGE\WKHHTXDWLRQ
3KDVHGLlHUHQFHLVKRZPXFKRQHRVFLOODWRULVLQIURQWRUEHKLQGDQRWKHU
:KHQWKHUHODWLYHSRVLWLRQRIWZRRVFLOODWRUVDUHHTXDOWKH\DUHLQSKDVH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:KHQRQHRVFLOODWRULVH[DFWO\KDOIDF\FOHEHKLQGDQRWKHUWKH\DUHVDLGWREHLQDQWL
SKDVH
3KDVHGLlHUHQFHLVQRUPDOO\PHDVXUHGLQUDGLDQVRUIUDFWLRQVRIDF\FOH
:KHQWZRRVFLOODWRUVDUHLQDQWLSKDVHWKH\KDYHDSKDVHGLlHUHQFHRIdUDGLDQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH&DOFXODWLQJDQJXODUIUHTXHQF\
6WHS
:ULWHGRZQWKHHTXDWLRQIRUDQJXODUIUHTXHQF\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
6WHS
&DOFXODWHWKHWLPHSHULRG7IURPWKHJUDSK
7KHWLPHSHULRGLVGHmQHGDVWKHWLPHWDNHQIRURQHFRPSOHWHRVFLOODWLRQ
7KLVFDQEHUHDGIURPWKHJUDSK
7 i V
6WHS
6XEVWLWXWHLQWRDQJXODUIUHTXHQF\HTXDWLRQ
([DP7LS
7KHSURSHUWLHVXVHGWRGHVFULEHRVFLOODWLRQVDUHYHU\VLPLODUWRWUDQVYHUVH
ZDYHV7KHNH\GLlHUHQFHLVWKDWRVFLOODWRUVGRQRWKDYHDfZDYHOHQJWKgDQG

WKHLUGLUHFWLRQRIWUDYHOLVRQO\NHSWZLWKLQWKHRVFLOODWLRQVWKHPVHOYHVUDWKHU
WKDQWUDYHOOLQJDGLVWDQFHLQVSDFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
6,03/(+$5021,&027,21
&RQGLWLRQVIRU6LPSOH+DUPRQLF0RWLRQ
6LPSOHKDUPRQLFPRWLRQ 6+0 LVDVSHFLmFW\SHRIRVFLOODWLRQ
6+0LVGHmQHGDV
$W\SHRIRVFLOODWLRQLQZKLFKWKHDFFHOHUDWLRQRIDERG\LVSURSRUWLRQDOWRLWV
GLVSODFHPHQWEXWDFWVLQWKHRSSRVLWHGLUHFWLRQ
([DPSOHVRIRVFLOODWRUVWKDWXQGHUJR6+0DUH
7KHSHQGXOXPRIDFORFN
$PDVVRQDVSULQJ
*XLWDUVWULQJV
7KHHOHFWURQVLQDOWHUQDWLQJFXUUHQWnRZLQJWKURXJKDZLUH
7KLVPHDQVIRUDQREMHFWWRRVFLOODWHVSHFLmFDOO\LQ6+0LWPXVWVDWLVI\WKHIROORZLQJ
FRQGLWLRQV
3HULRGLFRVFLOODWLRQV
$FFHOHUDWLRQSURSRUWLRQDOWRLWVGLVSODFHPHQW
$FFHOHUDWLRQLQWKHRSSRVLWHGLUHFWLRQWRLWVGLVSODFHPHQW
$FFHOHUDWLRQDDQGGLVSODFHPHQW[FDQEHUHSUHVHQWHGE\WKHGHmQLQJHTXDWLRQRI6+0
Dji[
$QREMHFWLQ6+0ZLOODOVRKDYHDUHVWRULQJIRUFHWRUHWXUQLWWRLWVHTXLOLEULXPSRVLWLRQ
7KLVUHVWRULQJIRUFHZLOOEHGLUHFWO\SURSRUWLRQDOEXWLQWKHRSSRVLWHGLUHFWLRQWRWKH
GLVSODFHPHQWRIWKHREMHFWIURPWKHHTXLOLEULXPSRVLWLRQ
1RWHWKHUHVWRULQJIRUFHDQGDFFHOHUDWLRQDFWLQWKHVDPHGLUHFWLRQ
7KLVLVZK\DSHUVRQMXPSLQJRQDWUDPSROLQHLVQRWDQH[DPSOHRIVLPSOHKDUPRQLFPRWLRQ
7KHUHVWRULQJIRUFHRQWKHSHUVRQLVQRWSURSRUWLRQDOWRWKHLUGLVWDQFHIURPWKH
HTXLOLEULXPSRVLWLRQ
:KHQWKHSHUVRQLVQRWLQFRQWDFWZLWKWKHWUDPSROLQHWKHUHVWRULQJIRUFHLVHTXDOWR
WKHLUZHLJKWZKLFKLVFRQVWDQW
7KLVGRHVQRWFKDQJHHYHQLIWKH\MXPSKLJKHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
&$/&8/$7,1*$&&(/(5$7,21 ',63/$&(0(17,16+0
&DOFXODWLQJ$FFHOHUDWLRQ 'LVSODFHPHQWRIDQ2VFLOODWRU
7KHDFFHOHUDWLRQRIDQREMHFWRVFLOODWLQJLQVLPSOHKDUPRQLFPRWLRQLV
D ik[
:KHUH
D DFFHOHUDWLRQ PV
j DQJXODUIUHTXHQF\ UDGV
[ GLVSODFHPHQW P
7KLVLVXVHGWRmQGWKHDFFHOHUDWLRQRIDQREMHFWLQ6+0ZLWKDSDUWLFXODUDQJXODUIUHTXHQF\j
DWDVSHFLmFGLVSODFHPHQW[
7KHHTXDWLRQGHPRQVWUDWHV
7KHDFFHOHUDWLRQUHDFKHVLWVPD[LPXPYDOXHZKHQWKHGLVSODFHPHQWLVDWDPD[LPXP
LH[ [ DPSOLWXGH
7KHPLQXVVLJQVKRZVWKDWZKHQWKHREMHFWLVGLVSODFHPHQWWRWKHULJKWWKHGLUHFWLRQ
RIWKHDFFHOHUDWLRQLVWRWKHOHIW
7KHJUDSKRIDFFHOHUDWLRQDJDLQVWGLVSODFHPHQWLVDVWUDLJKWOLQHWKURXJKWKHRULJLQVORSLQJ
GRZQZDUGV VLPLODUWR\ i[
.H\IHDWXUHVRIWKHJUDSK
7KHJUDGLHQWLVHTXDOWRij
7KHPD[LPXPDQGPLQLPXPGLVSODFHPHQW[YDOXHVDUHWKHDPSOLWXGHVi[DQG[
$VROXWLRQWRWKH6+0DFFHOHUDWLRQHTXDWLRQLVWKHGLVSODFHPHQWHTXDWLRQ
[ [VLQ kW
:KHUH
[ GLVSODFHPHQW P
[ DPSOLWXGH P
W WLPH V

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
7KLVHTXDWLRQFDQEHXVHGWRmQGWKHSRVLWLRQRIDQREMHFWLQ6+0ZLWKDSDUWLFXODUDQJXODU
IUHTXHQF\DQGDPSOLWXGHDWDPRPHQWLQWLPH
1RWH7KLVYHUVLRQRIWKHHTXDWLRQLVRQO\UHOHYDQWZKHQDQREMHFWEHJLQVRVFLOODWLQJ
IURPWKHHTXLOLEULXPSRVLWLRQ [ DWW
7KHGLVSODFHPHQWZLOOEHDWLWVPD[LPXPZKHQVLQ jW HTXDOVRUiZKHQ[ [
,IDQREMHFWLVRVFLOODWLQJIURPLWVDPSOLWXGHSRVLWLRQ [ [RU[ i[DWW WKHQWKH

GLVSODFHPHQWHTXDWLRQZLOOEH
[ [FRV kW
7KLVLVEHFDXVHWKHFRVLQHJUDSKVWDUWVDWDPD[LPXPZKLOVWWKHVLQHJUDSKVWDUWVDW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH&DOFXODWLQJ6+0GLVSODFHPHQW
6WHS
:ULWHGRZQWKH6+0GLVSODFHPHQWHTXDWLRQ
6LQFHWKHPDVVLVUHOHDVHGDWW DWLWVPD[LPXPGLVSODFHPHQWWKHGLVSODFHPHQWHTXDWLRQ
ZLOOEHZLWKWKHFRVLQHIXQFWLRQ
[ [FRV kW
6WHS
&DOFXODWHDQJXODUIUHTXHQF\
5HPHPEHUWRXVHWKHYDOXHRIWKHWLPHSHULRGJLYHQQRWWKHWLPHZKHUH\RXDUHFDOFXODWLQJ
WKHGLVSODFHPHQWIURP
6WHS
6XEVWLWXWHYDOXHVLQWRWKHGLVSODFHPHQWHTXDWLRQ
[ FRV c eh eFP VI
0DNHVXUHWKHFDOFXODWRULVLQUDGLDQVPRGH
7KHQHJDWLYHYDOXHPHDQVWKHPDVVLVFPRQWKHRSSRVLWHVLGHRIWKHHTXLOLEULXPSRVLWLRQ
WRZKHUHLWVWDUWHG FPDERYHLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
([DP7LS
6LQFHGLVSODFHPHQWLVDYHFWRUTXDQWLW\UHPHPEHUWRNHHSWKHPLQXVVLJQLQ
\RXUVROXWLRQVLIWKH\DUHQHJDWLYH\RXFRXOGORVHDPDUNLIQRW
$OVRUHPHPEHUWKDW\RXUFDOFXODWRUPXVWEHLQUDGLDQVPRGHZKHQXVLQJWKH
FRVDQGVLQHIXQFWLRQV7KLVLVEHFDXVHWKHDQJXODUIUHTXHQF\jLVFDOFXODWHG
LQUDGVQRWGHJUHHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
&$/&8/$7,1*63((',16+0
&DOFXODWLQJ6SHHGRIDQ2VFLOODWRU
7KHVSHHGRIDQREMHFWLQVLPSOHKDUPRQLFPRWLRQYDULHVDVLWRVFLOODWHVEDFNDQGIRUWK
,WVVSHHGLVWKHPDJQLWXGHRILWVYHORFLW\
7KHJUHDWHVWVSHHGRIDQRVFLOODWRULVDWWKHHTXLOLEULXPSRVLWLRQLHZKHQLWVGLVSODFHPHQWLV
[
7KHVSHHGRIDQRVFLOODWRULQ6+0LVGHmQHGE\
Y YFRV kW
:KHUH
Y VSHHG PV
Y PD[LPXPVSHHG PV
W WLPH V
7KLVLVDFRVLQHIXQFWLRQLIWKHREMHFWVWDUWVRVFLOODWLQJIURPWKHHTXLOLEULXPSRVLWLRQ [
ZKHQW
$OWKRXJKWKHV\PEROYLVFRPPRQO\XVHGWRUHSUHVHQWYHORFLW\QRWVSHHGH[DPTXHVWLRQV
IRFXVPRUHRQWKHPDJQLWXGHRIWKHYHORFLW\WKDQLWVGLUHFWLRQLQ6+0
+RZWKHVSHHGYFKDQJHVZLWKWKHRVFLOODWRUgVGLVSODFHPHQW[LVGHmQHGE\
:KHUH
[ GLVSODFHPHQW P
[ DPSOLWXGH P
d fSOXVRUPLQXVg7KHYDOXHFDQEHQHJDWLYHRUSRVLWLYH
7KLVHTXDWLRQVKRZWKDWZKHQDQRVFLOODWRUKDVDJUHDWHUDPSOLWXGH[LWKDVWRWUDYHOD
JUHDWHUGLVWDQFHLQWKHVDPHWLPHDQGKHQFHKDVJUHDWHUVSHHGY
%RWKHTXDWLRQVIRUVSHHGZLOOEHJLYHQRQ\RXUIRUPXODHVKHHWLQWKHH[DP
:KHQWKHVSHHGLVDWLWVPD[LPXPV DW[ WKHHTXDWLRQEHFRPHV
Y k[

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH&DOFXODWLQJWKHVSHHGRIDSHQGXOXP
6WHS
:ULWHRXWWKHNQRZQTXDQWLWLHV
$PSOLWXGHRIRVFLOODWLRQV[ FP P
'LVSODFHPHQWDWZKLFKWKHVSHHGLVWREHIRXQG[ FP P
)UHTXHQF\I +]
6WHS
2VFLOODWRUVSHHGZLWKGLVSODFHPHQWHTXDWLRQ
6LQFHWKHVSHHGLVEHLQJFDOFXODWHGWKHdVLJQFDQEHUHPRYHGDVGLUHFWLRQGRHVQRWPDWWHU
LQWKLVFDVH
6WHS
:ULWHDQH[SUHVVLRQIRUWKHDQJXODUIUHTXHQF\
(TXDWLRQUHODWLQJDQJXODUIUHTXHQF\DQGQRUPDOIUHTXHQF\
k dI dc h
6WHS
6XEVWLWXWHLQYDOXHVDQGFDOFXODWH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
Y PV VI
([DP7LS
<RXRIWHQKDYHWRFRQYHUWEHWZHHQWLPHSHULRG7IUHTXHQF\IDQGDQJXODU
IUHTXHQF\jIRUPDQ\H[DPTXHVWLRQVeVRPDNHVXUH\RXUHYLVHWKH
HTXDWLRQVUHODWLQJWRWKHVH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
6+0*5$3+6
6+0*UDSKV
7KHGLVSODFHPHQWYHORFLW\DQGDFFHOHUDWLRQRIDQREMHFWLQVLPSOHKDUPRQLFPRWLRQFDQEH
UHSUHVHQWHGE\JUDSKVDJDLQVWWLPH
$OOXQGDPSHG6+0JUDSKVDUHUHSUHVHQWHGE\SHULRGLFIXQFWLRQV
7KLVPHDQVWKH\FDQDOOEHGHVFULEHGE\VLQHDQGFRVLQHFXUYHV
.H\IHDWXUHVRIWKHGLVSODFHPHQWWLPHJUDSK
7KHDPSOLWXGHRIRVFLOODWLRQV[FDQEHIRXQGIURPWKHPD[LPXPYDOXHRI[
7KHWLPHSHULRGRIRVFLOODWLRQV7FDQEHIRXQGIURPUHDGLQJWKHWLPHWDNHQIRURQHIXOO
F\FOH
7KHJUDSKPLJKWQRWDOZD\VVWDUWDW
,IWKHRVFLOODWLRQVVWDUWVDWWKHSRVLWLYHRUQHJDWLYHDPSOLWXGHWKHGLVSODFHPHQWZLOOEH
DWLWVPD[LPXP
.H\IHDWXUHVRIWKHYHORFLW\WLPHJUDSK
,WLVRRXWRISKDVHZLWKWKHGLVSODFHPHQWWLPHJUDSK
9HORFLW\LVHTXDOWRWKHUDWHRIFKDQJHRIGLVSODFHPHQW
6RWKHYHORFLW\RIDQRVFLOODWRUDWDQ\WLPHFDQEHGHWHUPLQHGIURPWKHJUDGLHQWRI
WKHGLVSODFHPHQWWLPHJUDSK
$QRVFLOODWRUPRYHVWKHIDVWHVWDWLWVHTXLOLEULXPSRVLWLRQ
7KHUHIRUHWKHYHORFLW\LVDWLWVPD[LPXPZKHQWKHGLVSODFHPHQWLV]HUR
.H\IHDWXUHVRIWKHDFFHOHUDWLRQWLPHJUDSK
7KHDFFHOHUDWLRQJUDSKLVDUHnHFWLRQRIWKHGLVSODFHPHQWJUDSKRQWKH[D[LV
7KLVPHDQVZKHQDPDVVKDVSRVLWLYHGLVSODFHPHQW WRWKHULJKW WKHDFFHOHUDWLRQLVLQ

WKHRSSRVLWHGLUHFWLRQ WRWKHOHIW DQGYLFHYHUVD
,WLVRRXWRISKDVHZLWKWKHYHORFLW\WLPHJUDSK
$FFHOHUDWLRQLVHTXDOWRWKHUDWHRIFKDQJHRIYHORFLW\
6RWKHDFFHOHUDWLRQRIDQRVFLOODWRUDWDQ\WLPHFDQEHGHWHUPLQHGIURPWKHJUDGLHQW
RIWKHYHORFLW\WLPHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
7KHPD[LPXPYDOXHRIWKHDFFHOHUDWLRQLVZKHQWKHRVFLOODWRULVDWLWVPD[LPXP
GLVSODFHPHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH8VLQJ6+0JUDSKGDWD
6WHS7KHYHORFLW\LVDWLWVPD[LPXPZKHQWKHGLVSODFHPHQW[
6WHS5HDGLQJYDOXHRIWLPHZKHQ[
)URPWKHJUDSKWKLVLVHTXDOWRV
([DP7LS
7KHVHJUDSKVPLJKWQRWORRNLGHQWLFDOWRZKDWLVLQ\RXUWH[WERRNGHSHQGLQJ
RQZKHUHWKHREMHFWVWDUWVRVFLOODWLQJIURPDWW RQHLWKHUVLGHRIWKH

HTXLOLEULXPRUDWWKHHTXLOLEULXP +RZHYHULIWKHUHLVQRGDPSLQJWKH\ZLOO
DOODOZD\VEHDJHQHUDOVLQHRUFRVLQHFXUYHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
(1(5*<,16+0
.LQHWLF 3RWHQWLDO(QHUJLHV
'XULQJVLPSOHKDUPRQLFPRWLRQHQHUJ\LVFRQVWDQWO\H[FKDQJHGEHWZHHQWZRIRUPVNLQHWLF
DQGSRWHQWLDO
7KHSRWHQWLDOHQHUJ\FRXOGEHLQWKHIRUPRI
*UDYLWDWLRQDOSRWHQWLDOHQHUJ\ IRUDSHQGXOXP
(ODVWLFSRWHQWLDOHQHUJ\ IRUDKRUL]RQWDOPDVVRQDVSULQJ
2UERWK IRUDYHUWLFDOPDVVRQDVSULQJ
6SHHGYLVDWDPD[LPXPZKHQGLVSODFHPHQW[ VR
7KHNLQHWLFHQHUJ\LVDWDPD[LPXPZKHQWKHGLVSODFHPHQW[
HTXLOLEULXPSRVLWLRQ
7KHUHIRUHWKHNLQHWLFHQHUJ\LVDWPD[LPXPGLVSODFHPHQW[ [VR
7KHSRWHQWLDOHQHUJ\LVDWDPD[LPXPZKHQWKHGLVSODFHPHQW ERWKSRVLWLYH
DQGQHJDWLYH LVDWDPD[LPXP[ [ DPSOLWXGH
$VLPSOHKDUPRQLFV\VWHPLVWKHUHIRUHFRQVWDQWO\FRQYHUWLQJEHWZHHQNLQHWLFDQGSRWHQWLDO
HQHUJ\
:KHQRQHLQFUHDVHVWKHRWKHUGHFUHDVHVDQGYLFHYHUVDWKHUHIRUH
7KHWRWDOHQHUJ\RIDVLPSOHKDUPRQLFV\VWHPDOZD\VUHPDLQVFRQVWDQWDQG
LVHTXDOWRWKHVXPRIWKHNLQHWLFDQGSRWHQWLDOHQHUJLHV
7KHNH\IHDWXUHVRIWKHHQHUJ\WLPHJUDSK
%RWKWKHNLQHWLFDQGSRWHQWLDOHQHUJLHVDUHUHSUHVHQWHGE\SHULRGLFIXQFWLRQV VLQHRU
FRVLQH ZKLFKDUHYDU\LQJLQRSSRVLWHGLUHFWLRQVWRRQHDQRWKHU
:KHQWKHSRWHQWLDOHQHUJ\LVWKHNLQHWLFHQHUJ\LVDWLWVPD[LPXPSRLQWDQGYLFH
YHUVD
7KHWRWDOHQHUJ\LVUHSUHVHQWHGE\DKRUL]RQWDOVWUDLJKWOLQHGLUHFWO\DERYHWKH
FXUYHVDWWKHPD[LPXPYDOXHRIERWKWKHNLQHWLFRUSRWHQWLDOHQHUJ\
(QHUJ\LVDOZD\VSRVLWLYHVRWKHUHDUHQRQHJDWLYHYDOXHVRQWKH\D[LV
1RWHNLQHWLFDQGSRWHQWLDOHQHUJ\JRWKURXJKWZRFRPSOHWHF\FOHVGXULQJRQHSHULRGRI
RVFLOODWLRQ
7KLVLVEHFDXVHRQHFRPSOHWHRVFLOODWLRQUHDFKHVWKHPD[LPXPGLVSODFHPHQWWZLFH SRVLWLYH
DQGQHJDWLYH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
7KHNH\IHDWXUHVRIWKHHQHUJ\GLVSODFHPHQWJUDSK
'LVSODFHPHQWLVDYHFWRUVRWKHJUDSKKDVERWKSRVLWLYHDQGQHJDWLYH[YDOXHV
7KHSRWHQWLDOHQHUJ\LVDOZD\VDWDPD[LPXPDWWKHDPSOLWXGHSRVLWLRQV[DQGDW
WKHHTXLOLEULXPSRVLWLRQ [
7KLVLVUHSUHVHQWHGE\Df8gVKDSHGFXUYH
7KHNLQHWLFHQHUJ\LVWKHRSSRVLWHLWLVDWWKHDPSOLWXGHSRVLWLRQV[DQGPD[LPXP
DWWKHHTXLOLEULXPSRVLWLRQ[
7KLVLVUHSUHVHQWHGE\DfQgVKDSHGFXUYH
7KHWRWDOHQHUJ\LVUHSUHVHQWHGE\DKRUL]RQWDOVWUDLJKWOLQHDERYHWKHFXUYHV
([DP7LS
<RXPD\EHH[SHFWHGWRGUDZDVZHOODVLQWHUSUHWHQHUJ\JUDSKVDJDLQVWWLPH
RUGLVSODFHPHQWLQH[DPTXHVWLRQV0DNHVXUHWKHVNHWFKHVRIWKHFXUYHVDUH

DVHYHQDVSRVVLEOHDQGXVHDUXOHUWRGUDZVWUDLJKWOLQHVIRUH[DPSOHWR
UHSUHVHQWWKHWRWDOHQHUJ\
&DOFXODWLQJ7RWDO(QHUJ\RID6LPSOH+DUPRQLF6\VWHP
7KHWRWDOHQHUJ\RIV\VWHPXQGHUJRLQJVLPSOHKDUPRQLFPRWLRQLVGHmQHGE\
:KHUH
( WRWDOHQHUJ\RIDVLPSOHKDUPRQLFV\VWHP -
P PDVVRIWKHRVFLOODWRU NJ
[ DPSOLWXGH P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH&DOFXODWLQJWKHWRWDOHQHUJ\RIRVFLOODWLRQV
6WHS:ULWHGRZQDOONQRZQTXDQWLWLHV
0DVVP J ceNJ
$PSOLWXGH[ FP P
)UHTXHQF\I +]
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHWRWDOHQHUJ\RI6+0RVFLOODWLRQV
6WHS:ULWHDQH[SUHVVLRQIRUWKHDQJXODUIUHTXHQF\
k dI dc
6WHS6XEVWLWXWHYDOXHVLQWRHQHUJ\HTXDWLRQ
( ce P- VI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
'$03('26&,//$7,216
'$03,1*
'DPSLQJ
,QSUDFWLFHDOORVFLOODWRUVHYHQWXDOO\VWRSRVFLOODWLQJ
7KHLUDPSOLWXGHVGHFUHDVHUDSLGO\RUJUDGXDOO\
7KLVKDSSHQVGXHWRUHVLVWLYHIRUFHVVXFKIULFWLRQRUDLUUHVLVWDQFHZKLFKDFWLQWKH
RSSRVLWHGLUHFWLRQWRWKHPRWLRQRIDQRVFLOODWRU
5HVLVWLYHIRUFHVDFWLQJRQDQRVFLOODWLQJVLPSOHKDUPRQLFV\VWHPFDXVHGDPSLQJ
7KHVHDUHNQRZQDVGDPSHGRVFLOODWLRQV
'DPSLQJLVGHmQHGDV
7KHUHGXFWLRQLQHQHUJ\DQGDPSOLWXGHRIRVFLOODWLRQVGXHWRUHVLVWLYHIRUFHV
RQWKHRVFLOODWLQJV\VWHP
'DPSLQJFRQWLQXHVXQWLOWKHRVFLOODWRUFRPHVWRUHVWDWWKHHTXLOLEULXPSRVLWLRQ
$NH\IHDWXUHRIVLPSOHKDUPRQLFPRWLRQLVWKDWWKHIUHTXHQF\RIGDPSHGRVFLOODWLRQVGRHV
QRWFKDQJHDVWKHDPSOLWXGHGHFUHDVHV
)RUH[DPSOHDFKLOGRQDVZLQJFDQRVFLOODWHEDFNDQGIRUWKRQFHHYHU\VHFRQGEXW
WKLVWLPHUHPDLQVWKHVDPHUHJDUGOHVVRIWKHDPSOLWXGH
([DP7LS
0DNHVXUHQRWWRFRQIXVHUHVLVWLYHIRUFHDQGUHVWRULQJIRUFH
h5HVLVWLYHIRUFHLVZKDWRSSRVHVWKHPRWLRQRIWKHRVFLOODWRUDQGFDXVHV
GDPSLQJ
h5HVWRULQJIRUFHLVZKDWEULQJVWKHRVFLOODWRUEDFNWRWKHHTXLOLEULXP
SRVLWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
7\SHVRI'DPSLQJ
7KHUHDUHWKUHHGHJUHHVRIGDPSLQJGHSHQGLQJRQKRZTXLFNO\WKHDPSOLWXGHRIWKH
RVFLOODWLRQVGHFUHDVH
/LJKWGDPSLQJ
&ULWLFDOGDPSLQJ
+HDY\GDPSLQJ
/LJKW'DPSLQJ
:KHQRVFLOODWLRQVDUHOLJKWO\GDPSHGWKHDPSOLWXGHGRHVQRWGHFUHDVHOLQHDUO\
,WGHFD\VH[SRQHQWLDOO\ZLWKWLPH
:KHQDOLJKWO\GDPSHGRVFLOODWRULVGLVSODFHGIURPWKHHTXLOLEULXPLWZLOORVFLOODWHZLWK
JUDGXDOO\GHFUHDVLQJDPSOLWXGH
)RUH[DPSOHDVZLQJLQJSHQGXOXPGHFUHDVLQJLQDPSOLWXGHXQWLOLWFRPHVWRDVWRS
.H\IHDWXUHVRIDGLVSODFHPHQWWLPHJUDSKIRUDOLJKWO\GDPSHGV\VWHP
7KHUHDUHPDQ\RVFLOODWLRQVUHSUHVHQWHGE\DVLQHRUFRVLQHFXUYHZLWKJUDGXDOO\
GHFUHDVLQJDPSOLWXGHRYHUWLPH
7KLVLVVKRZQE\WKHKHLJKWRIWKHFXUYHGHFUHDVLQJLQERWKWKHSRVLWLYHDQGQHJDWLYH
GLVSODFHPHQWYDOXHV
7KHDPSOLWXGHGHFUHDVHVH[SRQHQWLDOO\
7KHIUHTXHQF\RIWKHRVFLOODWLRQVUHPDLQFRQVWDQWWKLVPHDQVWKHWLPHSHULRGRI
RVFLOODWLRQVPXVWVWD\WKHVDPHDQGHDFKSHDNDQGWURXJKLVHTXDOO\VSDFHG
&ULWLFDO'DPSLQJ
:KHQDFULWLFDOO\GDPSHGRVFLOODWRULVGLVSODFHGIURPWKHHTXLOLEULXPLWZLOOUHWXUQWRUHVWDW
LWVHTXLOLEULXPSRVLWLRQLQWKHVKRUWHVWSRVVLEOHWLPHZLWKRXWRVFLOODWLQJ
)RUH[DPSOHFDUVXVSHQVLRQV\VWHPVSUHYHQWWKHFDUIURPRVFLOODWLQJDIWHUWUDYHOOLQJ
RYHUDEXPSLQWKHURDG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
.H\IHDWXUHVRIDGLVSODFHPHQWWLPHJUDSKIRUDFULWLFDOO\GDPSHGV\VWHP
7KLVV\VWHPGRHVQRWRVFLOODWHPHDQLQJWKHGLVSODFHPHQWIDOOVWRVWUDLJKWDZD\
7KHJUDSKKDVDIDVWGHFUHDVLQJJUDGLHQWZKHQWKHRVFLOODWRULVmUVWGLVSODFHGXQWLOLW
UHDFKHVWKH[D[LV
:KHQWKHRVFLOODWRUUHDFKHVWKHHTXLOLEULXPSRVLWLRQ [ WKHJUDSKLVDKRUL]RQWDO
OLQHDW[ IRUWKHUHPDLQLQJWLPH
+HDY\'DPSLQJ
:KHQDKHDYLO\GDPSHGRVFLOODWRULVGLVSODFHGIURPWKHHTXLOLEULXPLWZLOOWDNHDORQJWLPHWR
UHWXUQWRLWVHTXLOLEULXPSRVLWLRQZLWKRXWRVFLOODWLQJ
7KHV\VWHPUHWXUQVWRHTXLOLEULXPPRUHVORZO\WKDQWKHFULWLFDOGDPSLQJFDVH
)RUH[DPSOHGRRUGDPSHUVWRSUHYHQWWKHPVODPPLQJVKXW
.H\IHDWXUHVRIDGLVSODFHPHQWWLPHJUDSKIRUDKHDYLO\GDPSHGV\VWHP
7KHUHDUHQRRVFLOODWLRQV7KLVPHDQVWKHGLVSODFHPHQWGRHVQRWSDVV
7KHJUDSKKDVDVORZGHFUHDVLQJJUDGLHQWIURPZKHQWKHRVFLOODWRULVmUVWGLVSODFHG
XQWLOLWUHDFKHVWKH[D[LV
7KHRVFLOODWRUUHDFKHVWKHHTXLOLEULXPSRVLWLRQ [ DIWHUDORQJSHULRGRIWLPHDIWHU
ZKLFKWKHJUDSKUHPDLQVDKRUL]RQWDOOLQHIRUWKHUHPDLQLQJWLPH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
:RUNHGH[DPSOH
,GHDOO\WKHQHHGOHVKRXOGQRWRVFLOODWHEHIRUHVHWWOLQJ
7KLVPHDQVWKHVFDOHVKRXOGKDYHHLWKHUFULWLFDORUKHDY\GDPSLQJ
6LQFHWKHVFDOHLVUHDGVWUDLJKWDZD\DIWHUDZHLJKWLVDSSOLHGLGHDOO\WKHQHHGOH
VKRXOGVHWWOHDVTXLFNO\DVSRVVLEOH
+HDY\GDPSLQJZRXOGPHDQWKHQHHGOHZLOOWDNHVRPHWLPHWRVHWWOHRQWKHVFDOH
7KHUHIRUHFULWLFDOGDPSLQJVKRXOGEHDSSOLHGWRWKHZHLJKLQJVFDOHVRWKHQHHGOH
FDQVHWWOHDVTXLFNO\DVSRVVLEOHWRUHDGIURPWKHVFDOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
5(621$1&(
5HVRQDQFH
,QRUGHUWRVXVWDLQRVFLOODWLRQVLQDVLPSOHKDUPRQLFV\VWHPDSHULRGLFIRUFHPXVWEHDSSOLHG
WRUHSODFHWKHHQHUJ\ORVWLQGDPSLQJ
7KLVSHULRGLFIRUFHGRHVZRUNRQWKHUHVLVWLYHIRUFHGHFUHDVLQJWKHRVFLOODWLRQV
7KHVHDUHNQRZQDVIRUFHGRVFLOODWLRQVDQGDUHGHmQHGDV
3HULRGLFIRUFHVZKLFKDUHDSSOLHGLQRUGHUWRVXVWDLQRVFLOODWLRQV
)RUH[DPSOHZKHQDFKLOGLVRQDVZLQJWKH\ZLOOEHSXVKHGDWRQHHQGDIWHUHDFKF\FOHLQ
RUGHUWRNHHSVZLQJLQJDQGSUHYHQWDLUUHVLVWDQFHIURPGDPSLQJWKHRVFLOODWLRQV
7KHVHH[WUDSXVKHVDUHWKHIRUFHGRVFLOODWLRQVZLWKRXWWKHPWKHFKLOGZLOOHYHQWXDOO\
FRPHWRDVWRS
7KHIUHTXHQF\RIIRUFHGRVFLOODWLRQVLVUHIHUUHGWRDVWKHGULYLQJIUHTXHQF\ I
$OORVFLOODWLQJV\VWHPVKDYHDQDWXUDOIUHTXHQF\ I WKLVLVGHmQHGDV
7KHIUHTXHQF\RIDQRVFLOODWLRQZKHQWKHRVFLOODWLQJV\VWHPLVDOORZHGWR
RVFLOODWHIUHHO\
2VFLOODWLQJV\VWHPVFDQH[KLELWDSURSHUW\NQRZQDVUHVRQDQFH
:KHQUHVRQDQFHLVDFKLHYHGDPD[LPXPDPSOLWXGHRIRVFLOODWLRQVFDQEHREVHUYHG
5HVRQDQFHLVGHmQHGDV
:KHQWKHGULYLQJIUHTXHQF\DSSOLHGWRDQRVFLOODWLQJV\VWHPLVHTXDOWRLWV
QDWXUDOIUHTXHQF\WKHDPSOLWXGHRIWKHUHVXOWLQJRVFLOODWLRQVLQFUHDVHV
VLJQLcFDQWO\
)RUH[DPSOHZKHQDFKLOGLVSXVKHGRQDVZLQJ
7KHVZLQJSOXVWKHFKLOGKDVDm[HGQDWXUDOIUHTXHQF\
$VPDOOSXVKDIWHUHDFKF\FOHLQFUHDVHVWKHDPSOLWXGHRIWKHRVFLOODWLRQVWRVZLQJWKH
FKLOGKLJKHU
,IWKHGULYLQJIUHTXHQF\GRHVQRWTXLWHPDWFKWKHQDWXUDOIUHTXHQF\WKHDPSOLWXGH
ZLOOLQFUHDVHEXWQRWWRWKHVDPHH[WHQWDWZKHQUHVRQDQFHLVDFKLHYHG
7KLVLVEHFDXVHDWUHVRQDQFHHQHUJ\LVWUDQVIHUUHGIURPWKHGULYHUWRWKHRVFLOODWLQJV\VWHP
PRVWHmFLHQWO\
7KHUHIRUHDWUHVRQDQFHWKHV\VWHPZLOOEHWUDQVIHUULQJWKHPD[LPXPNLQHWLFHQHUJ\
SRVVLEOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
2VFLOODWLRQV k
$JUDSKRIGULYLQJIUHTXHQF\IDJDLQVWDPSOLWXGHDRIRVFLOODWLRQVLVFDOOHGDUHVRQDQFH
FXUYH,WKDVWKHIROORZLQJNH\IHDWXUHV
:KHQIIWKHDPSOLWXGHRIRVFLOODWLRQVLQFUHDVHV
$WWKHSHDNZKHUHI IWKHDPSOLWXGHLVDWLWVPD[LPXP7KLVLVUHVRQDQFH
:KHQI!IWKHDPSOLWXGHRIRVFLOODWLRQVVWDUWVWRGHFUHDVH
'DPSLQJUHGXFHVWKHDPSOLWXGHRIUHVRQDQFHYLEUDWLRQV
7KHKHLJKWDQGVKDSHRIWKHUHVRQDQFHFXUYHZLOOWKHUHIRUHFKDQJHVOLJKWO\GHSHQGLQJRQWKH
GHJUHHRIGDPSLQJ
1RWHWKHQDWXUDOIUHTXHQF\IZLOOUHPDLQWKHVDPH
$VWKHGHJUHHRIGDPSLQJLVLQFUHDVHGWKHUHVRQDQFHJUDSKLVDOWHUHGLQWKHIROORZLQJZD\V
7KHDPSOLWXGHRIUHVRQDQFHYLEUDWLRQVGHFUHDVHPHDQLQJWKHSHDNRIWKHFXUYH
ORZHUV
7KHUHVRQDQFHSHDNEURDGHQV
7KHUHVRQDQFHSHDNPRYHVVOLJKWO\WRWKHOHIWRIWKHQDWXUDOIUHTXHQF\ZKHQKHDYLO\
GDPSHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
&217(176
(OHFWULF)LHOGV
(OHFWULF)LHOGV )RUFHVRQ&KDUJHV
(OHFWULF)LHOG/LQHV
(OHFWULF)LHOG6WUHQJWK
0RWLRQRI&KDUJHG3DUWLFOHV
(OHFWULF)RUFH%HWZHHQ7ZR3RLQW&KDUJHV
(OHFWULF3RWHQWLDO
(OHFWULF3RWHQWLDO
(OHFWULF3RWHQWLDO*UDGLHQW
(OHFWULF3RWHQWLDO(QHUJ\
(/(&75,&),(/'6
(/(&75,&),(/'6 )25&(621&+$5*(6
(OHFWULF)LHOG'HpQLWLRQ
$QHOHFWULFpHOGLVDUHJLRQRIVSDFHLQZKLFKDQHOHFWULFFKDUJHkIHHOVlDIRUFH
(OHFWULFjHOGVWUHQJWKDWDSRLQWLVGHpQHGDV
7KHHOHFWURVWDWLFIRUFHSHUXQLWSRVLWLYHFKDUJHDFWLQJRQDVWDWLRQDU\SRLQW
FKDUJHDWWKDWSRLQW
(OHFWULFpHOGVWUHQJWKFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:KHUH
( HOHFWULFpHOGVWUHQJWK 1&
) HOHFWURVWDWLFIRUFHRQWKHFKDUJH 1
4 FKDUJH &
,WLVLPSRUWDQWWRXVHDSRVLWLYHWHVWFKDUJHLQWKLVGHpQLWLRQDVWKLVGHWHUPLQHVWKHGLUHFWLRQ
RIWKHHOHFWULFpHOG
7KHHOHFWULFpHOGVWUHQJWKLVDYHFWRUTXDQWLW\LWLVDOZD\VGLUHFWHG
$ZD\IURPDSRVLWLYHFKDUJH
7RZDUGVDQHJDWLYHFKDUJH
5HFDOOWKDWRSSRVLWHFKDUJHV SRVLWLYHDQGQHJDWLYH FKDUJHVDWWUDFWHDFKRWKHU
&RQYHUVHO\OLNHFKDUJHV SRVLWLYHDQGSRVLWLYHRUQHJDWLYHDQGQHJDWLYH UHSHOHDFKRWKHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH&DOFXODWLQJSDUWLFOHFKDUJH
6WHS:ULWHGRZQWKHHTXDWLRQIRUHOHFWULFpHOGVWUHQJWK
6WHS5HDUUDQJHIRUFKDUJH4
6WHS6XEVWLWXWHLQYDOXHVDQGFDOFXODWH
)RUFHVRQ&KDUJHV
7KHHOHFWULFpHOGVWUHQJWKHTXDWLRQFDQEHUHDUUDQJHGIRUWKHIRUFH)RQDFKDUJH4LQDQ
HOHFWULFpHOG(
) 4(
:KHUH
) HOHFWURVWDWLFIRUFHRQWKHFKDUJH 1
4 FKDUJH &
( HOHFWULFpHOGVWUHQJWK 1&
7KHGLUHFWLRQRIWKHIRUFHLVGHWHUPLQHGE\WKHFKDUJH
,IWKHFKDUJHLVSRVLWLYH WKHIRUFHLVLQWKHVDPHGLUHFWLRQDVWKH(pHOG
,IWKHFKDUJHLVQHJDWLYH WKHIRUFHLVLQWKHRSSRVLWHGLUHFWLRQWRWKH(pHOG
7KHIRUFHRQWKHFKDUJHZLOOFDXVHWKHFKDUJHGSDUWLFOHWRDFFHOHUDWHLILWVLQWKHVDPH
GLUHFWLRQDVWKH(pHOGRUGHFHOHUDWHLILQWKHRSSRVLWH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
1RWHWKHIRUFHZLOODOZD\VEHSDUDOOHOWRWKHHOHFWULFpHOGOLQHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH(OHFWULFIRUFH
6WHS:ULWHRXWWKHHTXDWLRQIRUWKHIRUFHRQDFKDUJHGSDUWLFOH
) 4(
) c c c1
6WHS6WDWHWKHGLUHFWLRQRIWKHIRUFH
6LQFHWKHFKDUJHLVQHJDWLYHWKHIRUFHLVGLUHFWHGDJDLQVWWKHHOHFWULFjHOGOLQHVDQG
GHFHOHUDWHVWKHHOHFWURQ
3RLQW&KDUJH$SSUR[LPDWLRQ
)RUDSRLQWRXWVLGHDVSKHULFDOFRQGXFWRUWKHFKDUJHRIWKHVSKHUHPD\EHFRQVLGHUHGWREH
DSRLQWFKDUJHDWLWVFHQWUH
$XQLIRUPVSKHULFDOFRQGXFWRULVRQHZKHUHLWVFKDUJHLVGLVWULEXWHGHYHQO\
7KHHOHFWULFpHOGOLQHVDURXQGDVSKHULFDOFRQGXFWRUDUHWKHUHIRUHLGHQWLFDOWRWKRVH
DURXQGDSRLQWFKDUJH
$QH[DPSOHRIDVSKHULFDOFRQGXFWRULVDFKDUJHGVSKHUH
7KHpHOGOLQHVDUHUDGLDODQGWKHLUGLUHFWLRQGHSHQGVRQWKHFKDUJHRIWKHVSKHUH
,IWKHVSKHULFDOFRQGXFWRULVSRVLWLYHO\FKDUJHGWKHpHOGOLQHVDUHGLUHFWHGDZD\
IURPWKHFHQWUHRIWKHVSKHUH
,IWKHVSKHULFDOFRQGXFWRULVQHJDWLYHO\FKDUJHGWKHpHOGOLQHVDUHGLUHFWHGWRZDUGV
WKHFHQWUHRIWKHVSKHUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
([DP7LS
<RXPLJKWKDYHQRWLFHGWKDWWKHHOHFWULFpHOGVVKDUHPDQ\VLPLODULWLHVWRWKH
JUDYLWDWLRQDOpHOGV7KHPDLQGLoHUHQFHEHLQJWKHJUDYLWDWLRQDOIRUFHLVDOZD\V
DWWUDFWLYHZKLOVWHOHFWURVWDWLFIRUFHVFDQEHDWWUDFWLYHRUUHSXOVLYH
<RXVKRXOGPDNHDOLVWRIDOOWKHVLPLODULWLHVDQGGLoHUHQFHV\RXFDQpQGDV
WKLVFRXOGFRPHXSLQDQH[DPTXHVWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&),(/'/,1(6
5HSUHVHQWLQJ(OHFWULF)LHOGV
7KHGLUHFWLRQRIHOHFWULFpHOGVLVUHSUHVHQWHGE\HOHFWULFpHOGOLQHV
(OHFWULFpHOGOLQHVDUHGLUHFWHGIURPSRVLWLYHWRQHJDWLYH
7KHUHIRUHWKHpHOGOLQHVPXVWEHSRLQWHGDZD\IURPWKHSRVLWLYHFKDUJHDQG
WRZDUGVWKHQHJDWLYHFKDUJH
$UDGLDOpHOGVSUHDGVXQLIRUPO\WRRUIURPWKHFKDUJHLQDOOGLUHFWLRQV
HJWKHpHOGDURXQGDSRLQWFKDUJHRUVSKHUH
$URXQGDSRLQWFKDUJHWKHHOHFWULFpHOGOLQHVDUHGLUHFWO\UDGLDOO\LQZDUGVRURXWZDUGV
,IWKHFKDUJHLVSRVLWLYH WKHpHOGOLQHVDUHUDGLDOO\RXWZDUGV
,IWKHFKDUJHLVQHJDWLYH WKHpHOGOLQHVDUHUDGLDOO\LQZDUGV
$XQLIRUPHOHFWULFpHOGKDVWKHVDPHHOHFWULFpHOGVWUHQJWKWKURXJKRXWWKHpHOG
)RUH[DPSOHWKHpHOGEHWZHHQRSSRVLWHO\FKDUJHGSDUDOOHOSODWHV
7KLVLVUHSUHVHQWHGE\HTXDOO\VSDFHGpHOGOLQHV
7KLVVKDUHVPDQ\VLPLODULWLHVWRUDGLDOJUDYLWDWLRQDOpHOGOLQHVDURXQGDSRLQWPDVV
6LQFHJUDYLW\LVRQO\DQDWWUDFWLYHIRUFHWKHpHOGOLQHVZLOOORRNVLPLODUWRWKHQHJDWLYH
SRLQWFKDUJHZKLOVWHOHFWULFpHOGOLQHVFDQEHLQHLWKHUGLUHFWLRQ
$QRQXQLIRUPHOHFWULFpHOGKDVYDU\LQJHOHFWULFpHOGVWUHQJWKWKURXJKRXW
7KHVWUHQJWKRIDQHOHFWULFpHOGLVGHWHUPLQHGE\WKHVSDFLQJRIWKHpHOGOLQHV
$VWURQJHUpHOGLVUHSUHVHQWHGE\WKHpHOGOLQHVFORVHUWRJHWKHU
$ZHDNHUpHOGLVUHSUHVHQWHGE\WKHpHOGOLQHVIXUWKHUDSDUW
7KHHOHFWULFpHOGOLQHVDUHGLUHFWHGIURPWKHSRVLWLYHWRWKHQHJDWLYHSODWH
$UDGLDOpHOGLVFRQVLGHUHGDQRQXQLIRUPpHOG
6RWKHHOHFWULFpHOGVWUHQJWK(LVGLoHUHQWGHSHQGLQJRQKRZIDU\RXDUHIURPD
FKDUJHGSDUWLFOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH
(OHFWULFpHOGOLQHVDURXQGSRLQWFKDUJHVDUHUDGLDOO\RXWZDUGVIRUSRVLWLYHFKDUJHVDQGUDGLDOO\
LQZDUGVIRUQHJDWLYHFKDUJHV
7KHpHOGOLQHVPXVWEHGUDZQZLWKDUURZVIURPWKHSRVLWLYHFKDUJHWRWKHQHJDWLYH
FKDUJH
([DP7LS
$OZD\VODEHOWKHDUURZVRQWKHpHOGOLQHV7KHOLQHVPXVWDOVRWRXFKWKH

VXUIDFHRIWKHVRXUFHFKDUJHRUSODWHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&),(/'675(1*7+
(OHFWULF)LHOG6WUHQJWK
7KHHOHFWULFpHOGVWUHQJWKRIDXQLIRUPpHOGEHWZHHQWZRFKDUJHGSDUDOOHOSODWHVLVGHpQHG
DV
:KHUH
( HOHFWULFpHOGVWUHQJWK 9P
g9 SRWHQWLDOGLoHUHQFHEHWZHHQWKHSODWHV 9
gG VHSDUDWLRQEHWZHHQWKHSODWHV P
1RWHWKHHOHFWULFpHOGVWUHQJWKLVQRZDOVRGHpQHGE\WKHXQLWV9P
7KHHTXDWLRQVKRZV
7KHJUHDWHUWKHYROWDJHEHWZHHQWKHSODWHVWKHVWURQJHUWKHpHOG
7KHJUHDWHUWKHVHSDUDWLRQEHWZHHQWKHSODWHVWKHZHDNHUWKHpHOG
5HPHPEHUWKLVHTXDWLRQFDQQRWEHXVHGWRpQGWKHHOHFWULFpHOGVWUHQJWKDURXQGDSRLQW
FKDUJH VLQFHWKLVZRXOGEHDUDGLDOpHOG
7KHGLUHFWLRQRIWKHHOHFWULFpHOGLVIURPWKHSODWHFRQQHFWHGWRWKHSRVLWLYHWHUPLQDORIWKH
FHOOWRWKHSODWHFRQQHFWHGWRWKHQHJDWLYHWHUPLQDO
1RWHLIRQHRIWKHSDUDOOHOSODWHVLVHDUWKHGLWKDVDYROWDJHRI9

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH(OHFWULFIRUFHEHWZHHQSODWHV
6WHS:ULWHGRZQWKHNQRZQYDOXHV
3RWHQWLDOGLiHUHQFHd9 N9 c9
'LVWDQFHEHWZHHQSODWHVdG FP cP
&KDUJH4 c&
6WHS&DOFXODWHWKHHOHFWULFpHOGVWUHQJWKEHWZHHQWKHSDUDOOHOSODWHV
6WHS:ULWHRXWWKHHTXDWLRQIRUHOHFWULFIRUFHRQDFKDUJHGSDUWLFOH
) 4(
6WHS6XEVWLWXWHHOHFWULFpHOGVWUHQJWKDQGFKDUJHLQWRHOHFWULFIRUFHHTXDWLRQ
) 4( c c c c1 c1 VI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(OHFWULF)LHOGRID3RLQW&KDUJH
7KHHOHFWULFpHOGVWUHQJWKDWDSRLQWGHVFULEHVKRZVWURQJRUZHDNDQHOHFWULFpHOGLVDWWKDW
SRLQW
7KHHOHFWULFpHOGVWUHQJWK(DWDGLVWDQFHUGXHWRDSRLQWFKDUJH4LQIUHHVSDFHLVGHpQHG
E\
:KHUH
4 WKHFKDUJHSURGXFLQJWKHHOHFWULFpHOG &
U GLVWDQFHIURPWKHFHQWUHRIWKHFKDUJH P
h SHUPLWWLYLW\RIIUHHVSDFH )P
7KLVHTXDWLRQVKRZV
(OHFWULFpHOGVWUHQJWKLVQRWFRQVWDQW
$VHOHFWULFpHOGVWUHQJWKLQFUHDVHVGHFUHDVHVE\DIDFWRURIU
7KLVLVDQLQYHUVHVTXDUHODZUHODWLRQVKLSZLWKGLVWDQFH
7KLVPHDQVWKHpHOGVWUHQJWKGHFUHDVHVE\DIDFWRURIIRXUZKHQWKHGLVWDQFHLVGRXEOHG
1RWHWKLVHTXDWLRQLVRQO\IRUWKHpHOGVWUHQJWKDURXQGDSRLQWFKDUJHVLQFHLWSURGXFHVD
UDGLDOpHOG
7KHHOHFWULFpHOGVWUHQJWKLVDYHFWRU,WVGLUHFWLRQLVWKHVDPHDVWKHHOHFWULFpHOGOLQHV
,IWKHFKDUJHLVQHJDWLYHWKH(pHOGVWUHQJWKLVQHJDWLYHDQGSRLQWVWRZDUGVWKH
FHQWUHRIWKHFKDUJH
,IWKHFKDUJHLVSRVLWLYHWKH(pHOGVWUHQJWKLVSRVLWLYHDQGSRLQWVDZD\IURPWKH
FHQWUHRIWKHFKDUJH
7KLVHTXDWLRQLVDQDORJRXVWRWKHJUDYLWDWLRQDOpHOGVWUHQJWKDURXQGDSRLQWPDVV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH6XUIDFHFKDUJHRIDVSKHUH
6WHS:ULWHGRZQWKHNQRZQYDOXHV
(OHFWULFjHOGVWUHQJWK( c9P
5DGLXVRIVSKHUHU FP cP
6WHS:ULWHRXWWKHHTXDWLRQIRUHOHFWULFpHOGVWUHQJWK
4 ge(U
4 gcc c c c c c& Q& VI
([DP7LS
5HPHPEHUWRDOZD\VVTXDUHWKHGLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
027,212)&+$5*('3$57,&/(6
0RWLRQRI&KDUJHG3DUWLFOHV
$FKDUJHGSDUWLFOHLQDQHOHFWULFpHOGZLOOH[SHULHQFHDIRUFHRQLWWKDWZLOOFDXVHLWWRPRYH
,IDFKDUJHGSDUWLFOHUHPDLQVVWLOOLQDXQLIRUPHOHFWULFpHOGLWZLOOPRYHSDUDOOHOWRWKHHOHFWULF
pHOGOLQHV DORQJRUDJDLQVWWKHpHOGOLQHVGHSHQGLQJRQLWVFKDUJH
,IDFKDUJHGSDUWLFOHLVLQPRWLRQWKURXJKDXQLIRUPHOHFWULFpHOG HJEHWZHHQWZRFKDUJHG
SDUDOOHOSODWHV LWZLOOH[SHULHQFHDFRQVWDQWHOHFWULFIRUFHDQGWUDYHOLQDSDUDEROLF
WUDMHFWRU\
7KHGLUHFWLRQRIWKHSDUDERODZLOOGHSHQGRQWKHFKDUJHRIWKHSDUWLFOH
$SRVLWLYHFKDUJHZLOOEHGHqHFWHGWRZDUGVWKHQHJDWLYHSODWH
$QHJDWLYHFKDUJHZLOOEHGHqHFWHGWRZDUGVWKHSRVLWLYHSODWH
7KHIRUFHRQWKHSDUWLFOHLVWKHVDPHDWDOOSRLQWVDQGLVDOZD\VLQWKHVDPHGLUHFWLRQ
1RWHDQXQFKDUJHGSDUWLFOHVXFKDVDQHXWURQH[SHULHQFHVQRIRUFHLQDQHOHFWULFpHOGDQG
ZLOOWKHUHIRUHWUDYHOVWUDLJKWWKURXJKWKHSODWHVXQGHqHFWHG
7KHDPRXQWRIGHqHFWLRQGHSHQGVRQWKHIROORZLQJSURSHUWLHVRIWKHSDUWLFOHV
0DVViWKHJUHDWHUWKHPDVVWKHVPDOOHUWKHGHqHFWLRQDQGYLFHYHUVD
&KDUJHiWKHJUHDWHUWKHPDJQLWXGHRIWKHFKDUJHRIWKHSDUWLFOHWKHJUHDWHUWKH
GHqHFWLRQDQGYLFHYHUVD
6SHHGiWKHJUHDWHUWKHVSHHGRIWKHSDUWLFOHWKHVPDOOHUWKHGHqHFWLRQDQGYLFH
YHUVD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH
6WHS
&RPSDUHWKHFKDUJHRIWKHERURQQXFOHXVWRWKHSURWRQ
%RURQKDVSURWRQVPHDQLQJLWKDVDFKDUJHfJUHDWHUWKDQWKHSURWRQ
7KHIRUFHRQERURQZLOOWKHUHIRUHEHfJUHDWHUWKDQRQWKHSURWRQ
6WHS
&RPSDUHWKHPDVVRIWKHERURQQXFOHXVWRWKHSURWRQ
7KHERURQQXFOHXVKDVDPDVVRIQXFOHRQVPHDQLQJLWVPDVVLVfJUHDWHUWKDQ
WKHSURWRQ
7KHERURQQXFOHXVZLOOWKHUHIRUHEHOHVVGHqHFWHGWKDQWKHSURWRQ
6WHS
'UDZWKHWUDMHFWRU\RIWKHERURQQXFOHXV
6LQFHWKHPDVVFRPSDULVRQLVPXFKJUHDWHUWKDQWKHFKDUJHFRPSDULVRQWKHERURQ
QXFOHXVZLOOEHPXFKOHVVGHkHFWHGWKDQWKHSURWRQ
7KHQXFOHXVLVSRVLWLYHO\FKDUJHGVLQFHWKHQHXWURQVLQWKHQXFOHXVKDYHQRFKDUJH
7KHUHIRUHWKHVKDSHRIWKHSDWKZLOOEHWKHVDPHDVWKHSURWRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&)25&(%(7:((17:232,17&+$5*(6
&RXORPE V/DZ
$OOFKDUJHGSDUWLFOHVSURGXFHDQHOHFWULFpHOGDURXQGLW
7KLVpHOGH[HUWVDIRUFHRQDQ\RWKHUFKDUJHGSDUWLFOHZLWKLQUDQJH
7KHHOHFWURVWDWLFIRUFHEHWZHHQWZRFKDUJHVLVGHpQHGE\&RXORPEhV/DZ
5HFDOOWKDWWKHFKDUJHRIDXQLIRUPVSKHULFDOFRQGXFWRUFDQEHFRQVLGHUHGDVDSRLQW
FKDUJHDWLWVFHQWUH
&RXORPEjV/DZVWDWHVWKDW
7KHHOHFWURVWDWLFIRUFHEHWZHHQWZRSRLQWFKDUJHVLVSURSRUWLRQDOWRWKH
SURGXFWRIWKHFKDUJHVDQGLQYHUVHO\SURSRUWLRQDOWRWKHVTXDUHRIWKHLU
VHSDUDWLRQ
7KH&RXORPEHTXDWLRQLVGHpQHGDV
:KHUH
)( HOHFWURVWDWLFIRUFHEHWZHHQWZRFKDUJHV 1
4DQG4 WZRSRLQWFKDUJHV &
h SHUPLWWLYLW\RIIUHHVSDFH
U GLVWDQFHEHWZHHQWKHFHQWUHRIWKHFKDUJHV P
7KHUUHODWLRQLVFDOOHGWKHLQYHUVHVTXDUHODZ
7KLVPHDQVWKDWZKHQDFKDUJHLVWZLFHDVIDUDVDZD\IURPDQRWKHUWKHHOHFWURVWDWLF
IRUFHEHWZHHQWKHPUHGXFHVE\ e d
,IWKHUHLVDSRVLWLYHDQGQHJDWLYHFKDUJHWKHQWKHHOHFWURVWDWLFIRUFHLVQHJDWLYHWKLVFDQEH
LQWHUSUHWHGDVDQDWWUDFWLYHIRUFH
,IWKHFKDUJHVDUHWKHVDPHWKHHOHFWURVWDWLFIRUFHLVSRVLWLYHWKLVFDQEHLQWHUSUHWHGDVD
UHSXOVLYHIRUFH
6LQFHXQLIRUPO\FKDUJHGVSKHUHVFDQEHFRQVLGHUHGDVSRLQWFKDUJHV&RXORPEjVODZFDQEH
DSSOLHGWRpQGWKHHOHFWURVWDWLFIRUFHEHWZHHQWKHPDVORQJDVWKHVHSDUDWLRQLVWDNHQIURP
WKHFHQWUHRIERWKVSKHUHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH&RXORPEjV/DZ
6WHS
:ULWHGRZQWKHNQRZQTXDQWLWLHV
'LVWDQFHU PP cP
7KHFKDUJHRIRQHSURWRQ c&
$QDOSKDSDUWLFOH KHOLXPQXFOHXV KDVSURWRQV
&KDUJHRIDOSKDSDUWLFOH4 cc c&
7KHJROGQXFOHXVKDVSURWRQV
&KDUJHRIJROGQXFOHXV4 cc c&
6WHS
7KHHOHFWURVWDWLFIRUFHEHWZHHQWZRSRLQWFKDUJHVLVJLYHQE\&RXORPEjV/DZ
6WHS
6XEVWLWXWHYDOXHVLQWR&RXORPEjV/DZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&327(17,$/
(/(&75,&327(17,$/
(OHFWULF3RWHQWLDO
,QRUGHUWRPRYHDSRVLWLYHFKDUJHFORVHUWRDQRWKHUSRVLWLYHFKDUJHZRUNPXVWEHGRQHWR
RYHUFRPHWKHIRUFHRIUHSXOVLRQEHWZHHQWKHP
(QHUJ\LVWKHUHIRUHWUDQVIHUUHGWRWKHFKDUJHWKDWLVEHLQJSXVKHGXSRQ
7KLVPHDQVLWVSRWHQWLDOHQHUJ\LQFUHDVHV
,IWKHSRVLWLYHFKDUJHLVIUHHWRPRYHLWZLOOVWDUWWRPRYHDZD\IURPWKHUHSHOOLQJFKDUJH
$VDUHVXOWLWVSRWHQWLDOHQHUJ\GHFUHDVHVEDFNWR
7KLVLVDQDORJRXVWRWKHJUDYLWDWLRQDOSRWHQWLDOHQHUJ\RIDPDVVLQFUHDVLQJDVLWLVEHLQJOLIW
XSZDUGVDQGGHFUHDVLQJDQGLWIDOOV
7KHHOHFWULFSRWHQWLDODWDSRLQWLVGHpQHGDV
7KHZRUNGRQHSHUXQLWSRVLWLYHFKDUJHLQEULQJLQJDVPDOOWHVWFKDUJHIURP
LQbQLW\WRDGHbQHGSRLQW
(OHFWULFSRWHQWLDOLVDVFDODUTXDQWLW\
7KLVPHDQVLWGRHVQjWKDYHDGLUHFWLRQ
+RZHYHU\RXZLOOVWLOOVHHWKHHOHFWULFSRWHQWLDOZLWKDSRVLWLYHRUQHJDWLYHVLJQ7KLVLV
EHFDXVHWKHHOHFWULFSRWHQWLDOLV
3RVLWLYHZKHQQHDUDQLVRODWHGSRVLWLYHFKDUJH
1HJDWLYHZKHQQHDUDQLVRODWHGQHJDWLYHFKDUJHV
=HURDWLQpQLW\
3RVLWLYHZRUNLVGRQHE\WKHPDVVIURPLQpQLW\WRDSRLQWDURXQGDSRVLWLYHFKDUJHDQG
QHJDWLYHZRUNLVGRQHDURXQGDQHJDWLYHFKDUJH7KLVPHDQV
:KHQDWHVWFKDUJHPRYHVFORVHUWRDQHJDWLYHFKDUJHLWVHOHFWULFSRWHQWLDO
GHFUHDVHV
:KHQDWHVWFKDUJHPRYHVFORVHUWRDSRVLWLYHFKDUJHLWVHOHFWULFSRWHQWLDO
LQFUHDVHV
7RpQGWKHSRWHQWLDODWDSRLQWFDXVHGE\PXOWLSOHFKDUJHVDGGXSHDFKSRWHQWLDOVHSDUDWHO\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(OHFWULF3RWHQWLDO'XHWRD3RLQW&KDUJH
7KHHOHFWULFSRWHQWLDOLQWKHpHOGGXHWRDSRLQWFKDUJHLVGHpQHGDV
:KHUH
9 WKHHOHFWULFSRWHQWLDO 9
4 WKHSRLQWFKDUJHSURGXFLQJWKHSRWHQWLDO &
U GLVWDQFHIURPWKHFHQWUHRIWKHSRLQWFKDUJH P
7KLVHTXDWLRQVKRZVWKDWIRUDSRVLWLYH FKDUJH
$VWKHGLVWDQFHIURPWKHFKDUJHUGHFUHDVHVWKHSRWHQWLDO9LQFUHDVHV
7KLVLVEHFDXVHPRUHZRUNKDVWREHGRQHRQDSRVLWLYHWHVWFKDUJHWRRYHUFRPHWKH
UHSXOVLYHIRUFH
)RUDQHJDWLYH m FKDUJH
$VWKHGLVWDQFHIURPWKHFKDUJHUGHFUHDVHVWKHSRWHQWLDO9GHFUHDVHV
7KLVLVEHFDXVHOHVVZRUNKDVWREHGRQHRQDSRVLWLYHWHVWFKDUJHVLQFHWKHDWWUDFWLYH
IRUFHZLOOPDNHLWHDVLHU
8QOLNHWKHJUDYLWDWLRQDOSRWHQWLDOHTXDWLRQWKHPLQXVVLJQLQWKHHOHFWULFSRWHQWLDOHTXDWLRQ
ZLOOEHLQFOXGHGLQWKHFKDUJH
7KHHOHFWULFSRWHQWLDOFKDQJHVDFFRUGLQJWRDQLQYHUVHVTXDUHODZZLWKGLVWDQFH
1RWHWKLVHTXDWLRQVWLOODSSOLHVWRDFRQGXFWLQJVSKHUH7KHFKDUJHRQWKHVSKHUHLVWUHDWHG
DVLILWFRQFHQWUDWHGDWDSRLQWLQWKHVSKHUHIURPWKHSRLQWFKDUJHDSSUR[LPDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH9DQGH*UDDIFKDUJH
3DUW D
5DGLXVRIWKHGRPHU FP cP
3RWHQWLDOGLiHUHQFH9 N9 c9
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHHOHFWULFSRWHQWLDOGXHWRDSRLQWFKDUJH
4 9geU
4 c c gcc c c c& f&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
3DUW E
4 FKDUJHVWRUHGLQWKHGRPH f& c&
U UDGLXVRIWKHGRPHGLVWDQFHIURPWKHGRPH FP cP
6WHS:ULWHGRZQWKHHTXDWLRQIRUHOHFWULFSRWHQWLDOGXHWRDSRLQWFKDUJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&327(17,$/*5$',(17
3RWHQWLDO*UDGLHQW
$QHOHFWULFpHOGFDQEHGHpQHGLQWHUPVRIWKHYDULDWLRQRIHOHFWULFSRWHQWLDODWGLoHUHQW
SRLQWVLQWKHpHOG
7KHHOHFWULFbHOGDWDSDUWLFXODUSRLQWLVHTXDOWRWKHQHJDWLYHJUDGLHQWRID
SRWHQWLDOGLVWDQFHJUDSKDWWKDWSRLQW
7KHSRWHQWLDOJUDGLHQWLVGHpQHGE\WKHHTXLSRWHQWLDOOLQHV
7KHVHGHPRQVWUDWHWKHHOHFWULFSRWHQWLDOLQDQHOHFWULFpHOGDQGDUHDOZD\VGUDZQ
SHUSHQGLFXODUWRWKHpHOGOLQHV
(TXLSRWHQWLDOOLQHVDUHOLQHVRIHTXDOHOHFWULFSRWHQWLDO
$URXQGDUDGLDOpHOGWKHHTXLSRWHQWLDOOLQHVDUHUHSUHVHQWHGE\FRQFHQWULFFLUFOHV
DURXQGWKHFKDUJHZLWKLQFUHDVLQJUDGLXV
7KHHTXLSRWHQWLDOOLQHVEHFRPHIXUWKHUDZD\IURPHDFKRWKHU
,QDXQLIRUPHOHFWULFpHOGWKHHTXLSRWHQWLDOOLQHVDUHHTXDOO\VSDFHG
7KHSRWHQWLDOJUDGLHQWLQDQHOHFWULFpHOGLVGHpQHGDV
7KHUDWHRIFKDQJHRIHOHFWULFSRWHQWLDOZLWKUHVSHFWWRGLVSODFHPHQWLQWKH
GLUHFWLRQRIWKHbHOG
7KHHOHFWULFpHOGVWUHQJWKLVHTXLYDOHQWWRWKLVH[FHSWZLWKDQHJDWLYHVLJQ
:KHUH
( HOHFWULFpHOGVWUHQJWK 9P
g9 FKDQJHLQSRWHQWLDO 9
gU GLVSODFHPHQWLQWKHGLUHFWLRQRIWKHpHOG P
7KHPLQXVVLJQLVLPSRUWDQWWRREWDLQDQDWWUDFWLYHpHOGDURXQGDQHJDWLYHFKDUJHDQG
UHSXOVLYHpHOGDURXQGDSRVLWLYHFKDUJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
7KHHOHFWULFSRWHQWLDOFKDQJHVDFFRUGLQJWRWKHFKDUJHFUHDWLQJWKHSRWHQWLDODVWKHGLVWDQFH
ULQFUHDVHVIURPWKHFHQWUH
,IWKHFKDUJHLVSRVLWLYHWKHSRWHQWLDOGHFUHDVHVZLWKGLVWDQFH
,IWKHFKDUJHLVQHJDWLYHWKHSRWHQWLDOLQFUHDVHVZLWKGLVWDQFH
7KLVLVEHFDXVHWKHWHVWFKDUJHLVSRVLWLYH
([DP7LS
2QHZD\WRUHPHPEHUZKHWKHUWKHHOHFWULFSRWHQWLDOLQFUHDVHVRUGHFUHDVHV
ZLWKUHVSHFWWRWKHGLVWDQFHIURPWKHFKDUJHLVE\WKHGLUHFWLRQRIWKHHOHFWULF

pHOGOLQHV7KHSRWHQWLDODOZD\VGHFUHDVHVLQWKHVDPHGLUHFWLRQDVWKHpHOG
OLQHVDQGYLFHYHUVD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
(/(&75,&327(17,$/(1(5*<
(OHFWULF3RWHQWLDO(QHUJ\RI7ZR3RLQW&KDUJHV
7KHHOHFWULFSRWHQWLDOHQHUJ\(SDWSRLQWLQDQHOHFWULFpHOGLVGHpQHGDV
7KHZRUNGRQHLQEULQJLQJDFKDUJHIURPLQbQLW\WRWKDWSRLQW
7KHHOHFWULFSRWHQWLDOHQHUJ\RIDSDLURISRLQWFKDUJHV4DQG4LVGHpQHGE\
:KHUH
(S HOHFWULFSRWHQWLDOHQHUJ\ -
U VHSDUDWLRQRIWKHFKDUJHV4DQG4 P
7KHSRWHQWLDOHQHUJ\HTXDWLRQLVGHpQHGE\WKHZRUNGRQHLQPRYLQJSRLQWFKDUJH4IURP
LQpQLW\WRZDUGVDSRLQWFKDUJH4
7KHZRUNGRQHLVHTXDOWR
: 94
:KHUH
: ZRUNGRQH -
9 HOHFWULFSRWHQWLDOGXHWRDSRLQWFKDUJH 9
4 &KDUJHSURGXFLQJWKHSRWHQWLDO &
7KLVHTXDWLRQLVUHOHYDQWWRFDOFXODWHWKHZRUNGRQHGXHRQDFKDUJHLQDXQLIRUPpHOG
8QOLNHWKHHOHFWULFSRWHQWLDOWKHSRWHQWLDOHQHUJ\ZLOODOZD\VEHSRVLWLYH
5HFDOOWKDWDWLQpQLW\9 WKHUHIRUH(S
,WLVPRUHXVHIXOWRpQGWKHFKDQJHLQSRWHQWLDOHQHUJ\HJDVRQHFKDUJHPRYHVDZD\IURP
DQRWKHU
7KHFKDQJHLQSRWHQWLDOHQHUJ\IURPDFKDUJH4DWDGLVWDQFHUIURPWKHFHQWUHRIFKDUJH4
WRDGLVWDQFHULVHTXDOWR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
7KHFKDQJHLQHOHFWULFSRWHQWLDOg9LVWKHVDPHZLWKRXWWKHFKDUJH4
%RWKHTXDWLRQVDUHYHU\VLPLODUWRWKHFKDQJHLQJUDYLWDWLRQDOSRWHQWLDOEHWZHHQWZRSRLQWV
QHDUDSRLQWPDVV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
:RUNHGH[DPSOH$OSKDSDUWLFOH
6WHS
:ULWHGRZQWKHNQRZQTXDQWLWLHV
'LVWDQFHU cP
7KHFKDUJHRIRQHSURWRQ c&
$QDOSKDSDUWLFOH KHOLXPQXFOHXV KDVSURWRQV
&KDUJHRIDOSKDSDUWLFOH4 cc c&
7KHJROGQXFOHXVKDVSURWRQV
&KDUJHRIJROGQXFOHXV4 cc c&
6WHS
:ULWHGRZQWKHHTXDWLRQIRUHOHFWULFSRWHQWLDOHQHUJ\
6WHS
6XEVWLWXWHYDOXHVLQWRWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
(OHFWULF)LHOGV n
([DP7LS
:KHQFDOFXODWLQJHOHFWULFSRWHQWLDOHQHUJ\PDNHVXUH\RXGRQRWVTXDUHWKH

GLVWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
&217(176
&DSDFLWRUV
&DSDFLWDQFH
'HULYDWLRQRI& 49
&DSDFLWRUVLQ6HULHV 3DUDOOHO
$UHD8QGHUD3RWHQWLDO&KDUJH*UDSK
(QHUJ\6WRUHGLQD&DSDFLWRU
&KDUJLQJDQG'LVFKDUJLQJ
&DSDFLWRU'LVFKDUJH*UDSKV
&DSDFLWRU'LVFKDUJH(TXDWLRQV
&$3$&,7256
&$3$&,7$1&(
'HnQLQJ&DSDFLWDQFH
&DSDFLWRUVDUHHOHFWULFDOGHYLFHVXVHGWRVWRUHHQHUJ\LQHOHFWURQLFFLUFXLWVFRPPRQO\IRUD
EDFNXSUHOHDVHRIHQHUJ\LIWKHSRZHUIDLOV
7KH\FDQEHLQWKHIRUPRI
$QLVRODWHGVSKHULFDOFRQGXFWRU
3DUDOOHOSODWHV
&DSDFLWRUVDUHPDUNHGZLWKDYDOXHRIWKHLUFDSDFLWDQFH7KLVLVGHnQHGDV
7KHFKDUJHVWRUHGSHUXQLWSRWHQWLDOGLbHUHQFH
7KHJUHDWHUWKHFDSDFLWDQFHWKHJUHDWHUWKHHQHUJ\VWRUHGLQWKHFDSDFLWRU
$SDUDOOHOSODWHFDSDFLWRULVPDGHXSRIWZRFRQGXFWLYHPHWDOSODWHVFRQQHFWHGWRDYROWDJH
VXSSO\
7KHQHJDWLYHWHUPLQDORIWKHYROWDJHVXSSO\SXVKHVHOHFWURQVRQWRRQHSODWHPDNLQJ
LWQHJDWLYHO\FKDUJHG
7KHHOHFWURQVDUHUHSHOOHGIURPWKHRSSRVLWHSODWHPDNLQJLWSRVLWLYHO\FKDUJHG
7KHUHLVFRPPRQO\DGLHOHFWULFLQEHWZHHQWKHSODWHVWKLVLVWRHQVXUHFKDUJHGRHV
QRWIUHHO\oRZEHWZHHQWKHSODWHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
([DP7LS
7KHhFKDUJHVWRUHGiE\DFDSDFLWRUUHIHUVWRWKHPDJQLWXGHRIWKHFKDUJH
VWRUHGRQHDFKSODWHLQDSDUDOOHOSODWHFDSDFLWRURURQWKHVXUIDFHRID
VSKHULFDOFRQGXFWRU7KHFDSDFLWRULWVHOIGRHVQRWVWRUHFKDUJH
&DOFXODWLQJ&DSDFLWDQFH
7KHFDSDFLWDQFHRIDFDSDFLWRULVGHnQHGE\WKHHTXDWLRQ
:KHUH
& FDSDFLWDQFH )
4 FKDUJH &
9 SRWHQWLDOGLmHUHQFH 9
,WLVPHDVXUHGLQWKHXQLW)DUDG )
,QSUDFWLFH)LVDYHU\ODUJHXQLW
&DSDFLWDQFHZLOORIWHQEHTXRWHGLQWKHRUGHURIPLFUR)DUDGV e) QDQRIDUDGV Q) RU

SLFRIDUDGV S)
,IWKHFDSDFLWRULVPDGHRISDUDOOHOSODWHV4LVWKHFKDUJHRQWKHSODWHVDQG9LVWKHSRWHQWLDO
GLmHUHQFHDFURVVWKHFDSDFLWRU
7KHFKDUJH4LVQRWWKHFKDUJHRIWKHFDSDFLWRULWVHOILWLVWKHFKDUJHVWRUHGRQWKHSODWHVRU
VSKHULFDOFRQGXFWRU
7KLVFDSDFLWDQFHHTXDWLRQVKRZVWKDWDQREMHFWiVFDSDFLWDQFHLVWKHUDWLRRIWKHFKDUJHRQ
DQREMHFWWRLWVSRWHQWLDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
&DSDFLWDQFHRID6SKHULFDO&RQGXFWRU
7KHFDSDFLWDQFHRIDFKDUJHGVSKHUHLVGHnQHGE\WKHFKDUJHSHUXQLWSRWHQWLDODWWKH
VXUIDFHRIWKHVSKHUH
7KHSRWHQWLDO9LVGHnQHGE\WKHSRWHQWLDORIDQLVRODWHGSRLQWFKDUJH VLQFHWKHFKDUJHRQ
WKHVXUIDFHRIDVSKHULFDOFRQGXFWRUFDQEHFRQVLGHUHGDVDSRLQWFKDUJHDWLWVFHQWUH
6XEVWLWXWLQJWKLVLQWRWKHFDSDFLWDQFHHTXDWLRQPHDQVWKHFDSDFLWDQFH&RIDVSKHUHLVJLYHQ
E\WKHH[SUHVVLRQ
& fdU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH&KDUJHRQSDUDOOHOSODWHV
&DSDFLWDQFH& Q) c)
3RWHQWLDOGLjHUHQFH9 N9 c9
6WHS:ULWHRXWWKHHTXDWLRQIRUFDSDFLWDQFH
4 &9
4 c c c c& Q&
([DP7LS
7KHOHWWHUh&iLVXVHGERWKDVWKHV\PEROIRUFDSDFLWDQFHDVZHOODVWKHXQLWRI

FKDUJH FRXORPEV 7DNHFDUHQRWWRFRQIXVHWKHWZR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
'(5,9$7,212)& 49
'HULYDWLRQRI& 49
7KHFLUFXLWV\PEROIRUDSDUDOOHOSODWHFDSDFLWRULVWZRSDUDOOHOOLQHV
&DSDFLWRUVFDQEHFRPELQHGLQVHULHVDQGSDUDOOHOFLUFXLWV
7KHFRPELQHGFDSDFLWDQFHGHSHQGVRQZKHWKHUWKHFDSDFLWRUVDUHFRQQHFWHGLQVHULHVRU
SDUDOOHO
&DSDFLWRUVLQ6HULHV
&RQVLGHUWZRSDUDOOHOSODWHFDSDFLWRUV&DQG&FRQQHFWHGLQVHULHVZLWKDSRWHQWLDO
GLmHUHQFH SG 9DFURVVWKHP
,QDVHULHVFLUFXLWSGLVVKDUHGEHWZHHQDOOWKHFRPSRQHQWVLQWKHFLUFXLW
7KHUHIRUHLIWKHFDSDFLWRUVVWRUHWKHVDPHFKDUJHRQWKHLUSODWHVEXWKDYHGLmHUHQW
SGVWKHSGDFURVV&LV9DQGDFURVV&LV9
7KHWRWDOSRWHQWLDOGLmHUHQFH9LVWKHVXPRI9DQG9
9 99
5HDUUDQJLQJWKHFDSDFLWDQFHHTXDWLRQIRUWKHSG9PHDQV9DQG9FDQEHZULWWHQDV
:KHUHWKHWRWDOSG9LVGHnQHGE\WKHWRWDOFDSDFLWDQFH
6XEVWLWXWLQJWKHVHLQWRWKHHTXDWLRQ9 99HTXDOV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
6LQFHWKHFXUUHQWLVWKHVDPHWKURXJKDOOFRPSRQHQWVLQDVHULHVFLUFXLWWKHFKDUJH4LVWKH
VDPHWKURXJKHDFKFDSDFLWRUDQGFDQFHOVRXW
7KHUHIRUHWKHHTXDWLRQIRUFRPELQHGFDSDFLWDQFHRIFDSDFLWRUVLQVHULHVLV
&DSDFLWRUVLQ3DUDOOHO
&RQVLGHUWZRSDUDOOHOSODWHFDSDFLWRUV&DQG&FRQQHFWHGLQSDUDOOHOHDFKZLWKSG9
6LQFHWKHFXUUHQWLVVSOLWDFURVVHDFKMXQFWLRQLQDSDUDOOHOFLUFXLWWKHFKDUJHVWRUHGRQHDFK
FDSDFLWRULVGLjHUHQW
7KHUHIRUHWKHFKDUJHRQFDSDFLWRU&LV4DQGRQ&LV4
7KHWRWDOFKDUJH4LVWKHVXPRI4DQG4
4 44
5HDUUDQJLQJWKHFDSDFLWDQFHHTXDWLRQIRUWKHFKDUJH4PHDQV4DQG4FDQEHZULWWHQDV
4 &9DQG4 &9
:KHUHWKHWRWDOFKDUJH4LVGHnQHGE\WKHWRWDOFDSDFLWDQFH
4 &WRWDO9
6XEVWLWXWLQJWKHVHLQWRWKH4 44HTXDOV
&WRWDO9 &9&9 && 9
6LQFHWKHSGLVWKHVDPHWKURXJKDOOFRPSRQHQWVLQHDFKEUDQFKRIDSDUDOOHOFLUFXLWWKHSG
9FDQFHOVRXW
7KHUHIRUHWKHHTXDWLRQIRUFRPELQHGFDSDFLWDQFHRIFDSDFLWRUVLQSDUDOOHOLV
&WRWDO &&&h

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
([DP7LS
<RXZLOOEHH[SHFWHGWRUHPHPEHUWKHVHGHULYDWLRQVIRU\RXUH[DPWKHUHIRUH
PDNHVXUH\RXXQGHUVWDQGHDFKVWHS<RXVKRXOGHVSHFLDOO\PDNHVXUHWR

UHYLVHKRZWKHFXUUHQWDQGSRWHQWLDOGLmHUHQFHYDULHVLQDVHULHVDQGSDUDOOHO
FLUFXLW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
&$3$&,7256,16(5,(6 3$5$//(/
&DSDFLWRUVLQ6HULHV 3DUDOOHO
5HFDOOWKHIRUPXODIRUWKHFRPELQHGFDSDFLWDQFHRIFDSDFLWRUVLQVHULHV
,QSDUDOOHO
&WRWDO &&&h

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH&DOFXODWLQJWRWDOFDSDFLWDQFHEHWZHHQWZRSRLQWV
6WHS&DOFXODWHWKHFRPELQHGFDSDFLWDQFHRIWKHWZRFDSDFLWRUVLQSDUDOOHO
&DSDFLWRUVLQSDUDOOHO&WRWDO &&&h
&SDUDOOHO e)
6WHS&RQQHFWWKLVFRPELQHGFDSDFLWDQFHZLWKWKHnQDOFDSDFLWRULQVHULHV
6WHS5HDUUDQJHIRUWKHWRWDOFDSDFLWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
([DP7LS
%RWKWKHFRPELQHGFDSDFLWDQFHHTXDWLRQVORRNVLPLODUWRWKHHTXDWLRQVIRU
FRPELQHGUHVLVWDQFHLQVHULHVDQGSDUDOOHOFLUFXLWV+RZHYHUWDNHQRWHWKDW
WKH\DUHWKHRSSRVLWHZD\DURXQGWRHDFKRWKHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
$5($81'(5$327(17,$/&+$5*(*5$3+
$UHD8QGHUD3RWHQWLDOg&KDUJH*UDSK
:KHQFKDUJLQJDFDSDFLWRUWKHSRZHUVXSSO\SXVKHVHOHFWURQVIURPWKHSRVLWLYHWRWKH
QHJDWLYHSODWH
,WWKHUHIRUHGRHVZRUNRQWKHHOHFWURQVZKLFKLQFUHDVHWKHLUHOHFWULFSRWHQWLDO
HQHUJ\
$WnUVWDVPDOODPRXQWRIFKDUJHLVSXVKHGIURPWKHSRVLWLYHWRWKHQHJDWLYHSODWHWKHQ
JUDGXDOO\WKLVEXLOGVXS
$GGLQJPRUHHOHFWURQVWRWKHQHJDWLYHSODWHDWnUVWLVUHODWLYHO\HDV\VLQFHWKHUHLV
OLWWOHUHSXOVLRQ
$VWKHFKDUJHRIWKHQHJDWLYHSODWHLQFUHDVHVLHEHFRPHVPRUHQHJDWLYHO\FKDUJHGWKHIRUFH
RIUHSXOVLRQEHWZHHQWKHHOHFWURQVRQWKHSODWHDQGWKHQHZHOHFWURQVEHLQJSXVKHGRQWRLW
LQFUHDVHV
7KLVPHDQVDJUHDWHUDPRXQWRIZRUNPXVWEHGRQHWRLQFUHDVHWKHFKDUJHRQWKHQHJDWLYH
SODWHRULQRWKHUZRUGV
7KHSRWHQWLDOGLbHUHQFH9DFURVVWKHFDSDFLWRULQFUHDVHVDVWKHDPRXQWRIFKDUJH
4LQFUHDVHV
7KHFKDUJH4RQWKHFDSDFLWRULVGLUHFWO\SURSRUWLRQDOWRLWVSRWHQWLDOGLmHUHQFH9
7KHJUDSKRIFKDUJHDJDLQVWSRWHQWLDOGLmHUHQFHLVWKHUHIRUHDVWUDLJKWOLQHJUDSKWKURXJKWKH
RULJLQ
7KHHOHFWULFSRWHQWLDOHQHUJ\VWRUHGLQWKHFDSDFLWRUFDQEHGHWHUPLQHGIURPWKHDUHDXQGHU
WKHSRWHQWLDOFKDUJHJUDSKZKLFKLVHTXDOWRWKHDUHDRIDULJKWDQJOHGWULDQJOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH3RWHQWLDOFKDUJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
6WHS
'HWHUPLQHWKHFKDUJHRQWKHVSKHUHDWWKHSRWHQWLDORIN9
)URPWKHJUDSKWKHFKDUJHRQWKHVSKHUHDWN9LVe&
6WHS
&DOFXODWHWKHHOHFWULFSRWHQWLDOHQHUJ\VWRUHG
7KH(3(VWRUHGLVWKHDUHDXQGHUWKHJUDSKDWN9
7KHDUHDLVHTXDOWRDULJKWDQJOHGWULDQJOHVRFDQEHFDOFXODWHGZLWKWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
(1(5*<6725(',1$&$3$&,725
&DOFXODWLQJ(QHUJ\6WRUHGLQD&DSDFLWRU
5HFDOOWKHHOHFWULFSRWHQWLDOHQHUJ\LVWKHDUHDXQGHUDSRWHQWLDOFKDUJHJUDSK
7KLVLVHTXDOWRWKHZRUNGRQHLQFKDUJLQJWKHFDSDFLWRUWRDSDUWLFXODUSRWHQWLDOGLmHUHQFH
7KHVKDSHRIWKLVDUHDLVDULJKWDQJOHGWULDQJOH
7KHUHIRUHWKHZRUNGRQHRUHQHUJ\VWRUHGLQDFDSDFLWRULVGHnQHGE\WKHHTXDWLRQ
6XEVWLWXWLQJWKHFKDUJHZLWKWKHFDSDFLWDQFHHTXDWLRQ4 &9WKHZRUNGRQHFDQDOVREH
GHnQHGDV
:KHUH
: ZRUNGRQHHQHUJ\VWRUHG -
4 FKDUJHRQWKHFDSDFLWRU &
9 SRWHQWLDOGLmHUHQFH 9
& FDSDFLWDQFH )
%\VXEVWLWXWLQJWKHSRWHQWLDO9WKHZRUNGRQHFDQDOVREHGHnQHGLQWHUPVRIMXVWWKHFKDUJH
DQGWKHFDSDFLWDQFH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH(QHUJ\VWRUHGLQDFDSDFLWRU
6WHS:ULWHGRZQWKHHTXDWLRQIRUHQHUJ\VWRUHGLQWHUPVRIFDSDFLWDQFH&DQGSG
9
6WHS7KHFKDQJHLQHQHUJ\VWRUHGLVSURSRUWLRQDOWRWKHFKDQJHLQSG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
&+$5*,1*$1'',6&+$5*,1*
&$3$&,725',6&+$5*(*5$3+6
&DSDFLWRU'LVFKDUJH*UDSKV
6RIDURQO\FDSDFLWRUVFKDUJHGE\DEDWWHU\KDYHEHHQFRQVLGHUHG
7KLVLVZKHQWKHHOHFWURQVoRZIURPWKHSRVLWLYHWRQHJDWLYHSODWH
$WWKHVWDUWZKHQWKHFDSDFLWRULVFKDUJLQJWKHFXUUHQWLVODUJHDQGWKHQJUDGXDOO\
IDOOVWR]HUR
&DSDFLWRUVDUHGLVFKDUJHGWKURXJKDUHVLVWRU
7KHHOHFWURQVQRZoRZEDFNIURPWKHQHJDWLYHSODWHWRWKHSRVLWLYHSODWHXQWLOWKHUH
DUHHTXDOQXPEHUVRQHDFKSODWH
$WWKHVWDUWRIGLVFKDUJHWKHFXUUHQWLVODUJH EXWLQWKHRSSRVLWHGLUHFWLRQWRZKHQLWZDV
FKDUJLQJ DQGJUDGXDOO\IDOOVWR]HUR
$VDFDSDFLWRUGLVFKDUJHVWKHFXUUHQWSGDQGFKDUJHDOOGHFUHDVHH[SRQHQWLDOO\
7KHPHDQVWKHUDWHDWZKLFKWKHFXUUHQWSGRUFKDUJHGHFUHDVHVLVSURSRUWLRQDOWRWKH
DPRXQWRIFXUUHQWSGRUFKDUJHLWKDVOHIW
7KHJUDSKVRIWKHYDULDWLRQZLWKWLPHRIFXUUHQWSGDQGFKDUJHDUHDOOLGHQWLFDODQG
UHSUHVHQWDQH[SRQHQWLDOGHFD\
7KHNH\IHDWXUHVRIWKHGLVFKDUJHJUDSKVDUH
7KHVKDSHRIWKHFXUUHQWSGDQGFKDUJHDJDLQVWWLPHJUDSKVDUHLGHQWLFDO
(DFKJUDSKVKRZVH[SRQHQWLDOGHFD\FXUYHVZLWKGHFUHDVLQJJUDGLHQW
7KHLQLWLDOYDOXHVWDUWVRQWKH\D[LVDQGGHFUHDVHVH[SRQHQWLDOO\
7KHUDWHDWZKLFKDFDSDFLWRUGLVFKDUJHVGHSHQGVRQWKHUHVLVWDQFHRIWKHFLUFXLW
,IWKHUHVLVWDQFHLVKLJKWKHFXUUHQWZLOOGHFUHDVHDQGFKDUJHZLOOoRZIURPWKH
FDSDFLWRUSODWHVPRUHVORZO\PHDQLQJWKHFDSDFLWRUZLOOWDNHORQJHUWRGLVFKDUJH
,IWKHUHVLVWDQFHLVORZWKHFXUUHQWZLOOLQFUHDVHDQGFKDUJHZLOOoRZIURPWKH
FDSDFLWRUSODWHVTXLFNO\PHDQLQJWKHFDSDFLWRUZLOOGLVFKDUJHIDVWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
&$3$&,725',6&+$5*((48$7,216
7KH7LPH&RQVWDQW
7KHWLPHFRQVWDQWRIDFDSDFLWRUGLVFKDUJLQJWKURXJKDUHVLVWRULVDPHDVXUHRIKRZORQJLW
WDNHVIRUWKHFDSDFLWRUWRGLVFKDUJH
7KHGHnQLWLRQRIWKHWLPHFRQVWDQWLV
7KHWLPHWDNHQIRUWKHFKDUJHRIDFDSDFLWRUWRGHFUHDVHWRRILWVRULJLQDO
YDOXH
7KLVLVUHSUHVHQWHGE\WKHJUHHNOHWWHUWDX f DQGPHDVXUHGLQXQLWVRIVHFRQGV V
7KHWLPHFRQVWDQWJLYHVDQHDV\ZD\WRFRPSDUHWKHUDWHRIFKDQJHRIVLPLODUTXDQWLWLHVHJ
FKDUJHFXUUHQWDQGSG
7KHWLPHFRQVWDQWLVGHnQHGE\WKHHTXDWLRQ
g 5&
:KHUH
f WLPHFRQVWDQW V
5 UHVLVWDQFHRIWKHUHVLVWRU k
& FDSDFLWDQFHRIWKHFDSDFLWRU )

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH7LPHFRQVWDQW
6WHS:ULWHRXWWKHNQRZQTXDQWLWLHV
&DSDFLWDQFH& Q) c)
7LPHFRQVWDQWg cV
6WHS:ULWHGRZQWKHWLPHFRQVWDQWHTXDWLRQ
g 5&
6WHS5HDUUDQJHIRUUHVLVWDQFH5
8VLQJWKH&DSDFLWRU'LVFKDUJH(TXDWLRQ
7KHWLPHFRQVWDQWLVXVHGLQWKHH[SRQHQWLDOGHFD\HTXDWLRQVIRUWKHFXUUHQWFKDUJHRU
SRWHQWLDOGLmHUHQFH SG IRUDFDSDFLWRUGLVFKDUJLQJWKURXJKDUHVLVWRU
7KHVHFDQEHXVHGWRGHWHUPLQHWKHDPRXQWRIFXUUHQWFKDUJHRUSGOHIWDIWHUD
FHUWDLQDPRXQWRIWLPHZKHQDFDSDFLWRULVGLVFKDUJLQJ
7KHH[SRQHQWLDOGHFD\RIFXUUHQWRQDGLVFKDUJLQJFDSDFLWRULVGHnQHGE\WKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:KHUH
, FXUUHQW $
, LQLWLDOFXUUHQWEHIRUHGLVFKDUJH $
H WKHH[SRQHQWLDOIXQFWLRQ
W WLPH V
5& UHVLVWDQFH k dFDSDFLWDQFH ) WKHWLPHFRQVWDQWf V
7KLVHTXDWLRQVKRZVWKDWWKHIDVWHUWKHWLPHFRQVWDQWfWKHTXLFNHUWKHH[SRQHQWLDOGHFD\RI
WKHFXUUHQWZKHQGLVFKDUJLQJ
$OVRKRZELJWKHLQLWLDOFXUUHQWLVDmHFWVWKHUDWHRIGLVFKDUJH
,I,LVODUJHWKHFDSDFLWRUZLOOWDNHORQJHUWRGLVFKDUJH
1RWHGXULQJFDSDFLWRUGLVFKDUJH,LVDOZD\VODUJHUWKDQ,WKLVLVEHFDXVHWKHFXUUHQW,ZLOO
DOZD\VEHGHFUHDVLQJ
7KHFXUUHQWDWDQ\WLPHLVGLUHFWO\SURSRUWLRQDOWRWKHSGDFURVVWKHFDSDFLWRUDQGWKHFKDUJH
DFURVVWKHSDUDOOHOSODWHV
7KHUHIRUHWKLVHTXDWLRQDOVRGHVFULEHVWKHFKDQJHLQSGDQGFKDUJHRQWKHFDSDFLWRU
:KHUH
4 FKDUJHRQWKHFDSDFLWRUSODWHV &
4 LQLWLDOFKDUJHRQWKHFDSDFLWRUSODWHV &

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:KHUH
9 SGDFURVVWKHFDSDFLWRU &
9 LQLWLDOSGDFURVVWKHFDSDFLWRU &
7KH([SRQHQWLDO)XQFWLRQH
7KHV\PEROHUHSUHVHQWVWKHH[SRQHQWLDOFRQVWDQWDQXPEHUZKLFKLVDSSUR[LPDWHO\HTXDOWR
H j
2QDFDOFXODWRULWLVVKRZQE\WKHEXWWRQH[
7KHLQYHUVHIXQFWLRQRIH[LVOQ \ NQRZQDVWKHQDWXUDOORJDULWKPLFIXQFWLRQ
7KLVLVEHFDXVHLIH[ \WKHQ[ OQ \
7KHLQWKHGHnQLWLRQRIWKHWLPHFRQVWDQWDULVHVDVDUHVXOWRIWKHH[SRQHQWLDO
FRQVWDQWWKHWUXHGHnQLWLRQLV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
:RUNHGH[DPSOH&XUUHQWFDSDFLWRUGLVFKDUJH
,QLWLDOFXUUHQWEHIRUHGLVFKDUJH, $
&XUUHQW, $
5HVLVWDQFH5 i
&DSDFLWDQFH& e) c)
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHH[SRQHQWLDOGHFD\RIFXUUHQW
6WHS&DOFXODWHWKHWLPHFRQVWDQW
g 5&
g c c V
6WHS6XEVWLWXWHLQWRWKHFXUUHQWHTXDWLRQ
6WHS5HDUUDQJHIRUWKHWLPHW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
&DSDFLWDQFH l
7KHH[SRQHQWLDOFDQEHUHPRYHGE\WDNLQJWKHQDWXUDOORJRIERWKVLGHV
([DP7LS
0DNHVXUH\RXiUHFRQnGHQWLQUHDUUDQJLQJHTXDWLRQVZLWKQDWXUDOORJV OQ DQG
WKHH[SRQHQWLDOIXQFWLRQ H 7RUHIUHVK\RXUNQRZOHGJHRIWKLVKDYHDORRNDW
WKH$60DWKVUHYLVLRQQRWHVRQ([SRQHQWLDOV /RJDULWKPV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
&217(176
0DJQHWLF)LHOGV
5HSUHVHQWLQJ0DJQHWLF)LHOGV
)RUFHRQD&XUUHQW&DUU\LQJ&RQGXFWRU
)OHPLQJ V/HIW+DQG5XOH
0DJQHWLF)OX['HQVLW\
)RUFHRQD0RYLQJ&KDUJH
+DOO9ROWDJH
8VLQJD+DOO3UREH
0RWLRQRID&KDUJHG3DUWLFOHLQD0DJQHWLF)LHOG
9HORFLW\6HOHFWLRQ
0DJQHWLF)LHOGVLQ:LUHV&RLOV 6ROHQRLGV
)RUFHVEHWZHHQ&XUUHQW&DUU\LQJ&RQGXFWRUV
(OHFWURPDJQHWLF,QGXFWLRQ
0DJQHWLF)OX[
0DJQHWLF)OX[/LQNDJH
3ULQFLSOHVRI(OHFWURPDJQHWLF,QGXFWLRQ
)DUDGD\ V /HQ] V/DZV
0$*1(7,&),(/'6
5(35(6(17,1*0$*1(7,&),(/'6

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
0DJQHWLF)LHOG'HpQLWLRQ
$PDJQHWLFpHOGLVDlHOGRIIRUFHWKDWLVFUHDWHGHLWKHUE\
0RYLQJHOHFWULFFKDUJH
3HUPDQHQWPDJQHWV
3HUPDQHQWPDJQHWVDUHPDWHULDOVWKDWSURGXFHDPDJQHWLFpHOG
$VWDWLRQDU\FKDUJHZLOOQRWSURGXFHDPDJQHWLFpHOG
$PDJQHWLFpHOGLVVRPHWLPHVUHIHUUHGWRDVD%ilHOG
$PDJQHWLFpHOGLVFUHDWHGDURXQGDFXUUHQWFDUU\LQJZLUHGXHWRWKHPRYHPHQWRI
HOHFWURQV
$OWKRXJKPDJQHWLFpHOGVDUHLQYLVLEOHWKH\FDQEHREVHUYHGE\WKHIRUFHWKDWSXOOVRQ
PDJQHWLFPDWHULDOVVXFKDVLURQRUWKHPRYHPHQWRIDQHHGOHLQDSORWWLQJFRPSDVV
5HSUHVHQWLQJ0DJQHWLF)LHOGV
0DJQHWLFpHOGVDUHUHSUHVHQWHGE\PDJQHWLFpHOGOLQHV
7KHVHFDQEHVKRZQXVLQJLURQpOLQJVRUSORWWLQJFRPSDVVHV
)LHOGOLQHVDUHEHVWUHSUHVHQWHGRQEDUPDJQHWVZKLFKFRQVLVWRIDQRUWKSROHRQRQHHQG
DQGVRXWKSROHRQWKHRWKHU
7KHPDJQHWLFpHOGLVSURGXFHGRQDEDUPDJQHWE\WKHPRYHPHQWRIHOHFWURQVZLWKLQWKH
DWRPVRIWKHPDJQHW
7KLVLVDUHVXOWRIWKHHOHFWURQVFLUFXODWLQJDURXQGWKHDWRPVUHSUHVHQWLQJDWLQ\FXUUHQWDQG
KHQFHVHWWLQJXSDPDJQHWLFpHOG
7KHGLUHFWLRQRIDPDJQHWLFpHOGRQDEDUPDJQHWLVDOZD\VIURPQRUWKWRVRXWK
:KHQWZREDUPDJQHWVDUHSXVKHGWRJHWKHUWKH\HLWKHUDWWUDFWRUUHSHOHDFKRWKHU
7ZROLNHSROHV QRUWKDQGQRUWKRUVRXWKDQGVRXWK UHSHOHDFKRWKHU
7ZRRSSRVLWHSROHV QRUWKDQGVRXWK DWWUDFWHDFKRWKHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
7KHNH\DVSHFWVRIGUDZLQJPDJQHWLFlHOGOLQHV
7KHOLQHVFRPHRXWIURPWKHQRUWKSROHVDQGLQWRWKHVRXWKSROHV
7KHGLUHFWLRQRIWKHpHOGOLQHVKRZVWKHGLUHFWLRQRIWKHIRUFHWKDWDIUHHPDJQHWLF
QRUWKSROHZRXOGH[SHULHQFHDWWKDWSRLQW
7KHpHOGOLQHVDUHVWURQJHUWKHFORVHUWKHOLQHVDUHWRJHWKHU
7KHpHOGOLQHVDUHZHDNHUWKHIXUWKHUDSDUWWKHOLQHVDUH
0DJQHWLFpHOGOLQHVQHYHUFURVVVLQFHWKHPDJQHWLFpHOGLVXQLTXHDWDQ\SRLQW
0DJQHWLFpHOGOLQHVDUHFRQWLQXRXV
$XQLIRUPPDJQHWLFpHOGLVZKHUHWKHPDJQHWLFpHOGVWUHQJWKLVWKHVDPHDWDOOSRLQWV
7KLVLVUHSUHVHQWHGE\HTXDOO\VSDFHGSDUDOOHOOLQHVMXVWOLNHHOHFWULFpHOGV
0DJQHWLFpHOGVFDQEHUHSUHVHQWHGLQ'E\XVLQJWKHIROORZLQJV\PEROV
'RWVUHSUHVHQWWKHPDJQHWLFpHOGGLUHFWHGRXWRIWKHSODQHRIWKHSDJH
&URVVHVUHSUHVHQWWKHPDJQHWLFpHOGGLUHFWHGLQWRWKHSODQHRIWKHSDJH
([DP7LS
7KHEHVWZD\WRUHPHPEHUZKLFKZD\DURXQGWRGUDZPDJQHWLFpHOGVLQ'LV
E\LPDJLQLQJDQDUURZFRPLQJWRZDUGVRUDZD\IURP\RX
l:KHQWKHKHDGRIDQDUURZLVFRPLQJWRZDUGV\RX\RXVHHWKHWLSDVDGRW

UHSUHVHQWLQJWKHDUURZFRPLQJiRXWjRIWKHSDJH
l:KHQDQDUURZLVWUDYHOOLQJDZD\IURP\RX\RXVHHWKHFURVVDWWKHEDFNRI
WKHDUURZUHSUHVHQWLQJWKHDUURZJRLQJiLQWRjWKHSDJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
)25&(21$&855(17&$55<,1*&21'8&725
)RUFHRQD&XUUHQW&DUU\LQJ&RQGXFWRU
$FXUUHQWFDUU\LQJFRQGXFWRUSURGXFHVLWVRZQPDJQHWLFpHOG
:KHQLQWHUDFWLQJZLWKDQH[WHUQDOPDJQHWLFpHOGLWZLOOH[SHULHQFHDIRUFH
$FXUUHQWFDUU\LQJFRQGXFWRUZLOORQO\H[SHULHQFHDIRUFHLIWKHFXUUHQWWKURXJKLWLV
SHUSHQGLFXODUWRWKHGLUHFWLRQRIWKHPDJQHWLFpHOGOLQHV
$VLPSOHVLWXDWLRQZRXOGEHDFRSSHUURGSODFHGZLWKLQDXQLIRUPPDJQHWLFpHOG
:KHQFXUUHQWLVSDVVHGWKURXJKWKHFRSSHUURGLWH[SHULHQFHVDIRUFHZKLFKPDNHVLWPRYH
&DOFXODWLQJ0DJQHWLF)RUFHRQD&XUUHQW&DUU\LQJ&RQGXFWRU
7KHVWUHQJWKRIDPDJQHWLFpHOGLVNQRZQDVWKHPDJQHWLFmX[GHQVLW\%
7KLVLVDOVRNQRZQDVWKHPDJQHWLFpHOGVWUHQJWK
,WLVPHDVXUHGLQXQLWVRI7HVOD 7
7KHIRUFH)RQDFRQGXFWRUFDUU\LQJFXUUHQW,DWULJKWDQJOHVWRDPDJQHWLFpHOGZLWKqX[
GHQVLW\%LVGHpQHGE\WKHHTXDWLRQ
) %,/VLQg
:KHUH
) IRUFHRQDFXUUHQWFDUU\LQJFRQGXFWRULQD%pHOG 1
% PDJQHWLFqX[GHQVLW\RIH[WHUQDO%pHOG 7
, FXUUHQWLQWKHFRQGXFWRU $
/ OHQJWKRIWKHFRQGXFWRU P
h DQJOHEHWZHHQWKHFRQGXFWRUDQGH[WHUQDO%pHOG GHJUHHV
7KLVHTXDWLRQVKRZVWKDWWKHJUHDWHUWKHFXUUHQWRUWKHPDJQHWLFpHOGVWUHQJWKWKHJUHDWHU
WKHIRUFHRQWKHFRQGXFWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
7KHPD[LPXPIRUFHRFFXUVZKHQVLQh
7KLVPHDQVh RDQGWKHFRQGXFWRULVSHUSHQGLFXODUWRWKH%pHOG
7KLVHTXDWLRQIRUWKHPDJQHWLFIRUFHQRZEHFRPHV
) %,/
7KHPLQLPXPIRUFH LVZKHQVLQh
7KLVPHDQVh RDQGWKHFRQGXFWRULVSDUDOOHOWRWKH%pHOG
,WLVLPSRUWDQWWRQRWHWKDWDFXUUHQWFDUU\LQJFRQGXFWRUZLOOH[SHULHQFHQRIRUFHLQD
PDJQHWLFpHOGLILVSDUDOOHOWRWKHpHOG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH
0DJQHWLFmX[GHQVLW\% P7 c7
&XUUHQW, $
/HQJWKRIZLUH/ P
$QJOHEHWZHHQWKHZLUHDQGWKHPDJQHWLFlHOGg R
6WHS:ULWHGRZQWKHHTXDWLRQIRUIRUFHRQDFXUUHQWFDUU\LQJFRQGXFWRU
) %,/VLQg
) c c c cVLQ 1 VI
([DP7LS
5HPHPEHUWKDWWKHGLUHFWLRQRIFXUUHQWqRZLVWKHqRZRISRVLWLYHFKDUJH
SRVLWLYHWRQHJDWLYH DQGWKLVLVLQWKHRSSRVLWHGLUHFWLRQWRWKHqRZRI
HOHFWURQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
)/(0,1* 6/()7+$1'58/(
)OHPLQJ V/HIW+DQG5XOH
7KHGLUHFWLRQRIWKHIRUFHRQDFKDUJHPRYLQJLQDPDJQHWLFpHOGLVGHWHUPLQHGE\WKH
GLUHFWLRQRIWKHPDJQHWLFpHOGDQGWKHFXUUHQW
5HFDOOWKDWWKHGLUHFWLRQRIWKHFXUUHQWLVWKHGLUHFWLRQRIFRQYHQWLRQDOFXUUHQWqRZ SRVLWLYH
WRQHJDWLYH
:KHQWKHIRUFHPDJQHWLFpHOGDQGFXUUHQWDUHDOOPXWXDOO\SHUSHQGLFXODUWRHDFKRWKHUWKH
GLUHFWLRQVRIHDFKFDQEHLQWHUSUHWHGE\)OHPLQJjVOHIWKDQGUXOH
2QWKHOHIWKDQGZLWKWKHWKXPESRLQWHGXSZDUGVpUVWpQJHUIRUZDUGVDQGVHFRQG
pQJHUWRWKHULJKWLHDOOWKUHHDUHSHUSHQGLFXODUWRHDFKRWKHU
7KHWKXPESRLQWVLQWKHGLUHFWLRQRIPRWLRQRIWKHURG RUWKHGLUHFWLRQRIWKHIRUFH
)
7KHlUVWpQJHUSRLQWVLQWKHGLUHFWLRQRIWKHH[WHUQDOPDJQHWLFlHOG %
7KHVHFRQGpQJHUSRLQWVLQWKHGLUHFWLRQRIFRQYHQWLRQDOFXUUHQWqRZ ,

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH8VLQJWKHOHIWKDQGUXOH
8VLQJ)OHPLQJkVOHIWKDQGUXOH
% LQWRWKHSDJH
) YHUWLFDOO\GRZQZDUGV
, IURPULJKWWROHIW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
([DP7LS
'RQkWEHDIUDLGWRXVH)OHPLQJkVOHIWKDQGUXOHGXULQJDQH[DP$OWKRXJKLWLV

EHVWWRGRLWVXEWO\LQRUGHUQRWWRJLYHWKHDQVZHUDZD\WRRWKHUVWXGHQWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
0$*1(7,&)/8;'(16,7<
0DJQHWLF)OX['HQVLW\'HpQLWLRQ
7KHPDJQHWLFqX[GHQVLW\%LVGHpQHGDV
7KHIRUFHDFWLQJSHUXQLWFXUUHQWSHUXQLWOHQJWKRQDFXUUHQWFDUU\LQJ
FRQGXFWRUSODFHGSHUSHQGLFXODUWRWKHPDJQHWLFcHOG
5HDUUDQJLQJWKHHTXDWLRQIRUPDJQHWLFIRUFHRQDZLUHWKHPDJQHWLFqX[GHQVLW\LVGHpQHG
E\WKHHTXDWLRQ
1RWHWKLVHTXDWLRQLVRQO\UHOHYDQWZKHQWKH%pHOGLVSHUSHQGLFXODUWRWKHFXUUHQW
0DJQHWLFqX[GHQVLW\LVPHDVXUHGLQXQLWVRIWHVODZKLFKLVGHpQHGDV
$VWUDLJKWFRQGXFWRUFDUU\LQJDFXUUHQWRI$QRUPDOWRDPDJQHWLFcHOGRI
dX[GHQVLW\RI7ZLWKIRUFHSHUXQLWOHQJWKRIWKHFRQGXFWRURI1P
7RSXWWKLVLQWRSHUVSHFWLYHWKH(DUWKkVPDJQHWLFqX[GHQVLW\LVDURXQGP7DQGDQ
RUGLQDU\IULGJHPDJQHWLVDURXQGP7

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH&DOFXODWLQJqX[GHQVLW\
)RUFHRQZLUH) 1
&XUUHQW, $
/HQJWKRIZLUH FP cP
6WHS0DJQHWLFqX[GHQVLW\%HTXDWLRQ
6WHS'HWHUPLQHWKHGLUHFWLRQRIWKH%pHOG
8VLQJ)OHPLQJjVOHIWKDQGUXOH
) WRWKHOHIW
, YHUWLFDOO\XSZDUGV
WKHUHIRUH% LQWRWKHSDJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
)25&(21$029,1*&+$5*(
&DOFXODWLQJ0DJQHWLF)RUFHRQD0RYLQJ&KDUJH
7KHPDJQHWLFIRUFHRQDQLVRODWLQJPRYLQJFKDUJHVXFKDQHOHFWURQLVJLYHQE\WKH
HTXDWLRQ
) %4YVLQg
:KHUH
) IRUFHRQWKHFKDUJH 1
% PDJQHWLFqX[GHQVLW\ 7
Y VSHHGRIWKHFKDUJH PV
h DQJOHEHWZHHQFKDUJHkVYHORFLW\DQGPDJQHWLFpHOG GHJUHHV
(TXLYDOHQWWRWKHIRUFHRQDZLUHLIWKHPDJQHWLFpHOG%LVSHUSHQGLFXODUWRWKHGLUHFWLRQRI
WKHFKDUJHkVYHORFLW\WKHHTXDWLRQVLPSOLpHVWR
) %4Y
$FFRUGLQJWR)OHPLQJkVOHIWKDQGUXOH
:KHQDQHOHFWURQHQWHUVDPDJQHWLFpHOGIURPWKHOHIWLIWKHPDJQHWLFpHOGLV
GLUHFWHGLQWRWKHSDJHWKHQWKHIRUFHRQLWZLOOEHGLUHFWHGXSZDUGV
7KHHTXDWLRQVKRZV
,IWKHGLUHFWLRQRIWKHHOHFWURQFKDQJHVWKHPDJQLWXGHRIWKHIRUFHZLOOFKDQJHWRR
7KHIRUFHGXHWRWKHPDJQHWLFpHOGLVDOZD\VSHUSHQGLFXODUWRWKHYHORFLW\RIWKHHOHFWURQ
1RWHWKLVLVHTXLYDOHQWWRFLUFXODUPRWLRQ
)OHPLQJkVOHIWKDQGUXOHFDQEHXVHGDJDLQWRpQGWKHGLUHFWLRQRIWKHIRUFHPDJQHWLFpHOG
DQGYHORFLW\
7KHNH\GLoHUHQFHLVWKDWWKHVHFRQGpQJHUUHSUHVHQWLQJFXUUHQW, GLUHFWLRQRI
SRVLWLYHFKDUJH LVQRZWKHGLUHFWLRQRIYHORFLW\YRIWKHSRVLWLYHFKDUJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH&DOFXODWLQJPDJQHWLFIRUFHRQDPRYLQJHOHFWURQ
6SHHGRIWKHHOHFWURQY cPV
&KDUJHRIDQHOHFWURQ4 c&
0DJQHWLFmX[GHQVLW\% 7
$QJOHEHWZHHQHOHFWURQDQGPDJQHWLFlHOGg R
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHPDJQHWLFIRUFHRQDQLVRODWHGSDUWLFOH
) %4YVLQg
6WHS6XEVWLWXWHLQYDOXHVDQGFDOFXODWHWKHIRUFHRQWKHHOHFWURQDWR
) c c c c cVLQ c1
6WHS&DOFXODWHWKHHOHFWURQIRUFHZKHQWUDYHOOLQJSHUSHQGLFXODUWRWKHpHOG
) %4Y c c c c c1
6WHS&DOFXODWHWKHUDWLRRIWKHSHUSHQGLFXODUIRUFHWRWKHIRUFHDWR
7KHUHIRUHWKHIRUFHRQWKHHOHFWURQLVWZLFHDVVWURQJZKHQLWLVPRYLQJSHUSHQGLFXODUWR
WKHlHOGWKDQZKHQLWLVPRYLQJDWRWRWKHlHOG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
([DP7LS
5HPHPEHUQRWWRPL[WKLVXSZLWK) %,/
l) %,/LVIRUDFXUUHQWFDUU\LQJFRQGXFWRU
l) %TYLVIRUDQLVRODWHGPRYLQJFKDUJH ZKLFKPD\EHLQVLGHDFRQGXFWRU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
+$//92/7$*(
+DOO9ROWDJH
7KH+DOOYROWDJHLVDSURGXFWRIWKH+DOOHoHFW
+DOOYROWDJHLVGHpQHGDV
7KHSRWHQWLDOGLbHUHQFHSURGXFHGDFURVVDQHOHFWULFDOFRQGXFWRUZKHQDQ
H[WHUQDOPDJQHWLFcHOGLVDSSOLHGSHUSHQGLFXODUWRWKHFXUUHQWWKURXJKWKH
FRQGXFWRU
:KHQDQH[WHUQDOPDJQHWLFpHOGLVDSSOLHGSHUSHQGLFXODUWRWKHGLUHFWLRQRIFXUUHQWWKURXJKD
FRQGXFWRUWKHHOHFWURQVH[SHULHQFHDPDJQHWLFIRUFH
7KLVPDNHVWKHPGULIWWRRQHVLGHRIWKHFRQGXFWRUZKHUHWKH\DOOJDWKHUDQGEHFRPHVPRUH
QHJDWLYHO\FKDUJHG
7KLVOHDYHVWKHRSSRVLWHVLGHGHpFLGHQWRIHOHFWURQVRUSRVLWLYHO\FKDUJHG
7KHUHLVQRZDSRWHQWLDOGLoHUHQFHDFURVVWKHFRQGXFWRU
7KLVLVFDOOHGWKH+DOO9ROWDJH9+
$QHTXDWLRQIRUWKH+DOOYROWDJH9+LVGHULYHGIURPWKHHOHFWULFDQGPDJQHWLFIRUFHVRQWKH
FKDUJHV
7KHYROWDJHDULVHVIURPWKHHOHFWURQVDFFXPXODWLQJRQRQHVLGHRIWKHFRQGXFWRUVOLFH
$VDUHVXOWDQHOHFWULFpHOGLVVHWXSEHWZHHQWKHWZRRSSRVLWHVLGHV
7KHWZRVLGHVFDQEHWUHDWHGOLNHRSSRVLWHO\FKDUJHGSDUDOOHOSODWHVZKHUHWKHHOHFWULFpHOG
VWUHQJWK(LVHTXDOWR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:KHUH
9+ +DOOYROWDJH 9
G ZLGWKRIWKHFRQGXFWRUVOLFH P
$VLQJOHHOHFWURQKDVDGULIWYHORFLW\RIYZLWKLQWKHFRQGXFWRU7KHPDJQHWLFpHOGLVLQWRWKH
SODQHRIWKHSDJHWKHUHIRUHWKHHOHFWURQKDVDPDJQHWLFIRUFH)%WRWKHULJKW
)% %TY
7KLVLVHTXDOWRWKHHOHFWULFIRUFH)(WRWKHOHIW
)( T(
T( %TY
6XEVWLWXWLQJ(DQGFDQFHOOLQJWKHFKDUJHT
5HFDOOWKDWFXUUHQW,LVUHODWHGWRWKHGULIWYHORFLW\YE\WKHHTXDWLRQ
, Q$YT
:KHUH
$ FURVVVHFWLRQDODUHDRIWKHFRQGXFWRU P
Q QXPEHUGHQVLW\RIHOHFWURQV P
5HDUUDQJLQJWKLVIRUYDQGVXEVWLWXWLQJLWLQWRWKHHTXDWLRQJLYHV
7KHFURVVVHFWLRQDODUHD$RIWKHVOLFHLVWKHSURGXFWRIWKHZLGWKGDQGWKLFNQHVVW
$ GW
6XEVWLWXWLQJ$DQGUHDUUDQJLQJIRUWKH+DOOYROWDJH9+OHDGVWRWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:KHUH
T FKDUJHRIWKHHOHFWURQ &
, FXUUHQW $
Q QXPEHUGHQVLW\RIHOHFWURQV P
W WKLFNQHVVRIWKHFRQGXFWRU P
7KLVHTXDWLRQVKRZVWKDWWKHVPDOOHUWKHHOHFWURQGHQVLW\QRIDPDWHULDOWKHODUJHUWKH
PDJQLWXGHRIWKH+DOOYROWDJH
7KLVLVZK\DVHPLFRQGXFWLQJPDWHULDOLVRIWHQXVHGIRUD+DOOSUREH
1RWHLIWKHHOHFWURQVZHUHSODFHGE\SRVLWLYHFKDUJHFDUULHUVWKHQHJDWLYHDQGSRVLWLYH
FKDUJHVZRXOGVWLOOGHqHFWLQRSSRVLWHGLUHFWLRQV
7KLVPHDQVWKHUHZRXOGEHQRFKDQJHLQWKHSRODULW\ GLUHFWLRQ RIWKH+DOOYROWDJH
([DP7LS
5HPHPEHUWRXVH)OHPLQJkVOHIWKDQGUXOHWRREWDLQWKHGLUHFWLRQWKH

HOHFWURQVPRYHGXHWRWKHPDJQHWLFIRUFHFUHDWHGE\WKHPDJQHWLFpHOG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
86,1*$+$//352%(
0HDVXULQJ0DJQHWLF)OX['HQVLW\XVLQJD+DOO3UREH
$+DOOSUREHFDQEHXVHGWRPHDVXUHWKHPDJQHWLFqX[GHQVLW\EHWZHHQWZRPDJQHWVEDVHG
RQWKH+DOOHoHFW
,WFRQVLVWVRIDF\OLQGHUZLWKDqDWVXUIDFHDWWKHHQG
7RPHDVXUHWKHPDJQHWLFqX[GHQVLW\EHWZHHQWZRPDJQHWVWKHqDWVXUIDFHRIWKHSUREH
PXVWEHGLUHFWHGEHWZHHQWKHPDJQHWVVRWKHPDJQHWLFpHOGOLQHVSDVVFRPSOHWHO\
SHUSHQGLFXODUWRWKLVVXUIDFH
7KHSUREHLVFRQQHFWHGWRDYROWPHWHUWRPHDVXUHWKH+DOOYROWDJH
,IWKHSUREHLVQRWKHOGLQWKHFRUUHFWRULHQWDWLRQ SHUSHQGLFXODUWRWKHpHOGOLQHV WKH

YROWPHWHUUHDGLQJZLOOEHUHGXFHG
6LQFHWKH+DOOYROWDJHLVGLUHFWO\SURSRUWLRQDOWRWKHPDJQHWLFqX[GHQVLW\WKHqX[GHQVLW\RI
WKHPDJQHWVFDQEHREWDLQHG
$+DOOSUREHLVVHQVLWLYHHQRXJKWRPHDVXUHHYHQWKH(DUWKkVPDJQHWLFqX[GHQVLW\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH8VLQJD+DOOSUREH
7KH+DOOYROWDJHGHSHQGVRQDQJOHEHWZHHQWKHPDJQHWLFpHOGDQGWKHSODQH
RIWKHSUREH
7KH+DOOYROWDJHUHDFKHVDPD[LPXPZKHQWKHpHOGLVSHUSHQGLFXODUWRWKH
SUREH
7KH+DOOYROWDJHLV]HURZKHQWKHpHOGLVSDUDOOHOWRWKHSUREH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
027,212)$&+$5*('3$57,&/(,1$0$*1(7,&),(/'
0RWLRQRID&KDUJHG3DUWLFOHLQD8QLIRUP0DJQHWLF)LHOG
$FKDUJHGSDUWLFOHLQXQLIRUPPDJQHWLFpHOGZKLFKLVSHUSHQGLFXODUWRLWVGLUHFWLRQRIPRWLRQ
WUDYHOVLQDFLUFXODUSDWK
7KLVLVEHFDXVHWKHPDJQHWLFIRUFH)%ZLOODOZD\VEHSHUSHQGLFXODUWRLWVYHORFLW\Y
)%ZLOODOZD\VEHGLUHFWHGWRZDUGVWKHFHQWUHRIWKHSDWK
7KHPDJQHWLFIRUFH)%SURYLGHVWKHFHQWULSHWDOIRUFHRQWKHSDUWLFOH
5HFDOOWKHHTXDWLRQIRUFHQWULSHWDOIRUFH
:KHUH
P PDVVRIWKHSDUWLFOH NJ
Y OLQHDUYHORFLW\RIWKHSDUWLFOH PV

(TXDWLQJWKLVWRWKHIRUFHRQDPRYLQJFKDUJHGSDUWLFOHJLYHVWKHHTXDWLRQ
5HDUUDQJLQJIRUWKHUDGLXVUREWDLQVWKHHTXDWLRQIRUWKHUDGLXVRIWKHRUELWRIDFKDUJHG
SDUWLFOHLQDSHUSHQGLFXODUPDJQHWLFpHOG
7KLVHTXDWLRQVVKRZVWKDW
)DVWHUPRYLQJSDUWLFOHVZLWKVSHHGYPRYHLQODUJHUFLUFOHV ODUJHUU UmY
3DUWLFOHVZLWKJUHDWHUPDVVPPRYHLQODUJHUFLUFOHVUmP
3DUWLFOHVZLWKJUHDWHUFKDUJHTPRYHLQVPDOOHUFLUFOHVUmT
3DUWLFOHVPRYLQJLQDVWURQJPDJQHWLFpHOG%PRYHLQVPDOOHUFLUFOHVUm%

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH&DOFXODWLQJWKHUDGLXVRIPRWLRQ
0DJQHWLFmX[GHQVLW\% P7
(OHFWURQVSHHGY cPV
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHUDGLXVRIDFKDUJHGSDUWLFOHLQD
SHUSHQGLFXODUPDJQHWLFpHOG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
9(/2&,7<6(/(&7,21
9HORFLW\6HOHFWLRQ
$YHORFLW\VHOHFWRULV
$GHYLFHFRQVLVWLQJRISHUSHQGLFXODUHOHFWULFDQGPDJQHWLFcHOGVZKHUHFKDUJHG
SDUWLFOHVZLWKDVSHFLcFYHORFLW\FDQEHcOWHUHG
9HORFLW\VHOHFWRUVDUHXVHGLQGHYLFHVVXFKDVPDVVVSHFWURPHWHUVLQRUGHUWRSURGXFHD
EHDPRIFKDUJHGSDUWLFOHVDOOWUDYHOOLQJDWWKHVDPHYHORFLW\
7KHFRQVWUXFWLRQRIDYHORFLW\VHOHFWRUFRQVLVWVRIWZRKRUL]RQWDORSSRVLWHO\FKDUJHGSODWHV
VLWXDWHGLQDYDFXXPFKDPEHU
7KHSODWHVSURYLGHDXQLIRUPHOHFWULFpHOGZLWKVWUHQJWK(EHWZHHQWKHP
7KHUHLVDOVRDXQLIRUPPDJQHWLFpHOGZLWKqX[GHQVLW\%DSSOLHGSHUSHQGLFXODUWRWKHHOHFWULF
pHOG
,IDEHDPRIFKDUJHGSDUWLFOHVHQWHUEHWZHHQWKHSODWHVWKH\PD\DOOKDYHWKHVDPH
FKDUJHEXWWUDYHODWGLoHUHQWVSHHGVY
7KHHOHFWULFIRUFHGRHVQRWGHSHQGRQWKHYHORFLW\)( (4
+RZHYHUWKHPDJQHWLFIRUFHGRHVGHSHQGRQWKHYHORFLW\)% %4Y
7KHPDJQHWLFIRUFHZLOOEHJUHDWHUIRUSDUWLFOHVZKLFKDUHWUDYHOOLQJIDVWHU
7RVHOHFWSDUWLFOHVWUDYHOOLQJDWH[DFWO\WKHGHVLUHGWKHVSHHGYWKHHOHFWULFDQGPDJQHWLF
IRUFHPXVWWKHUHIRUHEHHTXDOEXWLQRSSRVLWHGLUHFWLRQV
)( )%
7KHUHVXOWDQWIRUFHRQWKHSDUWLFOHVDWVSHHGYZLOOEH]HURVRWKH\ZLOOUHPDLQXQGHqHFWHG
DQGSDVVVWUDLJKWWKURXJKEHWZHHQWKHSODWHV
%\HTXDWLQJWKHHOHFWULFDQGPDJQHWLFIRUFHHTXDWLRQV
(4 %4Y
7KHFKDUJH4ZLOOFDQFHORXWRQERWKVLGHVWRJLYHWKHVHOHFWHGYHORFLW\YHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
7KHUHIRUHWKHVSHHGYLQZKLFKDSDUWLFOHZLOOUHPDLQXQGHqHFWHGLVIRXQGE\WKHUDWLRRI
WKHHOHFWULFDQGPDJQHWLFlHOGVWUHQJWK
,IDSDUWLFOHKDVDVSHHGJUHDWHURUOHVVWKDQYWKHPDJQHWLFIRUFHZLOOGHqHFWLWDQG
FROOLGHZLWKRQHRIWKHFKDUJHGSODWHV
7KLVZRXOGUHPRYHWKHSDUWLFOHVLQWKHEHDPWKDWDUHQRWH[DFWO\DWVSHHGY
1RWHWKHJUDYLWDWLRQDOIRUFHRQWKHFKDUJHGSDUWLFOHVZLOOEHQHJOLJLEOHFRPSDUHGWRWKH
HOHFWULFDQGPDJQHWLFIRUFHVDQGWKHUHIRUHFDQEHLJQRUHGLQWKHVHFDOFXODWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH9HORFLW\VHOHFWLRQ
3DUW D
6WHS'LUHFWLRQRI(pHOG
(OHFWULFpHOGOLQHVSRLQWIURPWKHSRVLWLYHWRQHJDWLYHWRFKDUJH
7KHUHIRUHLWPXVWEHGLUHFWHGYHUWLFDOO\XSZDUGV
6WHS'LUHFWLRQRI%pHOG
8VLQJ)OHPLQJkVOHIWKDQGUXOH
7KHFKDUJHRUFXUUHQW,LVWRWKHULJKW
%LVRXWRIWKHSDJH
7KHUHIRUHWKHIRUFH)LVYHUWLFDOO\GRZQZDUGV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
3DUW E
9HORFLW\VHOHFWRUHTXDWLRQ
(OHFWULFpHOGVWUHQJWK( N9P c9P
0DJQHWLFqX[GHQVLW\% 7
3DUW F
,IWKHVSHHGLQFUHDVHVWKHPDJQHWLFIRUFHPXVWEHJUHDWHUEHFDXVH)%mY
6LQFHWKHPDJQHWLFIRUFHZRXOGGLUHFWWKHLRQGRZQZDUGVLQWKHGLUHFWLRQRIWKHpHOG
WKHLRQZLOOEHGHqHFWHGWRZDUGVWKHSRVLWLYHSODWH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
0$*1(7,&),(/'6,1:,5(6&2,/6 62/(12,'6
0DJQHWLF)LHOGVLQ:LUHV&RLOV 6ROHQRLGV
0DJQHWLFpHOGSDWWHUQVDUHQRWRQO\REVHUYHGDURXQGEDUPDJQHWVPDJQHWLFpHOGVDUH
IRUPHGZKHUHYHUFXUUHQWLVqRZLQJVXFKDVLQ
/RQJVWUDLJKWZLUHV
/RQJVROHQRLGV
)ODWFLUFXODUFRLOV
)LHOG/LQHVLQD&XUUHQW&DUU\LQJ:LUH
0DJQHWLFpHOGOLQHVLQDFXUUHQWFDUU\LQJZLUHDUHFLUFXODUULQJVFHQWHUHGRQWKHZLUH
7KHpHOGOLQHVDUHVWURQJHVWQHDUWKHZLUHDQGEHFRPHIXUWKHUSDUWDZD\IURPWKHZLUH
5HYHUVLQJWKHFXUUHQWUHYHUVHVWKHGLUHFWLRQRIWKHpHOG
7KHpHOGOLQHVDUHFORFNZLVHRUDQWLFORFNZLVHDURXQGWKHZLUHGHSHQGLQJRQWKHGLUHFWLRQRI
WKHFXUUHQW
7KHGLUHFWLRQRIWKHPDJQHWLFpHOGLVGHWHUPLQHGE\0D[ZHOOjVULJKWKDQGVFUHZUXOH
7KLVLVGHWHUPLQHGE\SRLQWLQJWKHULJKWKDQGWKXPELQWKHGLUHFWLRQRIWKHFXUUHQWLQ
WKHZLUHDQGFXUOLQJWKHpQJHUVRQWRWKHSDOP
7KHGLUHFWLRQRIWKHFXUOHGpQJHUVUHSUHVHQWVWKHGLUHFWLRQRIWKHPDJQHWLFpHOG
DURXQGWKHZLUH
)RUH[DPSOHLIWKHFXUUHQWLVWUDYHOOLQJYHUWLFDOO\XSZDUGVWKHPDJQHWLFpHOGOLQHVZLOO
EHGLUHFWHGDQWLFORFNZLVHDVVHHQIURPGLUHFWO\DERYHWKHZLUH
1RWHWKHGLUHFWLRQRIWKHFXUUHQWLVWDNHQWREHWKHFRQYHQWLRQDOFXUUHQWLHIURP
SRVLWLYHWRQHJDWLYHQRWWKHGLUHFWLRQRIHOHFWURQqRZ
)LHOG/LQHVLQD6ROHQRLG
$VVHHQIURPDFXUUHQWFDUU\LQJZLUHDQHOHFWULFFXUUHQWSURGXFHVDPDJQHWLFpHOG
$QHOHFWURPDJQHWLFPDNHVXVHRIWKLVE\XVLQJDFRLORIZLUHFDOOHGDVROHQRLGZKLFK
FRQFHQWUDWHVWKHPDJQHWLFpHOG
2QHHQGVEHFRPHVDQRUWKSROHDQGWKHRWKHUWKHVRXWKSROH
7KHUHIRUHWKHPDJQHWLFpHOGOLQHVDURXQGDVROHQRLGDUHYHU\VLPLODUWRDEDUPDJQHW
7KHpHOGOLQHVHPHUJHIURPWKHQRUWKSROH
7KHpHOGOLQHVUHWXUQWRWKHVRXWKSROH
:KLFKLVWKHQRUWKRUVRXWKSROHGHSHQGVRQWKHGLUHFWLRQRIWKHFXUUHQW
7KLVLVIRXQGE\WKHULJKWKDQGJULSUXOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
7KLVLQYROYHVJULSSLQJWKHHOHFWURPDJQHWVRWKHpQJHUVUHSUHVHQWWKHGLUHFWLRQRIWKHFXUUHQW
qRZRIWKHZLUH
7KHWKXPESRLQWVLQWKHGLUHFWLRQRIWKHpHOGOLQHVLQVLGHWKHFRLORULQRWKHUZRUGVSRLQW
WRZDUGVWKHHOHFWURPDJQHWkVQRUWKSROH
)LHOG/LQHVLQD)ODW&LUFXODU&RLO
$qDWFLUFXODUFRLOLVHTXDOWRRQHRIWKHFRLOVRIDVROHQRLG
7KHpHOGOLQHVZLOOHPHUJHWKURXJKRQHVLGHRIWKHFLUFOH QRUWKSROH DQGOHDYHWKHRWKHU
VRXWKSROH
$VEHIRUHWKHGLUHFWLRQRIWKHQRUWKDQGVRXWKSROHGHSHQGRQWKHGLUHFWLRQRIWKHFXUUHQW
7KLVFDQEHGHWHUPLQHGE\XVLQJWKHULJKWKDQGWKXPEUXOH
,WHDVLHUWRpQGWKHGLUHFWLRQRIWKHPDJQHWLFpHOGRQWKHVWUDLJKWSDUWRIWKHFLUFXODU
FRLOWRGHWHUPLQHZKLFKGLUHFWLRQWKHpHOGOLQHVDUHSDVVLQJWKURXJK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
k&RQFHQWULFFLUFOHV
k,QFUHDVLQJVHSDUDWLRQEHWZHHQHDFKFLUFOH
k$UURZVGUDZQLQDQWLFORFNZLVHGLUHFWLRQ
([DP7LS
5HPHPEHUWRGUDZWKHDUURZVVKRZLQJWKHGLUHFWLRQRIWKHpHOGOLQHVRQ
HYHU\VLQJOHpHOGOLQH\RXGUDZ$OVRHQVXUHWKDWLQDXQLIRUPPDJQHWLFpHOG
WKHpHOGOLQHVDUHHTXDOO\VSDFHG
)DFWRUV$oHFWLQJ0DJQHWLF)LHOG6WUHQJWK
7KHVWUHQJWKRIWKHPDJQHWLFpHOGRIDVROHQRLGFDQEHLQFUHDVHGE\
$GGLQJDFRUHPDGHIURPDIHUURXV LURQULFK PDWHULDOHJDQLURQURG
$GGLQJPRUHWXUQVLQWKHFRLO
:KHQFXUUHQWqRZVWKURXJKWKHVROHQRLGZLWKDQLURQFRUHLWEHFRPHVPDJQHWLVHGFUHDWLQJ
DQHYHQVWURQJHUpHOG
7KHDGGLWLRQRIDQLURQFRUHFDQVWUHQJWKHQWKHPDJQHWLFpHOGXSWRDVHYHUDO
KXQGUHGWLPHVPRUH
:KHQPRUHWXUQVDUHDGGHGLQWKHFRLOWKLVFRQFHQWUDWHVWKHPDJQHWLFpHOGOLQHVFDXVLQJWKH
PDJQHWLFpHOGVWUHQJWKWRLQFUHDVH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
)25&(6%(7:((1&855(17&$55<,1*&21'8&7256
2ULJLQRIWKH)RUFHV%HWZHHQ&XUUHQW&DUU\LQJ&RQGXFWRUV
$FXUUHQWFDUU\LQJFRQGXFWRUVXFKDVDZLUHSURGXFHVDPDJQHWLFpHOGDURXQGLW
7KHGLUHFWLRQRIWKHpHOGGHSHQGVRQWKHGLUHFWLRQRIWKHFXUUHQWWKURXJKWKHZLUH
7KLVLVGHWHUPLQHGE\WKHULJKWKDQGWKXPEUXOH
3DUDOOHOFXUUHQWFDUU\LQJFRQGXFWRUVZLOOWKHUHIRUHHLWKHUDWWUDFWRUUHSHOHDFKRWKHU
,IWKHFXUUHQWVDUHLQWKHVDPHGLUHFWLRQLQERWKFRQGXFWRUVWKHPDJQHWLFpHOGOLQHV
EHWZHHQWKHFRQGXFWRUVFDQFHORXWiWKHFRQGXFWRUVZLOODWWUDFWHDFKRWKHU
,IWKHFXUUHQWVDUHLQWKHRSSRVLWHGLUHFWLRQLQERWKFRQGXFWRUVWKHPDJQHWLFpHOG
OLQHVEHWZHHQWKHFRQGXFWRUVSXVKHDFKRWKHUDSDUWiWKHFRQGXFWRUVZLOOUHSHOHDFK
RWKHU
:KHQWKHFRQGXFWRUVDWWUDFWWKHGLUHFWLRQRIWKHPDJQHWLFIRUFHVZLOOEHWRZDUGVHDFK
RWKHU
:KHQWKHFRQGXFWRUVUHSHOWKHGLUHFWLRQRIWKHPDJQHWLFIRUFHVZLOOEHDZD\IURPHDFK
RWKHU
7KHPDJQLWXGHRIHDFKIRUFHGHSHQGRQWKHDPRXQWRIFXUUHQWDQGOHQJWKRIWKHZLUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
1HZWRQkV7KLUG/DZVWDWHV
:KHQWZRERGLHVLQWHUDFWWKHIRUFHRQRQHERG\LVHTXDOEXW
RSSRVLWHLQGLUHFWLRQWRWKHIRUFHRQWKHRWKHUERG\
7KHUHIRUHWKHIRUFHVRQWKHZLUHVDFWLQHTXDOEXWRSSRVLWHGLUHFWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
(/(&7520$*1(7,&,1'8&7,21
0$*1(7,&)/8;
0DJQHWLF)OX['HpQLWLRQ
(OHFWURPDJQHWLFLQGXFWLRQLVZKHQDQHPILVLQGXFHGLQDFORVHGFLUFXLWFRQGXFWRUGXHWRLW
PRYLQJWKURXJKDPDJQHWLFpHOG
7KLVKDSSHQVZKHQDFRQGXFWRUFXWVWKURXJKPDJQHWLFpHOGOLQHV
7KHDPRXQWRIHPILQGXFHGLVGHWHUPLQHGE\WKHPDJQHWLFqX[
7KLVLVWKHWRWDOPDJQHWLFpHOGWKDWSDVVHVWKURXJKDJLYHQDUHD
,WLVDPD[LPXPZKHQWKHPDJQHWLFpHOGOLQHVDUHSHUSHQGLFXODUWRWKHDUHD
,WLVDWDPLQLPXPZKHQWKHPDJQHWLFpHOGOLQHVDUHSDUDOOHOWRWKHDUHD
7KHPDJQHWLFmX[LVGHpQHGDV
7KHSURGXFWRIWKHPDJQHWLFdX[GHQVLW\DQGWKHFURVVVHFWLRQDODUHD
SHUSHQGLFXODUWRWKHGLUHFWLRQRIWKHPDJQHWLFdX[GHQVLW\
,QRWKHUZRUGVPDJQHWLFqX[LVWKHQXPEHURIPDJQHWLFlHOGOLQHVWKURXJKDJLYHQ
DUHD
&DOFXODWLQJ0DJQHWLF)OX[
0DJQHWLFqX[LVGHpQHGE\WKHV\PEROf JUHHNOHWWHUjSKLk
,WLVPHDVXUHGLQXQLWVRI:HEHUV :E
0DJQHWLFqX[FDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ
f %$
:KHUH
f PDJQHWLFqX[ :E
$ FURVVVHFWLRQDODUHD P

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:KHQWKHPDJQHWpHOGOLQHVDUHQRWFRPSOHWHO\SHUSHQGLFXODUWRWKHDUHD$WKHQWKH
FRPSRQHQWRIPDJQHWLFqX[GHQVLW\%SHUSHQGLFXODUWRWKHDUHDLVWDNHQ
7KHHTXDWLRQWKHQEHFRPHV
f %$FRV g
:KHUH
h DQJOHEHWZHHQPDJQHWLFpHOGOLQHVDQGWKHOLQHSHUSHQGLFXODUWRWKHSODQHRIWKH
DUHD RIWHQFDOOHGWKHQRUPDOOLQH GHJUHHV
7KLVPHDQVWKHPDJQHWLFqX[LV
0D[LPXP %$ZKHQFRV h WKHUHIRUHg R7KHPDJQHWLFpHOGOLQHVDUH

SHUSHQGLFXODUWRWKHSODQHRIWKHDUHD
0LQLPXP ZKHQFRV h WKHUHIRUHg R7KHPDJQHWLFpHOGVOLQHVDUH

SDUDOOHOWRWKHSODQHRIWKHDUHD
$QHPILVLQGXFHGLQDFLUFXLWZKHQWKHPDJQHWLFqX[OLQNDJHFKDQJHVZLWKUHVSHFWWRWLPH
7KLVPHDQVDQHPILVLQGXFHGZKHQWKHUHLV
$FKDQJLQJPDJQHWLFqX[GHQVLW\%
$FKDQJLQJFURVVVHFWLRQDODUHD$
$FKDQJHLQDQJOHb

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH
3DUW D
&URVVVHFWLRQDODUHD$ FPcFP c c c
P
0DJQHWLFmX[GHQVLW\% c7
6WHS:ULWHGRZQWKHHTXDWLRQIRUPDJQHWLFqX[
f %$
f c c c c:E

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
3DUW E
7KHPDJQHWLFmX[ZLOOEHDWDPLQLPXPZKHQWKHZLQGRZLVRSHQHGE\R
DQGDPD[LPXPZKHQIXOO\FORVHGRURSHQHGWRR
([DP7LS
&RQVLGHUFDUHIXOO\WKHYDOXHRIhLWLVWKHDQJOHEHWZHHQWKHpHOGOLQHVDQG
WKHOLQHQRUPDO SHUSHQGLFXODU WRWKHSODQHRIWKHDUHDWKHpHOGOLQHVDUH

SDVVLQJWKURXJK,ILWKHOSVGUDZLQJWKHQRUPDORQWKHDUHDSURYLGHGZLOOKHOS
YLVXDOLVHWKHFRUUHFWDQJOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
0$*1(7,&)/8;/,1.$*(
0DJQHWLF)OX[/LQNDJH
7KHPDJQHWLFmX[OLQNDJHLVDTXDQWLW\FRPPRQO\XVHGIRUVROHQRLGVZKLFKDUHPDGHRI1
WXUQVRIZLUH
0DJQHWLFqX[OLQNDJHLVGHpQHGDV
7KHSURGXFWRIWKHPDJQHWLFdX[DQGWKHQXPEHURIWXUQV
,WLVFDOFXODWHGXVLQJWKHHTXDWLRQ
f1 %$1
:KHUH
f PDJQHWLFqX[ :E
1 QXPEHURIWXUQVRIWKHFRLO
$ FURVVVHFWLRQDODUHD P
7KHqX[OLQNDJHf1KDVWKHXQLWVRI:HEHUWXUQV :EWXUQV
$VZLWKPDJQHWLFqX[LIWKHpHOGOLQHVDUHQRWFRPSOHWHO\SHUSHQGLFXODUWRWKHSODQHRIWKH
DUHDWKH\DUHSDVVLQJWKURXJK
7KHUHIRUHWKHFRPSRQHQWRIWKHqX[GHQVLW\ZKLFKLVSHUSHQGLFXODULVHTXDOWR
f1 %$1FRV g

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH
&URVVVHFWLRQDODUHD$ hU h P
0DJQHWLFmX[GHQVLW\% P7
1XPEHURIWXUQVRIWKHFRLO1 WXUQV
6WHS:ULWHGRZQWKHHTXDWLRQIRUWKHPDJQHWLFqX[OLQNDJH
f1 %$1
f1 c cc :EWXUQV VI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
35,1&,3/(62)(/(&7520$*1(7,&,1'8&7,21
3ULQFLSOHVRI(OHFWURPDJQHWLF,QGXFWLRQ
(OHFWURPDJQHWLFLQGXFWLRQLVDSKHQRPHQRQZKLFKRFFXUVZKHQDQHPILVLQGXFHGZKHQD
FRQGXFWRUPRYHVWKURXJKDPDJQHWLFpHOG
:KHQWKHFRQGXFWRUFXWVWKURXJKWKHPDJQHWLFpHOGOLQHV
7KLVFDXVHVDFKDQJHLQPDJQHWLFmX[
:KLFKFDXVHVZRUNWREHGRQH
7KLVZRUNLVWKHQWUDQVIRUPHGLQWRHOHFWULFDOHQHUJ\
7KHUHIRUHLIDWWDFKHGWRDFRPSOHWHFLUFXLWDFXUUHQWZLOOEHLQGXFHG
7KLVLVNQRZQDVHOHFWURPDJQHWLFLQGXFWLRQDQGLVGHpQHGDV
7KHSURFHVVLQZKLFKDQHPILVLQGXFHGLQDFORVHGFLUFXLWGXHWRFKDQJHV
LQPDJQHWLFdX[
7KLVFDQRFFXUHLWKHUZKHQ
$FRQGXFWRUFXWVWKURXJKDPDJQHWLFpHOG
7KHGLUHFWLRQRIDPDJQHWLFpHOGWKURXJKDFRLOFKDQJHV
(OHFWURPDJQHWLFLQGXFWLRQLVXVHGLQ
(OHFWULFDOJHQHUDWRUVZKLFKFRQYHUWPHFKDQLFDOHQHUJ\WRHOHFWULFDOHQHUJ\
7UDQVIRUPHUVZKLFKDUHXVHGLQHOHFWULFDOSRZHUWUDQVPLVVLRQ
7KLVSKHQRPHQRQFDQHDVLO\EHGHPRQVWUDWHGZLWKDPDJQHWDQGDFRLORUDZLUHDQGWZR
PDJQHWV
([SHULPHQW0RYLQJDPDJQHWWKURXJKDFRLO
:KHQDFRLOLVFRQQHFWHGWRDVHQVLWLYHYROWPHWHUDEDUPDJQHWFDQEHPRYHGLQDQGRXWRI
WKHFRLOWRLQGXFHDQHPI

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
7KHH[SHFWHGUHVXOWVDUH
:KHQWKHEDUPDJQHWLVQRWPRYLQJWKHYROWPHWHUVKRZVD]HURUHDGLQJ
:KHQWKHEDUPDJQHWLVKHOGVWLOOLQVLGHRURXWVLGHWKHFRLOWKHUDWHRIFKDQJHRIqX[
LV]HURVRWKHUHLVQRHPILQGXFHG
:KHQWKHEDUPDJQHWEHJLQVWRPRYHLQVLGHWKHFRLOWKHUHLVDUHDGLQJRQWKHYROWPHWHU
$VWKHEDUPDJQHWPRYHVLWVPDJQHWLFpHOGOLQHVjFXWWKURXJKkWKHFRLOJHQHUDWLQJD
FKDQJHLQPDJQHWLFmX[
7KLVLQGXFHVDQHPIZLWKLQWKHFRLOVKRZQPRPHQWDULO\E\WKHUHDGLQJRQWKH
YROWPHWHU
:KHQWKHEDUPDJQHWLVWDNHQEDFNRXWRIWKHFRLODQHPILVLQGXFHGLQWKHRSSRVLWH
GLUHFWLRQ
$VWKHPDJQHWFKDQJHVGLUHFWLRQWKHGLUHFWLRQRIWKHFXUUHQWFKDQJHV
7KHYROWPHWHUZLOOPRPHQWDULO\VKRZDUHDGLQJZLWKWKHRSSRVLWHVLJQ
,QFUHDVLQJWKHVSHHGRIWKHPDJQHWLQGXFHVDQHPIZLWKDKLJKHUPDJQLWXGH
$VWKHVSHHGRIWKHPDJQHWLQFUHDVHVWKHUDWHRIFKDQJHRIqX[LQFUHDVHV
7KHGLUHFWLRQRIWKHHOHFWULFFXUUHQWDQGHPILQGXFHGLQWKHFRQGXFWRULVVXFKWKDWLW
RSSRVHVWKHFKDQJHWKDWSURGXFHVLW
)DFWRUVWKDWZLOOLQFUHDVHWKHLQGXFHGHPIDUH
0RYLQJWKHPDJQHWIDVWHUWKURXJKWKHFRLO
$GGLQJPRUHWXUQVWRWKHFRLO
,QFUHDVLQJWKHVWUHQJWKRIWKHEDUPDJQHW
([SHULPHQW0RYLQJDZLUHWKURXJKDPDJQHWLFpHOG
:KHQDORQJZLUHLVFRQQHFWHGWRDYROWPHWHUDQGPRYHGEHWZHHQWZRPDJQHWVDQHPILV
LQGXFHG
1RWHWKHUHLVQRFXUUHQWqRZLQJWKURXJKWKHZLUHWRVWDUWZLWK
7KHH[SHFWHGUHVXOWVDUH
:KHQWKHZLUHLVQRWPRYLQJWKHYROWPHWHUVKRZVD]HURUHDGLQJ
:KHQWKHZLUHLVKHOGVWLOOLQVLGHRURXWVLGHWKHPDJQHWVWKHUDWHRIFKDQJHRIqX[LV
]HURVRWKHUHLVQRHPILQGXFHG
$VWKHZLUHLVPRYHGWKURXJKEHWZHHQWKHPDJQHWVDQHPILVLQGXFHGZLWKLQWKHZLUH
VKRZQPRPHQWDULO\E\WKHUHDGLQJRQWKHYROWPHWHU
$VWKHZLUHPRYHVLWjFXWVWKURXJKkWKHPDJQHWLFpHOGOLQHVRIWKHPDJQHWLF
JHQHUDWLQJDFKDQJHLQPDJQHWLFmX[

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:KHQWKHZLUHLVWDNHQEDFNRXWRIWKHPDJQHWDQHPILVLQGXFHGLQWKHRSSRVLWH
GLUHFWLRQ
$VWKHZLUHFKDQJHVGLUHFWLRQWKHGLUHFWLRQRIWKHFXUUHQWFKDQJHV
7KHYROWPHWHUZLOOPRPHQWDULO\VKRZDUHDGLQJZLWKWKHRSSRVLWHVLJQ
$VEHIRUHWKHGLUHFWLRQRIWKHHOHFWULFFXUUHQWDQGHPILQGXFHGLQWKHFRQGXFWRULVVXFK
WKDWLWRSSRVHVWKHFKDQJHWKDWSURGXFHVLW
)DFWRUVWKDWZLOOLQFUHDVHWKHLQGXFHGHPIDUH
,QFUHDVLQJWKHOHQJWKRIWKHZLUH
0RYLQJWKHZLUHEHWZHHQWKHPDJQHWVIDVWHU
,QFUHDVLQJWKHVWUHQJWKRIWKHPDJQHWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
)$5$'$< 6 /(1= 6/$:6
)DUDGD\ V /HQ] V/DZV
)DUDGD\kVODZWHOOVXVWKHPDJQLWXGHRIWKHLQGXFHGHPILQHOHFWURPDJQHWLFLQGXFWLRQDQGLV
GHpQHGDV
7KHPDJQLWXGHRIWKHLQGXFHGHPILVGLUHFWO\SURSRUWLRQDOWRWKHUDWHRIFKDQJH
LQPDJQHWLFdX[OLQNDJH
:KHUH
g LQGXFHGHPI 9
1 QXPEHURIWXUQVRIFRLO
ed FKDQJHLQPDJQHWLFqX[ :E
eW WLPHLQWHUYDO V
/HQ]kV/DZJLYHVWKHGLUHFWLRQRIWKHLQGXFHGHPIDVGHpQHGE\)DUDGD\kVODZ
7KHLQGXFHGHPIDFWVLQVXFKDGLUHFWLRQWRSURGXFHHbHFWVZKLFKRSSRVHWKH
FKDQJHFDXVLQJLW
/HQ]kVODZFRPELQHGZLWK)DUDGD\kVODZLV
7KLVHTXDWLRQVKRZV
:KHQDEDUPDJQHWJRHVWKURXJKDFRLODQHPILVLQGXFHGZLWKLQWKHFRLOGXHWRD
FKDQJHLQPDJQHWLFqX[
$FXUUHQWLVDOVRLQGXFHGZKLFKPHDQVWKHFRLOQRZKDVLWVRZQPDJQHWLFpHOG
7KHFRLOkVPDJQHWLFpHOGDFWVLQWKHRSSRVLWHGLUHFWLRQWRWKHPDJQHWLFpHOGRIWKH
EDUPDJQHW
,IDGLUHFWFXUUHQW GF SRZHUVXSSO\LVUHSODFHGZLWKDQDOWHUQDWLQJFXUUHQW DF VXSSO\WKH

HPILQGXFHGZLOODOVREHDOWHUQDWLQJZLWKWKHVDPHIUHTXHQF\DVWKHVXSSO\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
([SHULPHQWDO(YLGHQFHIRU/HQ]kV/DZ
7RYHULI\/HQ]kVODZWKHRQO\DSSDUDWXVQHHGHGLV
$EDUPDJQHW
$FRLORIZLUH
$VHQVLWLYHDPPHWHU
1RWHDFHOOLVQRWUHTXLUHG
$NQRZQSROH HLWKHUQRUWKRUVRXWK RIWKHEDUPDJQHWLVSXVKHGLQWRWKHFRLOZKLFKLQGXFHV

DPDJQHWLFpHOGLQWKHFRLO
8VLQJWKHULJKWKDQGJULSUXOHWKHFXUOHGpQJHUVLQGLFDWHWKHGLUHFWLRQRIWKHFXUUHQW
DQGWKHWKXPELQGLFDWHVWKHGLUHFWLRQRIWKHLQGXFHGPDJQHWLFlHOG
7KHGLUHFWLRQRIWKHFXUUHQWLVREVHUYHGRQWKHDPPHWHU
5HYHUVLQJWKHPDJQHWGLUHFWLRQZRXOGJLYHDQRSSRVLWHGHqHFWLRQRQWKHPHWHU
7KHLQGXFHGpHOG LQWKHFRLO UHSHOVWKHEDUPDJQHW
7KLVLVEHFDXVHRI/HQ]jVODZ
7KHGLUHFWLRQRIWKHLQGXFHGpHOGLQWKHFRLOSXVKHVDJDLQVWWKHFKDQJHFUHDWLQJLWLH
WKHEDUPDJQHW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
:RUNHGH[DPSOH)DUDGD\kV /HQ]kV/DZV
0DJQHWLFmX[GHQVLW\% P7 c7
$UHD$ c c c c cP
1XPEHURIWXUQV1
7LPHLQWHUYDOeW V
$QJOHEHWZHHQFRLODQGlHOGOLQHVg R
6WHS:ULWHRXWWKHHTXDWLRQIRU)DUDGD\kVODZ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DJQHWLF)LHOGV n
6WHS:ULWHRXWWKHHTXDWLRQIRUqX[OLQNDJH
d1 %$1FRV g
6WHS6XEVWLWXWHYDOXHVLQWRqX[OLQNDJHHTXDWLRQ
d1 c c c ccFRV :EWXUQV
6WHS6XEVWLWXWHqX[OLQNDJHDQGWLPHLQWR)DUDGD\kVODZHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
$OWHUQDWLQJ&XUUHQWV l
&217(176
3URSHUWLHVDQG8VHVRI$OWHUQDWLQJ&XUUHQW
$OWHUQDWLQJ&XUUHQW 9ROWDJH
5RRW0HDQ6TXDUH&XUUHQW 9ROWDJH
0HDQ3RZHU
5HFWLnFDWLRQ
6PRRWKLQJ
3523(57,(6$1'86(62)$/7(51$7,1*&855(17
$/7(51$7,1*&855(17 92/7$*(
3URSHUWLHVRI$OWHUQDWLQJ&XUUHQW 9ROWDJH
$QDOWHUQDWLQJFXUUHQW DF LVGHnQHGDV
$FXUUHQWZKLFKSHULRGLFDOO\YDULHVIURPSRVLWLYHWRQHJDWLYHDQGFKDQJHVLWV
PDJQLWXGHFRQWLQXRXVO\ZLWKWLPH
7KLVPHDQVWKHGLUHFWLRQRIDQDOWHUQDWLQJFXUUHQWYDULHVHYHU\KDOIF\FOH
7KHYDULDWLRQRIFXUUHQWRUSGZLWKWLPHFDQEHGHVFULEHGDVDVLQHFXUYHLHVLQXVRLGDO
7KHUHIRUHWKHHOHFWURQVLQDZLUHFDUU\LQJDFPRYHEDFNDQGIRUWKZLWKVLPSOH
KDUPRQLFPRWLRQ
$VZLWK6+0WKHUHODWLRQVKLSEHWZHHQWLPHSHULRG7DQGIUHTXHQF\IRIDQDOWHUQDWLQJ
FXUUHQWLVJLYHQE\
3HDNFXUUHQW , RUSHDNYROWDJH 9 LVGHnQHGDV
7KHPD[LPXPYDOXHRIWKHDOWHUQDWLQJFXUUHQWRUYROWDJH
3HDNFXUUHQWRUYROWDJHFDQEHGHWHUPLQHGIURPWKHDPSOLWXGHRIWKHJUDSK

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0DLQVHOHFWULFLW\LVVXSSOLHGDVDOWHUQDWLQJFXUUHQW
3RZHUVWDWLRQVSURGXFHDOWHUQDWLQJFXUUHQW
7KLVLVWKHW\SHRIFXUUHQWVXSSOLHGZKHQGHYLFHVDUHSOXJJHGLQWRVRFNHWV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH&DOFXODWLQJIUHTXHQF\
6WHS
:ULWHGRZQWKHSHULRGIUHTXHQF\UHODWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WHS
&DOFXODWHWKHWLPHSHULRGIURPWKHJUDSK
7KHWLPHSHULRGLVWKHWLPHWDNHQIRURQHFRPSOHWHF\FOH
)URPWKHJUDSKWKLVLVHTXDWLRQWRPV
7KHUHIRUHWKHWLPHSHULRG7 PV dV
6WHS
6XEVWLWXWHLQWRIUHTXHQF\HTXDWLRQ
([DP7LS
5HPHPEHUWRGRXEOHFKHFNWKHXQLWVRQWKHDOWHUQDWLQJFXUUHQWDQGYROWDJH
JUDSKV7KHVHDUHRIWHQVKRZQLQWKHUDQJHRIPLOOLVHFRQGV PV LQVWHDGRI
VHFRQGV V RQWKH[D[LV
8VLQJ6LQXVRLGDO5HSUHVHQWDWLRQV
7KHHTXDWLRQUHSUHVHQWLQJDOWHUQDWLQJFXUUHQWZKLFKJLYHVWKHYDOXHRIWKHFXUUHQW,DWDQ\
WLPHWLV
, ,VLQ gW
:KHUH
, FXUUHQW $
, SHDNFXUUHQW $
k DQJXODUIUHTXHQF\RIWKHVXSSO\ UDGV
W WLPH V
1RWHWKLVDVLQHIXQFWLRQVLQFHWKHDOWHUQDWLYHFXUUHQWJUDSKLVVLQXVRLGDO
$VLPLODUHTXDWLRQFDQEHXVHGIRUUHSUHVHQWLQJDOWHUQDWLQJYROWDJH
9 9VLQ gW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:KHUH
9 YROWDJH 9
9 SHDNYROWDJH 9
5HFDOOWKHUHODWLRQWKHHTXDWLRQIRUDQJXODUIUHTXHQF\k

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH8VLQJVLQXVRLGDOUHSUHVHQWDWLRQV
6WHS:ULWHRXWWKHHTXDWLRQIRUDOWHUQDWLQJFXUUHQW
, ,VLQ gW
6WHS:ULWHRXWWKHHTXDWLRQIRUDQJXODUIUHTXHQF\
6WHS0HDVXUHWKHWLPHSHULRG7DQGSHDNFXUUHQW,IURPWKHJUDSK
7KHWLPHSHULRGLVWKHWLPHWDNHQIRURQHIXOOF\FOH7 V
3HDNFXUUHQW DPSOLWXGH , $

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WHS6XEVWLWXWHYDOXHVLQWRDOWHUQDWLQJFXUUHQWHTXDWLRQDWWLPHW
8VLQJWKHWLPHJLYHQLQWKHTXHVWLRQW V
([DP7LS
5HPHPEHUWRFKHFNWKDW\RXUFDOFXODWRULVLQUDGLDQVPRGHZKHQXVLQJDQ\

RIWKHVHHTXDWLRQV7KLVLVEHFDXVHDQJXODUIUHTXHQF\kLVPHDVXUHGLQUDGV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
52270($1648$5(&855(17 92/7$*(
5RRW0HDQ6TXDUH&XUUHQW 9ROWDJH
5RRWPHDQVTXDUH UPV YDOXHVRIFXUUHQWRUYROWDJHDUHDXVHIXOZD\RIFRPSDULQJDF

FXUUHQWRUYROWDJHWRLWVHTXLYDOHQWGLUHFWFXUUHQWRUYROWDJH
7KHUPVYDOXHVUHSUHVHQWWKHGFFXUUHQWRUYROWDJHYDOXHVWKDWZLOOSURGXFHWKHVDPH
KHDWLQJHhHFWRUSRZHUGLVVLSDWLRQDVWKHDOWHUQDWLQJFXUUHQWRUYROWDJH
7KHUPVYDOXHRIDQDOWHUQDWLQJFXUUHQWLVGHnQHGDV
7KHYDOXHRIDFRQVWDQWFXUUHQWWKDWSURGXFHVWKHVDPHSRZHULQDUHVLVWRUDVWKH
DOWHUQDWLQJFXUUHQW
7KHUPVFXUUHQW,UPVLVGHnQHGE\WKHHTXDWLRQ
6RUPVFXUUHQWLVHTXDOWRe,ZKLFKLVDERXWRIWKHSHDNFXUUHQW,
7KHUPVYDOXHRIDQDOWHUQDWLQJYROWDJHLVGHnQHGDV
7KHYDOXHRIDFRQVWDQWYROWDJHWKDWSURGXFHVWKHVDPHSRZHULQDUHVLVWRU
DVWKHDOWHUQDWLQJYROWDJH
7KHUPVYROWDJH9UPVLVGHnQHGE\WKHHTXDWLRQ
:KHUH
, SHDNFXUUHQW $
9 SHDNYROWDJH 9
7KHUPVYDOXHLVWKHUHIRUHGHnQHGDV
7KHVWHDG\GLUHFWFXUUHQWRUYROWDJHWKDWGHOLYHUVWKHVDPHDYHUDJHSRZHU
LQDUHVLVWRUDVWKHDOWHUQDWLQJFXUUHQWRUYROWDJH
$UHVLVWLYHORDGLVDQ\HOHFWULFDOFRPSRQHQWZLWKUHVLVWDQFHHJDODPS

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH'HWHUPLQLQJWKHUPVFXUUHQW
6WHS:ULWHRXWWKHHTXDWLRQIRUUPVFXUUHQW
6WHS'HWHUPLQHWKHSHDNYROWDJH,
7KHDOWHUQDWLQJFXUUHQWHTXDWLRQLVLQWKHIRUP, ,VLQ gW
&RPSDULQJWKLVWR, VLQ gW PHDQVWKHSHDNFXUUHQWLV,

$
6WHS6XEVWLWXWHLQWRWKH,UPVHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0($132:(5
0HDQ3RZHU
,QPDLQVHOHFWULFLW\FXUUHQWDQGYROWDJHDUHYDU\LQJDOOWKHWLPH
7KLVDOVRPHDQVWKHSRZHUYDULHVFRQVWDQWO\UHFDOOWKHHTXDWLRQVIRUSRZHU
:KHUH
, GLUHFWFXUUHQW $
9 GLUHFWYROWDJH $
5 UHVLVWDQFH f
7KHUPVYDOXHVPHDQVHTXDWLRQVXVHGIRUGLUHFWFXUUHQWDQGYROWDJHFDQQRZEHDSSOLHGWR
DOWHUQDWLQJFXUUHQWDQGYROWDJH
7KH\DUHDOVRXVHGGHWHUPLQLQJDQDYHUDJHFXUUHQWRUYROWDJHIRUDOWHUQDWLQJVXSSOLHV
5HFDOOWKHHTXDWLRQIRUSHDNFXUUHQW
7KHUHIRUHWKHSHDN PD[LPXP SRZHULVUHODWHGWRWKHPHDQ DYHUDJH SRZHUE\
7KHUHIRUHLWFDQEHFRQFOXGHGWKDW
7KHPHDQSRZHULQDUHVLVWLYHORDGLVKDOIWKHPD[LPXPSRZHUIRUD
VLQXVRLGDODOWHUQDWLQJFXUUHQWRUYROWDJH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH&DOFXODWLQJPHDQSRZHU
5HVLVWDQFH5 f
3HDNYROWDJH9 9
6WHS:ULWHRXWWKHHTXDWLRQIRUWKHSHDNSRZHUDQGFDOFXODWH
6WHS&DOFXODWHWKHPHDQSRZHU
7KHPHDQSRZHULVKDOIRIWKHPD[LPXP SHDN SRZHU
0HDQSRZHU :

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
5(&7,),&$7,21
5HFWLnFDWLRQ*UDSKV
5HFWLnFDWLRQLVGHnQHGDV
7KHSURFHVVRIFRQYHUWLQJDOWHUQDWLQJFXUUHQWDQGYROWDJHLQWRGLUHFW
FXUUHQWDQGYROWDJH
5HFWLnFDWLRQLVXVHGLQHOHFWURQLFHTXLSPHQWZKLFKUHTXLUHVDGLUHFWFXUUHQW
)RUH[DPSOHPDLQVYROWDJHPXVWEHUHFWLnHGIURPWKHDOWHUQDWLQJYROWDJHSURGXFHG
DWSRZHUVWDWLRQV
7KHUHDUHWZRW\SHVRIUHFWLnFDWLRQ
+DOIZDYHUHFWLnFDWLRQ
)XOOZDYHUHFWLnFDWLRQ
)RUKDOIZDYHUHFWLnFDWLRQ
7KHJUDSKRIWKHRXWSXWYROWDJH9RXWDJDLQVWWLPHLVDVLQHFXUYHZLWKWKHSRVLWLYH
F\FOHVDQGDoDWOLQH 9RXW RQWKHQHJDWLYHF\FOH
7KLVLVEHFDXVHWKHGLRGHRQO\FRQGXFWVLQWKHSRVLWLYHGLUHFWLRQ
)RUIXOOZDYHUHFWLnFDWLRQ
7KHJUDSKRIWKHRXWSXWYROWDJH9RXWDJDLQVWWLPHLVDVLQHFXUYHZKHUHWKHSRVLWLYH
F\FOHVDQGWKHQHJDWLYHF\FOHVDUHERWKFXUYHGiEXPSVj
+DOI:DYH5HFWLnFDWLRQ
+DOIZDYHUHFWLnFDWLRQFRQVLVWVRIDVLQJOHGLRGH
$QDOWHUQDWLQJLQSXWYROWDJHLVFRQQHFWHGWRDFLUFXLWZLWKDORDGUHVLVWRUDQGGLRGHLQ
VHULHV
7KHGLRGHZLOORQO\FRQGXFWGXULQJWKHSRVLWLYHF\FOHVRIWKHLQSXWDOWHUQDWLQJYROWDJH
+HQFHWKHUHLVRQO\FXUUHQWLQWKHORDGUHVLVWRUGXULQJWKHVHSRVLWLYHF\FOHV
7KHRXWSXWYROWDJH9RXWDFURVVWKHUHVLVWRUZLOOoXFWXDWHDJDLQVWDJDLQVWWLPHLQWKHVDPHZD\
DVWKHLQSXWDOWHUQDWLQJYROWDJHH[FHSWWKHUHDUHQRQHJDWLYHF\FOHV
7KLVW\SHRIUHFWLnFDWLRQPHDQVKDOIRIWKHWLPHWKHYROWDJHLV]HUR
6RWKHSRZHUDYDLODEOHIURPDKDOIZDYHUHFWLnHGVXSSO\LVUHGXFHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
)XOO:DYH5HFWLnFDWLRQ
)XOOZDYHUHFWLnFDWLRQUHTXLUHVDEULGJHUHFWLnHUFLUFXLW
7KLVFRQVLVWVRIIRXUGLRGHVFRQQHFWHGDFURVVDQLQSXWDOWHUQDWLQJYROWDJHVXSSO\
7KHRXWSXWYROWDJH9RXWLVWDNHQDFURVVDORDGUHVLVWRU
'XULQJWKHSRVLWLYHF\FOHVRIWKHLQSXWYROWDJHRQHWHUPLQDOLIWKHYROWDJHVXSSO\LVSRVLWLYH
DQGWKHRWKHUQHJDWLYH
7ZRGLRGHVRSSRVLWHHDFKRWKHUWKDWDUHLQIRUZDUGELDVZLOOFRQGXFW
7KHRWKHUWZRLQUHYHUVHELDVZLOOQRWFRQGXFW
$FXUUHQWZLOOoRZLQWKHORDGUHVLVWRUZLWKWKHSRVLWLYHWHUPLQDODWWKHWRSRIWKH
UHVLVWRU
'XULQJWKHQHJDWLYHF\FOHVRIWKHLQSXWYROWDJHWKHSRVLWLYHDQGQHJDWLYHWHUPLQDOVRIWKH
LQSXWDOWHUQDWLQJYROWDJHVXSSO\ZLOOVZDS
7KHWZRGLRGHVWKDWZHUHIRUZDUGELDVZLOOQRZEHLQUHYHUVHELDVDQGQRWFRQGXFW
7KHRWKHUWZRLQUHYHUVHELDVZLOOQRZEHLQIRUZDUGELDVDQGZLOOFRQGXFW
7KHFXUUHQWLQWKHORDGUHVLVWRUZLOOVWLOOoRZLQWKHVDPHGLUHFWLRQDVEHIRUH
,QERWKWKHSRVLWLYHDQGQHJDWLYHF\FOHVWKHFXUUHQWLQWKHORDGUHVLVWRULVWKHVDPH
(DFKGLRGHSDLULVWKHVDPHDVLQKDOIZDYHUHFWLnFDWLRQ
6LQFHWKHUHDUHWZRSDLUVWKLVHTXDWHVWRIXOOZDYHUHFWLnFDWLRQRYHUDOO
7KHPDLQDGYDQWDJHRIIXOOZDYHUHFWLnFDWLRQFRPSDUHGWRKDOIZDYHUHFWLnFDWLRQLVWKDW
WKHUHLVPRUHSRZHUDYDLODEOH
7KHUHIRUHDJUHDWHUSRZHULVVXSSOLHGRQHYHU\KDOIF\FOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
'UDZSDWKRIWKHFXUUHQWGLUHFWLRQZLWKGLRGHVLQIRUZDUGELDV
5HPHPEHUWKDWFRQYHQWLRQDOFXUUHQWoRZLVIURPSRVLWLYHWRQHJDWLYHDQG
RQO\WUDYHOVWKURXJKWKHSDWKVZLWKGLRGHVLQIRUZDUGELDV
7KHUHIRUHWKHDQVZHULVGLRGHV$DQG&

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
60227+,1*
6PRRWKLQJ
,QUHFWLnFDWLRQWRSURGXFHDVWHDG\GLUHFWFXUUHQWRUYROWDJHIURPDQDOWHUQDWLQJFXUUHQWRU
YROWDJHDVPRRWKLQJFDSDFLWRULVQHFHVVDU\
6PRRWKLQJLVGHnQHGDV
7KHUHGXFWLRQLQWKHYDULDWLRQRIWKHRXWSXWYROWDJHRUFXUUHQW
7KLVZRUNVLQWKHIROORZLQJZD\V
$VLQJOHFDSDFLWRUZLWKFDSDFLWDQFH&LVFRQQHFWHGLQSDUDOOHOZLWKDORDGUHVLVWRURI
UHVLVWDQFH5
7KHFDSDFLWRUFKDUJHVXSIURPWKHLQSXWYROWDJHDQGPDLQWDLQVWKHYROWDJHDWDKLJK
OHYHO
$VLWGLVFKDUJHVJUDGXDOO\WKURXJKWKHUHVLVWRUZKHQWKHUHFWLnHGYROWDJHGURSVEXW
WKHYROWDJHWKHQULVHVDJDLQDQGWKHFDSDFLWRUFKDUJHVXSDJDLQ
7KHUHVXOWLQJJUDSKRIDVPRRWKHGRXWSXWYROWDJH9RXWDQGRXWSXWFXUUHQWDJDLQVWWLPHLVD
iULSSOHjVKDSH
7KHDPRXQWRIVPRRWKLQJLVFRQWUROOHGE\WKHFDSDFLWDQFH&RIWKHFDSDFLWRUDQGWKH
UHVLVWDQFH5RIWKHORDGUHVLVWRU
7KHOHVVWKHULSSOLQJHmHFWWKHVPRRWKHUWKHUHFWLnHGFXUUHQWDQGYROWDJHRXWSXW
7KHVORZHUWKHFDSDFLWRUGLVFKDUJHVWKHPRUHWKHVPRRWKLQJWKDWRFFXUVLHVPDOOHUULSSOHV
7KLVFDQEHDFKLHYHGE\XVLQJ
$FDSDFLWRUZLWKJUHDWHUFDSDFLWDQFH&
$UHVLVWDQFHZLWKODUJHUUHVLVWRU5
5HFDOOWKDWWKHSURGXFW5&LVWKHWLPHFRQVWDQWhRIDUHVLVWRU
7KLVPHDQVWKDWWKHWLPHFRQVWDQWRIWKHFDSDFLWRUPXVWEHJUHDWHUWKDQWKHWLPHLQWHUYDO
EHWZHHQWKHDGMDFHQWSHDNVRIWKHRXWSXWVLJQDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
:RUNHGH[DPSOH
6WHS
&DOFXODWHWKHWLPHFRQVWDQWZLWKWKHS)FDSDFLWRU
e 5& d d d dV QV
6WHS
&RPSDUHWLPHFRQVWDQWRIS)FDSDFLWRUZLWKLQWHUYDOEHWZHHQDGMDFHQWSHDNVRIWKHRXWSXW
VLJQDO
7KHWLPHLQWHUYDOEHWZHHQDGMDFHQWSHDNVLVPV
7KHWLPHFRQVWDQWRIQVLVWRRVPDOODQGWKHS)FDSDFLWRUZLOOGLVFKDUJHIDUWRR
TXLFNO\
7KHUHZRXOGEHQRVPRRWKLQJRIWKHRXWSXWYROWDJHV
7KHUHIRUHWKHS)FDSDFLWRULVQRWVXLWDEOH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
6WHS
&DOFXODWHWKHWLPHFRQVWDQWZLWKWKHd)FDSDFLWRU
e 5& d d d V
6WHS
&RPSDUHWLPHFRQVWDQWRIS)FDSDFLWRUZLWKLQWHUYDOEHWZHHQDGMDFHQWSHDNVRIWKHRXWSXW
VLJQDO
7KHWLPHFRQVWDQWRIVLVPXFKODUJHUWKDQPV
7KHFDSDFLWRUZLOOQRWGLVFKDUJHFRPSOHWHO\EHWZHHQWKHSRVLWLYHF\FOHVRIWKHKDOI
ZDYHUHFWLnHGVLJQDO
7KHUHIRUHWKHc)FDSDFLWRUZRXOGEHVXLWDEOHIRUWKHVPRRWKLQJWDVN

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
&217(176
7KH3KRWRHOHFWULF(qHFW
7KH3KRWRQ
7KH(OHFWURQYROW
7KH3KRWRHOHFWULF(qHFW%DVLFV
7KUHVKROG)UHTXHQF\
7KH:RUN)XQFWLRQ
:DYH3DUWLFOH'XDOLW\
:DYH3DUWLFOH'XDOLW\
7KHGH%URJOLH:DYHOHQJWK
4XDQWLVDWLRQRI(QHUJ\
$WRPLF(QHUJ\/HYHOV
/LQH6SHFWUD
&DOFXODWLQJ'LVFUHWH(QHUJLHV
7+(3+272(/(&75,&())(&7
7+(3+2721
7KH3DUWLFOH1DWXUHRI/LJKW
,QFODVVLFDOZDYHWKHRU\HOHFWURPDJQHWLF (0 UDGLDWLRQLVDVVXPHGWREHKDYHDVDZDYH
7KLVLVGHPRQVWUDWHGE\WKHIDFW(0UDGLDWLRQH[KLELWVSKHQRPHQDVXFKDVGLjUDFWLRQDQG
LQWHUIHUHQFH
+RZHYHUH[SHULPHQWVIURPWKHODVWFHQWXU\VXFKDVWKHSKRWRHOHFWULFHqHFWDQGDWRPLFOLQH
VSHFWUDFDQRQO\EHH[SODLQHGLI(0UDGLDWLRQLVDVVXPHGWREHKDYHDVSDUWLFOHV
7KHVHH[SHULPHQWVKDYHIRUPHGWKHEDVLVRITXDQWXPWKHRU\ZKLFKZLOOEHH[SORUHGLQ
GHWDLOLQWKLVVHFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7KH3KRWRQ
3KRWRQVDUHIXQGDPHQWDOSDUWLFOHVZKLFKPDNHXSDOOIRUPVRIHOHFWURPDJQHWLFUDGLDWLRQ
$SKRWRQLVDPDVVOHVVlSDFNHWmRUDlTXDQWXPmRIHOHFWURPDJQHWLFHQHUJ\
:KDWWKLVPHDQVLVWKDWWKHHQHUJ\LVQRWWUDQVIHUUHGFRQWLQXRXVO\EXWDVGLVFUHWHSDFNHWVRI
HQHUJ\
,QRWKHUZRUGVHDFKSKRWRQFDUULHVDVSHFLrFDPRXQWRIHQHUJ\DQGWUDQVIHUVWKLVHQHUJ\DOO
LQRQHJRUDWKHUWKDQVXSSO\LQJDFRQVLVWHQWDPRXQWRIHQHUJ\
([DP7LS
0DNHVXUH\RXOHDUQWKHGHrQLWLRQIRUDSKRWRQGLVFUHWHTXDQWLW\SDFNHW

TXDQWXPRIHOHFWURPDJQHWLFHQHUJ\DUHDOODFFHSWDEOHGHrQLWLRQV
&DOFXODWLQJ3KRWRQ(QHUJ\
7KHHQHUJ\RIDSKRWRQFDQEHFDOFXODWHGXVLQJWKHIRUPXOD
( KI
8VLQJWKHZDYHHTXDWLRQHQHUJ\FDQDOVREHHTXDOWR

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:KHUH
( HQHUJ\RIWKHSKRWRQ -
K 3ODQFN VFRQVWDQW -V
F WKHVSHHGRIOLJKW PV
I IUHTXHQF\LQ+HUW] +]
h ZDYHOHQJWK P
7KLVHTXDWLRQWHOOVXV
7KHKLJKHUWKHIUHTXHQF\RI(0UDGLDWLRQWKHKLJKHUWKHHQHUJ\RIWKHSKRWRQ
7KHHQHUJ\RIDSKRWRQLVLQYHUVHO\SURSRUWLRQDOWRWKHZDYHOHQJWK
$ORQJZDYHOHQJWKSKRWRQRIOLJKWKDVDKLJKHUHQHUJ\WKDQDVKRUWHUZDYHOHQJWK
SKRWRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOH&DOFXODWLQJSKRWRQHQHUJ\
:DYHOHQJWKg QP dP
3RZHU3 P: d:
7LPHW V
6WHS:ULWHWKHHTXDWLRQVIRUZDYHVSHHGDQGSKRWRQHQHUJ\
6WHS&DOFXODWHWKHHQHUJ\RIRQHSKRWRQ
6WHS&DOFXODWHWKHQXPEHURISKRWRQVKLWWLQJWKHVXUIDFHHYHU\VHFRQG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
6WHS&DOFXODWHWKHQXPEHURISKRWRQVWKDWKLWWKHVXUIDFHLQV
d d d
([DP7LS
7KHYDOXHVRI3ODQFNkVFRQVWDQWDQGWKHVSHHGRIOLJKWZLOODOZD\VEHJLYHQWR
\RXLQDQH[DPKRZHYHULWKHOSVWRPHPRULVHWKHPWRVSHHGXSFDOFXODWLRQ
TXHVWLRQV
3KRWRQ0RPHQWXP
(LQVWHLQVKRZHGWKDWDSKRWRQWUDYHOOLQJLQDYDFXXPKDVPRPHQWXPGHVSLWHLWKDYLQJQR
PDVV
7KHPRPHQWXP S RIDSKRWRQLVUHODWHGWRLWVHQHUJ\ ( E\WKHHTXDWLRQ
:KHUHFLVWKHVSHHGRIOLJKW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOH&DOFXODWLQJSKRWRQPRPHQWXP
3RZHU3 P: d:
)UHTXHQF\I d+]
&URVVVHFWLRQDODUHD$ dP
6WHS:ULWHWKHHTXDWLRQVIRUSKRWRQHQHUJ\DQGPRPHQWXP
SKRWRQHQHUJ\( KI
6WHS&DOFXODWHWKHSKRWRQPRPHQWXP
6WHS&DOFXODWHWKHQXPEHURISKRWRQVLQFLGHQWRQWKHSODWHHYHU\VHFRQG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
6WHS&DOFXODWHWKHIRUFHH[HUWHGRQWKHSODWHLQDVWLPHLQWHUYDO
)RUFH UDWHRIFKDQJHRIPRPHQWXP
QXPEHURISKRWRQVSHUVHFRQGdPRPHQWXPRIHDFK
SKRWRQ
d d d
d1
6WHS&DOFXODWHWKHSUHVVXUH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7+((/(&752192/7
7KH(OHFWURQYROW
7KHHOHFWURQYROWLVDXQLWZKLFKLVFRPPRQO\XVHGWRH[SUHVVYHU\VPDOOHQHUJLHV
7KLVLVEHFDXVHTXDQWXPHQHUJLHVWHQGWREHPXFKVPDOOHUWKDQ-RXOH
7KHHOHFWURQYROWLVGHULYHGIURPWKHGHrQLWLRQRISRWHQWLDOGLqHUHQFH
:KHQDQHOHFWURQWUDYHOVWKURXJKDSRWHQWLDOGLqHUHQFHHQHUJ\LVWUDQVIHUUHGEHWZHHQWZR
SRLQWVLQDFLUFXLWRUHOHFWULFrHOG
,IDQHOHFWURQZLWKDFKDUJHRIe&WUDYHOVWKURXJKDSRWHQWLDOGLqHUHQFHRI9WKH
HQHUJ\WUDQVIHUUHGLVHTXDOWR
( 49 d&d9 d-
7KHUHIRUHDQHOHFWURQYROWLVGHrQHGDV
7KHHQHUJ\JDLQHGE\DQHOHFWURQWUDYHOOLQJWKURXJKDSRWHQWLDOGLfHUHQFHRIRQH
YROW
H9 d-
5HODWLRQWRNLQHWLFHQHUJ\
:KHQDFKDUJHGSDUWLFOHLVDFFHOHUDWHGWKURXJKDSRWHQWLDOGLqHUHQFHLWJDLQVNLQHWLFHQHUJ\
,IDQHOHFWURQDFFHOHUDWHVIURPUHVWDQHOHFWURQYROWLVHTXDOWRWKHNLQHWLFHQHUJ\JDLQHG
H9 cPY
5HDUUDQJLQJWKHHTXDWLRQJLYHVWKHVSHHGRIWKHHOHFWURQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOH(OHFWURQYROWFRQYHUVLRQ
6WHS:ULWHWKHHTXDWLRQVIRUZDYHVSHHGDQGSKRWRQHQHUJ\
6WHS&DOFXODWHWKHSKRWRQHQHUJ\LQ-RXOHV
6WHS&RQYHUWWKHSKRWRQHQHUJ\LQWRHOHFWURQYROWV
H9 d--iH9GLYLGHE\d
([DP7LS
n7RFRQYHUWEHWZHHQH9DQG-
nH9o-PXOWLSO\E\e
n-oH9GLYLGHE\e

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7+(3+272(/(&75,&())(&7%$6,&6
7KH3KRWRHOHFWULF(qHFW%DVLFV
7KHSKRWRHOHFWULFHjHFWLVWKHSKHQRPHQDLQZKLFKHOHFWURQVDUHHPLWWHGIURPWKHVXUIDFH
RIDPHWDOXSRQWKHDEVRUSWLRQRIHOHFWURPDJQHWLFUDGLDWLRQ
(OHFWURQVUHPRYHGIURPDPHWDOLQWKLVPDQQHUDUHNQRZQDVSKRWRHOHFWURQV
7KHSKRWRHOHFWULFHqHFWSURYLGHVLPSRUWDQWHYLGHQFHWKDWOLJKWLVTXDQWLVHGRUFDUULHGLQ
GLVFUHWHSDFNHWV
7KLVLVVKRZQE\WKHIDFWHDFKHOHFWURQFDQDEVRUERQO\DVLQJOHSKRWRQ
7KLVPHDQVRQO\WKHIUHTXHQFLHVRIOLJKWDERYHDWKUHVKROGIUHTXHQF\ZLOOHPLWD
SKRWRHOHFWURQ
2EVHUYLQJWKH3KRWRHOHFWULF(qHFW
7KHSKRWRHOHFWULFHqHFWFDQEHREVHUYHGRQDJROGOHDIHOHFWURVFRSH
$SODWHRIPHWDOXVXDOO\]LQFLVDWWDFKHGWRDJROGOHDIZKLFKLQLWLDOO\KDVDQHJDWLYHFKDUJH
FDXVLQJLWWREHUHSHOOHGE\DFHQWUDOQHJDWLYHO\FKDUJHGURG
7KLVFDXVHVQHJDWLYHFKDUJHRUHOHFWURQVWREXLOGXSRQWKH]LQFSODWH
89OLJKWLVVKRQHRQWRWKHPHWDOSODWHOHDGLQJWRWKHHPLVVLRQRISKRWRHOHFWURQV
7KLVFDXVHVWKHH[WUDHOHFWURQVRQWKHFHQWUDOURGDQGJROGOHDIWREHUHPRYHGVRWKHJROG
OHDIEHJLQVWRIDOOEDFNWRZDUGVWKHFHQWUDOURG
7KLVLVEHFDXVHWKH\EHFRPHOHVVQHJDWLYHO\FKDUJHGDQGKHQFHUHSHOOHVV
6RPHQRWDEOHREVHUYDWLRQV
3ODFLQJWKH89OLJKWVRXUFHFORVHUWRWKHPHWDOSODWHFDXVHVWKHJROGOHDIWRIDOOPRUH
TXLFNO\
8VLQJDKLJKHUIUHTXHQF\OLJKWVRXUFHGRHVQRWFKDQJHWKHKRZTXLFNO\WKHJROGOHDI
IDOOV
8VLQJDrODPHQWOLJKWVRXUFHFDXVHVQRFKDQJHLQWKHJROGOHDIkVSRVLWLRQ
8VLQJDSRVLWLYHO\FKDUJHGSODWHDOVRFDXVHVQRFKDQJHLQWKHJROGOHDIkVSRVLWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7+5(6+2/')5(48(1&<
7KUHVKROG)UHTXHQF\ :DYHOHQJWK
7KHFRQFHSWRIDWKUHVKROGIUHTXHQF\LVUHTXLUHGLQRUGHUWRH[SODLQZK\DORZIUHTXHQF\
VRXUFHVXFKDVDrODPHQWODPSZDVXQDEOHWROLEHUDWHDQ\HOHFWURQVLQWKHJROGOHDI
H[SHULPHQW
7KHWKUHVKROGIUHTXHQF\LVGHrQHGDV
7KHPLQLPXPIUHTXHQF\RILQFLGHQWHOHFWURPDJQHWLFUDGLDWLRQUHTXLUHGWRUHPRYH
DSKRWRHOHFWURQIURPWKHVXUIDFHRIDPHWDO
7KHWKUHVKROGZDYHOHQJWKUHODWHGWRWKUHVKROGIUHTXHQF\E\WKHZDYHHTXDWLRQLVGHrQHG
DV
7KHORQJHVWZDYHOHQJWKRILQFLGHQWHOHFWURPDJQHWLFUDGLDWLRQWKDWZRXOGUHPRYHD
SKRWRHOHFWURQIURPWKHVXUIDFHRIDPHWDO
7KUHVKROGIUHTXHQF\DQGZDYHOHQJWKDUHSURSHUWLHVRIDPDWHULDODQGYDU\IURPPHWDOWR
PHWDO
([DP7LS
$XVHIXODQDORJ\IRUWKUHVKROGIUHTXHQF\LVDIDLUJURXQGFRFRQXWVK\
n2QHSHUVRQLVWKURZLQJWDEOHWHQQLVEDOOVDWWKHFRFRQXWVDQGDQRWKHU
SHUVRQKDVDSLVWRO
n1RPDWWHUKRZPDQ\RIWKHWDEOHWHQQLVEDOOVDUHWKURZQDWWKHFRFRQXWLW
ZLOOVWLOOVWD\rUPO\LQSODFHiWKLVUHSUHVHQWVWKHORZIUHTXHQF\TXDQWD
n+RZHYHUDVLQJOHVKRWIURPWKHSLVWROZLOONQRFNRqWKHFRFRQXW
LPPHGLDWHO\iWKLVUHSUHVHQWVWKHKLJKIUHTXHQF\TXDQWD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7KH3KRWRHOHFWULF(TXDWLRQ
6LQFHHQHUJ\LVDOZD\VFRQVHUYHGWKHHQHUJ\RIDQLQFLGHQWSKRWRQLVHTXDOWR
7KHWKUHVKROGHQHUJ\WKHNLQHWLFHQHUJ\RIWKHSKRWRHOHFWURQ
7KHHQHUJ\ZLWKLQDSKRWRQLVHTXDOWRKI
7KLVHQHUJ\LVWUDQVIHUUHGWRWKHHOHFWURQWRUHOHDVHLWIURPDPDWHULDO WKHZRUNIXQFWLRQ DQG
JLYHVWKHHPLWWHGSKRWRHOHFWURQWKHUHPDLQLQJDPRXQWDVNLQHWLFHQHUJ\
7KLVHTXDWLRQLVNQRZQDVWKHSKRWRHOHFWULFHTXDWLRQ
( KI dcPYPD[
6\PEROV
I WKHIUHTXHQF\RIWKHLQFLGHQWUDGLDWLRQ +]
g WKHZRUNIXQFWLRQRIWKHPDWHULDO -
cPYPD[ WKHPD[LPXPNLQHWLFHQHUJ\RIWKHSKRWRHOHFWURQV -
7KLVHTXDWLRQGHPRQVWUDWHV
,IWKHLQFLGHQWSKRWRQVGRQRWKDYHDKLJKHQRXJKIUHTXHQF\ I DQGHQHUJ\WR
RYHUFRPHWKHZRUNIXQFWLRQ g WKHQQRHOHFWURQVZLOOEHHPLWWHG
:KHQKI gZKHUHI WKUHVKROGIUHTXHQF\SKRWRHOHFWULFHPLVVLRQRQO\MXVWRFFXUV
(NPD[GHSHQGVRQO\RQWKHIUHTXHQF\RIWKHLQFLGHQWSKRWRQDQGQRWWKHLQWHQVLW\RI
WKHUDGLDWLRQ
7KHPDMRULW\RISKRWRHOHFWURQVZLOOKDYHNLQHWLFHQHUJLHVOHVVWKDQ(NPD[
*UDSKLFDO5HSUHVHQWDWLRQRI:RUN)XQFWLRQ
7KHSKRWRHOHFWULFHTXDWLRQFDQEHUHDUUDQJHGLQWRWKHVWUDLJKWOLQHHTXDWLRQ
\ P[F
&RPSDULQJWKLVWRWKHSKRWRHOHFWULFHTXDWLRQ
(NPD[ KIed
$JUDSKRIPD[LPXPNLQHWLFHQHUJ\(NPD[DJDLQVWIUHTXHQF\IFDQEHREWDLQHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7KHNH\HOHPHQWVRIWKHJUDSK
7KHZRUNIXQFWLRQgLVWKH\LQWHUFHSW
7KHWKUHVKROGIUHTXHQF\ILVWKH[LQWHUFHSW
7KHJUDGLHQWLVHTXDOWR3ODQFNkVFRQVWDQWK
7KHUHDUHQRHOHFWURQVHPLWWHGEHORZWKHWKUHVKROGIUHTXHQF\I

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOH&DOFXODWLQJZRUNIXQFWLRQ
6WHS:ULWHRXWWKHSKRWRHOHFWULFHTXDWLRQDQGUHDUUDQJHWRrWWKHHTXDWLRQRID
VWUDLJKWOLQH
( KI dcPYPD[i(NPD[ KIed
\ P[F
6WHS,GHQWLI\WKHWKUHVKROGIUHTXHQF\IURPWKH[D[LVRIWKHJUDSK
:KHQ(N I I
7KHUHIRUHWKHWKUHVKROGIUHTXHQF\LVI d+]

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
6WHS&DOFXODWHWKHZRUNIXQFWLRQ
)URPWKHJUDSKDWIcPYPD[
f KI d d d d-
6WHS&RQYHUWWKHZRUNIXQFWLRQLQWRH9
H9 d--iH9GLYLGHE\d

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7+(:25.)81&7,21
3KRWRHOHFWULF(PLVVLRQ
7KHZRUNIXQFWLRQgRUWKUHVKROGHQHUJ\RIDPDWHULDOLVGHrQHGDV
7KHPLQLPXPHQHUJ\UHTXLUHGWRUHOHDVHDSKRWRHOHFWURQIURPWKHVXUIDFHRID
PDWHULDO
&RQVLGHUWKHHOHFWURQVLQDPHWDODVWUDSSHGLQVLGHDQjHQHUJ\ZHOOkZKHUHWKHHQHUJ\
EHWZHHQWKHVXUIDFHDQGWKHWRSRIWKHZHOOLVHTXDOWRWKHZRUNIXQFWLRQg
$VLQJOHHOHFWURQDEVRUEVRQHSKRWRQ
7KHUHIRUHDQHOHFWURQFDQRQO\HVFDSHWKHVXUIDFHRIWKHPHWDOLILWDEVRUEVDSKRWRQZKLFK
KDVDQHQHUJ\HTXDOWRgRUKLJKHU
'LqHUHQWPHWDOVKDYHGLqHUHQWWKUHVKROGIUHTXHQFLHVDQGKHQFHGLqHUHQWZRUNIXQFWLRQV
8VLQJWKHZHOODQDORJ\
$PRUHWLJKWO\ERXQGHOHFWURQUHTXLUHVPRUHHQHUJ\WRUHDFKWKHWRSRIWKHZHOO
$OHVVWLJKWO\ERXQGHOHFWURQUHTXLUHVOHVVHQHUJ\WRUHDFKWKHWRSRIWKHZHOO
$ONDOLPHWDOVVXFKDVVRGLXPDQGSRWDVVLXPKDYHWKUHVKROGIUHTXHQFLHVLQWKHYLVLEOHOLJKW
UHJLRQ
7KLVLVEHFDXVHWKHDWWUDFWLYHIRUFHVEHWZHHQWKHVXUIDFHHOHFWURQVDQGSRVLWLYHPHWDO
LRQVDUHUHODWLYHO\ZHDN
7UDQVLWLRQPHWDOVVXFKDV]LQFDQGLURQKDYHWKUHVKROGIUHTXHQFLHVLQWKHXOWUDYLROHW
UHJLRQ
7KLVLVEHFDXVHWKHDWWUDFWLYHIRUFHVEHWZHHQWKHVXUIDFHHOHFWURQVDQGSRVLWLYHPHWDO
LRQVDUHPXFKVWURQJHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
/DZVRI3KRWRHOHFWULF(PLVVLRQ
2EVHUYDWLRQ
3ODFLQJWKH89OLJKWVRXUFHFORVHUWRWKHPHWDOSODWHFDXVHVWKHJROGOHDIWRIDOO
PRUHTXLFNO\
([SODQDWLRQ
3ODFLQJWKH89VRXUFHFORVHUWRWKHSODWHLQFUHDVHVWKHLQWHQVLW\LQFLGHQWRQWKH
VXUIDFHRIWKHPHWDO
,QFUHDVLQJWKHLQWHQVLW\RUEULJKWQHVVRIWKHLQFLGHQWUDGLDWLRQLQFUHDVHVWKHQXPEHU
RISKRWRHOHFWURQVHPLWWHGSHUVHFRQG
7KHUHIRUHWKHJROGOHDIORVHVQHJDWLYHFKDUJHPRUHUDSLGO\
2EVHUYDWLRQ
8VLQJDKLJKHUIUHTXHQF\OLJKWVRXUFHGRHVQRWFKDQJHWKHKRZTXLFNO\WKHJROGOHDI
IDOOV
([SODQDWLRQ
7KHPD[LPXPNLQHWLFHQHUJ\RIWKHHPLWWHGHOHFWURQVLQFUHDVHVZLWKWKHIUHTXHQF\RI
WKHLQFLGHQWUDGLDWLRQ
,QWKHFDVHRIWKHSKRWRHOHFWULFHqHFWHQHUJ\DQGIUHTXHQF\DUHLQGHSHQGHQWRIWKH
LQWHQVLW\RIWKHUDGLDWLRQ
6RWKHLQWHQVLW\RIWKHLQFLGHQWUDGLDWLRQDqHFWVKRZTXLFNO\WKHJROGOHDIIDOOVQRW
WKHIUHTXHQF\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
2EVHUYDWLRQ
8VLQJDrODPHQWOLJKWVRXUFHFDXVHVQRFKDQJHLQWKHJROGOHDIkVSRVLWLRQ
([SODQDWLRQ
,IWKHLQFLGHQWIUHTXHQF\LVEHORZDFHUWDLQWKUHVKROGIUHTXHQF\QRHOHFWURQVDUH
HPLWWHGQRPDWWHUWKHLQWHQVLW\RIWKHUDGLDWLRQ
$rODPHQWOLJKWVRXUFHKDVDIUHTXHQF\EHORZWKHWKUHVKROGIUHTXHQF\RIWKHPHWDO
VRQRSKRWRHOHFWURQVDUHUHOHDVHG
2EVHUYDWLRQ
8VLQJDSRVLWLYHO\FKDUJHGSODWHFDXVHVQRFKDQJHLQWKHJROGOHDIkVSRVLWLRQ
([SODQDWLRQ
,IWKHSODWHLVSRVLWLYHO\FKDUJHGWKDWPHDQVWKHUHLVDQH[FHVVRISRVLWLYHFKDUJHRQ
WKHVXUIDFHRIWKHPHWDOSODWH
(OHFWURQVDUHQHJDWLYHO\FKDUJHGVRWKH\ZLOOQRWEHHPLWWHGXQOHVVWKH\DUHRQWKH
VXUIDFHRIWKHPHWDO
$Q\HOHFWURQVHPLWWHGZLOOEHDWWUDFWHGEDFNE\SRVLWLYHFKDUJHVRQWKHVXUIDFHRIWKH
PHWDO
2EVHUYDWLRQ
(PLVVLRQRISKRWRHOHFWURQVKDSSHQVDVVRRQDVWKHUDGLDWLRQLVLQFLGHQWRQWKH
VXUIDFHRIWKHPHWDO
([SODQDWLRQ
$VLQJOHSKRWRQLQWHUDFWVZLWKDVLQJOHHOHFWURQ
,IWKHHQHUJ\RIWKHSKRWRQLVHTXDOWRWKHZRUNIXQFWLRQRIWKHPHWDOSKRWRHOHFWURQV
ZLOOEHUHOHDVHGLQVWDQWDQHRXVO\
,QWHQVLW\ 3KRWRHOHFWULF&XUUHQW
7KHPD[LPXPNLQHWLFHQHUJ\RIWKHSKRWRHOHFWURQVLVLQGHSHQGHQWRIWKHLQWHQVLW\RI
WKHLQFLGHQWUDGLDWLRQ
7KLVLVEHFDXVHHDFKHOHFWURQFDQRQO\DEVRUERQHSKRWRQ
.LQHWLFHQHUJ\LVRQO\GHSHQGHQWRQWKHIUHTXHQF\RIWKHLQFLGHQWUDGLDWLRQ
,QWHQVLW\LVDPHDVXUHRIWKHQXPEHURISKRWRQVLQFLGHQWRQWKHVXUIDFHRIWKHPHWDO
6RLQFUHDVLQJWKHQXPEHURIHOHFWURQVVWULNLQJWKHPHWDOZLOOQRWLQFUHDVHWKHNLQHWLFHQHUJ\
RIWKHHOHFWURQVLWZLOOLQFUHDVHWKHQXPEHURISKRWRHOHFWURQVHPLWWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
3KRWRHOHFWULF&XUUHQW
7KHSKRWRHOHFWULFFXUUHQWLVWKHQXPEHURISKRWRHOHFWURQVHPLWWHGSHUVHFRQG
3KRWRHOHFWULFFXUUHQWLVSURSRUWLRQDOWRWKHLQWHQVLW\RIWKHUDGLDWLRQLQFLGHQWRQWKH
VXUIDFHRIWKHPHWDO
7KLVLVEHFDXVHLQWHQVLW\LVSURSRUWLRQDOWRWKHQXPEHURISKRWRQVVWULNLQJWKHPHWDOSHU
VHFRQG
6LQFHHDFKSKRWRHOHFWURQDEVRUEVDVLQJOHSKRWRQWKHSKRWRHOHFWULFFXUUHQWPXVWEH
SURSRUWLRQDOWRWKHLQWHQVLW\RIWKHLQFLGHQWUDGLDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:$9(3$57,&/('8$/,7<
:$9(3$57,&/('8$/,7<
:DYH3DUWLFOH'XDOLW\
/LJKWZDYHVFDQEHKDYHOLNHSDUWLFOHVLHSKRWRQVDQGZDYHV
7KLVSKHQRPHQDLVFDOOHGWKHZDYHSDUWLFOHQDWXUHRIOLJKWRUZDYHSDUWLFOHGXDOLW\
/LJKWLQWHUDFWVZLWKPDWWHUVXFKDVHOHFWURQVDVDSDUWLFOH
7KHHYLGHQFHIRUWKLVLVSURYLGHGE\WKHSKRWRHOHFWULFHqHFW
/LJKWSURSDJDWHVWKURXJKVSDFHDVDZDYH
7KHHYLGHQFHIRUWKLVFRPHVIURPWKHGLqUDFWLRQDQGLQWHUIHUHQFHRIOLJKWLQ<RXQJkV
'RXEOH6OLWH[SHULPHQW
/LJKWDVD3DUWLFOH
(LQVWHLQSURSRVHGWKDWOLJKWFDQEHGHVFULEHGDVDTXDQWDRIHQHUJ\WKDWEHKDYHDVSDUWLFOHV
FDOOHGSKRWRQV
7KHSKRWRQPRGHORIOLJKWH[SODLQVWKDW
(OHFWURPDJQHWLFZDYHVFDUU\HQHUJ\LQGLVFUHWHSDFNHWVFDOOHGSKRWRQV
7KHHQHUJ\RIWKHSKRWRQVDUHTXDQWLVHGDFFRUGLQJWRWKHHTXDWLRQ( KI
,QWKHSKRWRHOHFWULFHqHFWHDFKHOHFWURQFDQDEVRUERQO\DVLQJOHSKRWRQiWKLVPHDQV
RQO\WKHIUHTXHQFLHVRIOLJKWDERYHWKHWKUHVKROGIUHTXHQF\ZLOOHPLWDSKRWRHOHFWURQ
7KHZDYHWKHRU\RIOLJKWGRHVQRWVXSSRUWDWKUHVKROGIUHTXHQF\
7KHZDYHWKHRU\VXJJHVWVDQ\IUHTXHQF\RIOLJKWFDQJLYHULVHWRSKRWRHOHFWULF
HPLVVLRQLIWKHH[SRVXUHWLPHLVORQJHQRXJK
7KLVLVEHFDXVHWKHZDYHWKHRU\VXJJHVWVWKHHQHUJ\DEVRUEHGE\HDFKHOHFWURQZLOO
LQFUHDVHJUDGXDOO\ZLWKHDFKZDYH
)XUWKHUPRUHWKHNLQHWLFHQHUJ\RIWKHHPLWWHGHOHFWURQVVKRXOGLQFUHDVHZLWK
UDGLDWLRQLQWHQVLW\
+RZHYHULQWKHSKRWRHOHFWULFHqHFWQRQHRIWKLVLVREVHUYHG
,IWKHIUHTXHQF\LVDERYHWKHWKUHVKROGDQGWKHLQWHQVLW\RIWKHOLJKWLVLQFUHDVHGPRUH
SKRWRHOHFWURQVDUHHPLWWHGSHUVHFRQG
$OWKRXJKWKHZDYHWKHRU\SURYLGHGJRRGH[SODQDWLRQVIRUSKHQRPHQDVXFKDVLQWHUIHUHQFH
DQGGLqUDFWLRQLWIDLOHGWRH[SODLQWKHSKRWRHOHFWULFHqHFW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:DYH3DUWLFOH'XDOLW\(OHFWURQ'LqUDFWLRQ
/RXLVGH%URJOLHGLVFRYHUHGWKDWPDWWHUVXFKDVHOHFWURQVFDQEHKDYHDVDZDYH
+HVKRZHGDGLqUDFWLRQSDWWHUQLVSURGXFHGZKHQDEHDPRIHOHFWURQVLVGLUHFWHGDWDWKLQ
JUDSKLWHrOP
'LqUDFWLRQLVDSURSHUW\RIZDYHVDQGFDQQRWEHH[SODLQHGE\GHVFULELQJHOHFWURQVDV
SDUWLFOHV
,QRUGHUWRREVHUYHWKHGLqUDFWLRQRIHOHFWURQVWKH\PXVWEHIRFXVHGWKURXJKDJDSVLPLODUWR
WKHLUVL]HVXFKDVDQDWRPLFODWWLFH
*UDSKLWHrOPLVLGHDOIRUWKLVSXUSRVHEHFDXVHRILWVFU\VWDOOLQHVWUXFWXUH
7KHJDSVEHWZHHQQHLJKERXULQJSODQHVRIWKHDWRPVLQWKHFU\VWDOVDFWDVVOLWV
DOORZLQJWKHHOHFWURQZDYHVWRVSUHDGRXWDQGFUHDWHDGLqUDFWLRQSDWWHUQ
7KHGLqUDFWLRQSDWWHUQLVREVHUYHGRQWKHVFUHHQDVDVHULHVRIFRQFHQWULFULQJV
7KLVSKHQRPHQRQLVVLPLODUWRWKHGLqUDFWLRQSDWWHUQSURGXFHGZKHQOLJKWSDVVHV
WKURXJKDGLqUDFWLRQJUDWLQJ
,IWKHHOHFWURQVDFWHGDVSDUWLFOHVDSDWWHUQZRXOGQRWEHREVHUYHGLQVWHDGWKH
SDUWLFOHVZRXOGEHGLVWULEXWHGXQLIRUPO\DFURVVWKHVFUHHQ
,WLVREVHUYHGWKDWDODUJHUDFFHOHUDWLQJYROWDJHUHGXFHVWKHGLDPHWHURIDJLYHQULQJZKLOHD
ORZHUDFFHOHUDWLQJYROWDJHLQFUHDVHVWKHGLDPHWHURIWKHULQJV
,QYHVWLJDWLQJ(OHFWURQ'LqUDFWLRQ
(OHFWURQGLqUDFWLRQWXEHVFDQEHXVHGWRLQYHVWLJDWHZDYHSURSHUWLHVRIHOHFWURQV
7KHHOHFWURQVDUHDFFHOHUDWHGLQDQHOHFWURQJXQWRDKLJKSRWHQWLDOVXFKDV9DQGDUH
WKHQGLUHFWHGWKURXJKDWKLQrOPRIJUDSKLWH
7KHHOHFWURQVGLqUDFWIURPWKHJDSVEHWZHHQFDUERQDWRPVDQGSURGXFHDFLUFXODUSDWWHUQRQ
DsXRUHVFHQWVFUHHQPDGHIURPSKRVSKRU
,QFUHDVLQJWKHYROWDJHEHWZHHQWKHDQRGHDQGWKHFDWKRGHFDXVHVWKHHQHUJ\DQGKHQFH
VSHHGRIWKHHOHFWURQVWRLQFUHDVH
7KHNLQHWLFHQHUJ\RIWKHHOHFWURQVLVSURSRUWLRQDOWRWKHYROWDJHDFURVVWKHDQRGHFDWKRGH
(N cPY H9

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
7+('(%52*/,(:$9(/(1*7+
7KHGH%URJOLH:DYHOHQJWK
'H%URJOLHSURSRVHGWKDWHOHFWURQVWUDYHOWKURXJKVSDFHDVDZDYH
7KLVZRXOGH[SODLQZK\WKH\FDQH[KLELWEHKDYLRXUVXFKDVGLqUDFWLRQ
+HWKHUHIRUHVXJJHVWHGWKDWHOHFWURQVPXVWDOVRKROGZDYHSURSHUWLHVVXFKDVZDYHOHQJWK
7KLVEHFDPHNQRZQDVWKHGH%URJOLHZDYHOHQJWK
+RZHYHUKHUHDOLVHGDOOSDUWLFOHVFDQVKRZZDYHOLNHSURSHUWLHVQRWMXVWHOHFWURQV
6RWKHGH%URJOLHZDYHOHQJWKFDQEHGHrQHGDV
7KHZDYHOHQJWKDVVRFLDWHGZLWKDPRYLQJSDUWLFOH
7KHPDMRULW\RIWKHWLPHDQGIRUHYHU\GD\REMHFWVWUDYHOOLQJDWQRUPDOVSHHGVWKHGH%URJOLH
ZDYHOHQJWKLVIDUWRRVPDOOIRUDQ\TXDQWXPHqHFWVWREHREVHUYHG
$W\SLFDOHOHFWURQLQDPHWDOKDVDGH%URJOLHZDYHOHQJWKRIDERXWQP
7KHUHIRUHTXDQWXPPHFKDQLFDOHqHFWVZLOORQO\EHREVHUYDEOHZKHQWKHZLGWKRIWKHVDPSOH
LVDURXQGWKDWYDOXH
7KHHOHFWURQGLqUDFWLRQWXEHFDQEHXVHGWRLQYHVWLJDWHKRZWKHZDYHOHQJWKRIHOHFWURQV
GHSHQGVRQWKHLUVSHHG
7KHVPDOOHUWKHUDGLXVRIWKHULQJVWKHVPDOOHUWKHGH%URJOLHZDYHOHQJWKRIWKH
HOHFWURQV
$VWKHYROWDJHLVLQFUHDVHG
7KHHQHUJ\RIWKHHOHFWURQVLQFUHDVHV
7KHUDGLXVRIWKHGLqUDFWLRQSDWWHUQGHFUHDVHV
7KLVVKRZVDVWKHVSHHGRIWKHHOHFWURQVLQFUHDVHVWKHGH%URJOLHZDYHOHQJWKRIWKH
HOHFWURQVGHFUHDVHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
&DOFXODWLQJGH%URJOLH:DYHOHQJWK
8VLQJLGHDVEDVHGXSRQWKHTXDQWXPWKHRU\DQG(LQVWHLQkVWKHRU\RIUHODWLYLW\GH%URJOLH
VXJJHVWHGWKDWWKHPRPHQWXP S RIDSDUWLFOHDQGLWVDVVRFLDWHGZDYHOHQJWK h DUHUHODWHG
E\WKHHTXDWLRQ
6LQFHPRPHQWXPS PYWKHGH%URJOLHZDYHOHQJWKFDQEHUHODWHGWRWKHVSHHGRIDPRYLQJ
SDUWLFOH Y E\WKHHTXDWLRQ
6LQFHNLQHWLFHQHUJ\( dPY
0RPHQWXPDQGNLQHWLFHQHUJ\FDQEHUHODWHGE\
&RPELQLQJWKLVZLWKWKHGH%URJOLHHTXDWLRQJLYHVDIRUPZKLFKUHODWHVWKHGH%URJOLH
ZDYHOHQJWKRIDSDUWLFOHWRLWVNLQHWLFHQHUJ\
:KHUH
h WKHGH%URJOLHZDYHOHQJWK P
K 3ODQFNkVFRQVWDQW -V
S PRPHQWXPRIWKHSDUWLFOH NJPV
( NLQHWLFHQHUJ\RIWKHSDUWLFOH -
P PDVVRIWKHSDUWLFOH NJ
Y VSHHGRIWKHSDUWLFOH PV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOHGH%URJOLHZDYHOHQJWK
6WHS
&RQVLGHUKRZWKHSURWRQDQGHOHFWURQFDQEHUHODWHGYLDWKHLUPDVVHV
7KHSURWRQDQGHOHFWURQDUHDFFHOHUDWHGWKURXJKWKHVDPHSGWKHUHIRUHWKH\ERWKKDYH
WKHVDPHNLQHWLFHQHUJ\
6WHS
:ULWHWKHHTXDWLRQZKLFKUHODWHVWKHGH%URJOLHZDYHOHQJWKRIDSDUWLFOHWRLWVNLQHWLFHQHUJ\
6WHS
&DOFXODWHWKHUDWLR
7KLVPHDQVWKHGH%URJOLHZDYHOHQJWKRIWKHSURWRQLVWLPHVVPDOOHUWKDQWKDWRIWKH
HOHFWURQ25WKHGH%URJOLHZDYHOHQJWKRIWKHHOHFWURQLVDERXWWLPHVODUJHUWKDQWKDWRI
WKHSURWRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
48$17,6$7,212)(1(5*<
$720,&(1(5*</(9(/6
$WRPLF(QHUJ\/HYHOV
(OHFWURQVLQDQDWRPFDQKDYHRQO\FHUWDLQVSHFLrFHQHUJLHV
7KHVHHQHUJLHVDUHFDOOHGHOHFWURQHQHUJ\OHYHOV
7KH\FDQEHUHSUHVHQWHGDVDVHULHVRIVWDFNHGKRUL]RQWDOOLQHVLQFUHDVLQJLQHQHUJ\
1RUPDOO\HOHFWURQVRFFXS\WKHORZHVWHQHUJ\OHYHODYDLODEOHWKLVLVNQRZQDVWKHJURXQG
VWDWH
(OHFWURQVFDQJDLQHQHUJ\DQGPRYHXSWKHHQHUJ\OHYHOVLILWDEVRUEVHQHUJ\HLWKHUE\
&ROOLVLRQVZLWKRWKHUDWRPVRUHOHFWURQV
$EVRUELQJDSKRWRQ
$SK\VLFDOVRXUFHVXFKDVKHDW
7KLVLVNQRZQDVH[FLWDWLRQDQGZKHQHOHFWURQVPRYHXSDQHQHUJ\OHYHOWKH\DUHVDLGWR
EHLQDQH[FLWHGVWDWH
,IWKHHOHFWURQJDLQVHQRXJKHQHUJ\WREHUHPRYHGIURPWKHDWRPHQWLUHO\WKLVLVNQRZQDV
LRQLVDWLRQ
:KHQDQHOHFWURQUHWXUQVWRDORZHUHQHUJ\VWDWHIURPDKLJKHUH[FLWHGVWDWHLWUHOHDVHV
HQHUJ\LQWKHIRUPRIDSKRWRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
/,1(63(&75$
/LQH6SHFWUD
/LQHVSHFWUDLVDSKHQRPHQRQZKLFKRFFXUVZKHQH[FLWHGDWRPVHPLWOLJKWRIFHUWDLQ
ZDYHOHQJWKVZKLFKFRUUHVSRQGWRGLqHUHQWFRORXUV
7KHHPLWWHGOLJKWFDQEHREVHUYHGDVDVHULHVRIFRORXUHGOLQHVZLWKGDUNVSDFHVLQEHWZHHQ
7KHVHVHULHVRIFRORXUHGOLQHVDUHFDOOHGOLQHRUDWRPLFVSHFWUD
(DFKHOHPHQWSURGXFHVDXQLTXHVHWRIVSHFWUDOOLQHV
1RWZRHOHPHQWVHPLWWKHVDPHVHWRIVSHFWUDOOLQHVWKHUHIRUHHOHPHQWVFDQEHLGHQWLrHGE\
WKHLUOLQHVSHFWUXP
7KHUHDUHWZRW\SHVRIOLQHVSHFWUDHPLVVLRQVSHFWUDDQGDEVRUSWLRQVSHFWUD
(PLVVLRQ6SHFWUD
:KHQDQHOHFWURQWUDQVLWLRQVIURPDKLJKHUHQHUJ\OHYHOWRDORZHUHQHUJ\OHYHOWKLVUHVXOWV
LQWKHHPLVVLRQRIDSKRWRQ
(DFKWUDQVLWLRQFRUUHVSRQGVWRDGLqHUHQWZDYHOHQJWKRIOLJKWDQGWKLVFRUUHVSRQGVWRDOLQHLQ
WKHVSHFWUXP
7KHUHVXOWLQJHPLVVLRQVSHFWUXPFRQWDLQVDVHWRIGLVFUHWHZDYHOHQJWKVUHSUHVHQWHGE\
FRORXUHGOLQHVRQDEODFNEDFNJURXQG
(DFKHPLWWHGSKRWRQKDVDZDYHOHQJWKZKLFKLVDVVRFLDWHGZLWKDGLVFUHWHFKDQJHLQHQHUJ\
DFFRUGLQJWRWKHHTXDWLRQ
:KHUH
f( FKDQJHLQHQHUJ\OHYHO -
I IUHTXHQF\RISKRWRQ +]
h ZDYHOHQJWKRIWKHSKRWRQ P
7KHUHIRUHWKLVLVHYLGHQFHWRVKRZWKDWHOHFWURQVLQDWRPVFDQRQO\WUDQVLWLRQEHWZHHQ
GLVFUHWHHQHUJ\OHYHOV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
$EVRUSWLRQ6SHFWUD
$QDWRPFDQEHUDLVHGWRDQH[FLWHGVWDWHE\WKHDEVRUSWLRQRIDSKRWRQ
:KHQZKLWHOLJKWSDVVHVWKURXJKDFRROORZSUHVVXUHJDVLWLVIRXQGWKDWOLJKWRIFHUWDLQ
ZDYHOHQJWKVDUHPLVVLQJ
7KLVW\SHRIVSHFWUXPLVFDOOHGDQDEVRUSWLRQVSHFWUXP
$QDEVRUSWLRQVSHFWUXPFRQVLVWVRIDFRQWLQXRXVVSHFWUXPFRQWDLQLQJDOOWKHFRORXUVZLWK
GDUNOLQHVDWFHUWDLQZDYHOHQJWKV
7KHVHGDUNOLQHVFRUUHVSRQGH[DFWO\WRWKHGLqHUHQFHVLQHQHUJ\OHYHOVLQDQDWRP
:KHQWKHVHHOHFWURQVUHWXUQWRORZHUOHYHOVWKHSKRWRQVDUHHPLWWHGLQDOOGLUHFWLRQVUDWKHU
WKDQLQWKHRULJLQDOGLUHFWLRQRIWKHZKLWHOLJKW
7KHUHIRUHVRPHZDYHOHQJWKVDSSHDUWREHPLVVLQJ
7KHZDYHOHQJWKVPLVVLQJIURPDQDEVRUSWLRQVSHFWUXPDUHWKHVDPHDVWKHLUFRUUHVSRQGLQJ
HPLVVLRQVSHFWUDRIWKHVDPHHOHPHQW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
&$/&8/$7,1*',6&5(7((1(5*,(6
&DOFXODWLQJ'LVFUHWH(QHUJLHV
7KHGLqHUHQFHEHWZHHQWZRHQHUJ\OHYHOVLVHTXDOWRDVSHFLrFSKRWRQHQHUJ\
7KHHQHUJ\ KI RIWKHSKRWRQLVJLYHQE\
e( KI (h(
:KHUH
( (QHUJ\RIWKHKLJKHUOHYHO -
( (QHUJ\RIWKHORZHUOHYHO -
I )UHTXHQF\RISKRWRQ +]
8VLQJWKHZDYHHTXDWLRQWKHZDYHOHQJWKRIWKHHPLWWHGRUDEVRUEHGUDGLDWLRQFDQEH
UHODWHGWRWKHHQHUJ\GLqHUHQFHE\WKHHTXDWLRQ
7KLVHTXDWLRQVKRZVWKDWWKHODUJHUWKHGLqHUHQFHLQHQHUJ\RIWZROHYHOVf(WKHVKRUWHUWKH
ZDYHOHQJWKhDQGYLFHYHUVD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
:RUNHGH[DPSOH&DOFXODWLQJGLVFUHWHHQHUJLHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
3DUW D
3KRWRQHQHUJ\DQGZDYHOHQJWKDUHLQYHUVHO\SURSRUWLRQDOVRWKHODUJHVWHQHUJ\FKDQJH
FRUUHVSRQGVWRWKHVKRUWHVWZDYHOHQJWK OLQH6 DQGWKHVPDOOHVWHQHUJ\FKDQJHFRUUHVSRQGV
WRWKHORQJHVWZDYHOHQJWK OLQH/
3DUW E
6WHS:ULWHGRZQWKHHTXDWLRQOLQNLQJWKHZDYHOHQJWKDQGWKHHQHUJ\OHYHOV
6WHS,GHQWLI\WKHHQHUJ\OHYHOVJLYLQJULVHWRWKHVKRUWHVWZDYHOHQJWK
( H9
( H9

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
4XDQWXP3K\VLFV p
6WHS&DOFXODWHWKHZDYHOHQJWK
7RFRQYHUWIURPH9o-PXOWLSO\E\e

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
&217(176
0DVV'HIHFW 1XFOHDU%LQGLQJ(QHUJ\
(QHUJ\ 0DVV(TXLYDOHQFH
1XFOHDU(TXDWLRQV
0DVV'HIHFW %LQGLQJ(QHUJ\
1XFOHDU)XVLRQ )LVVLRQ
&DOFXODWLQJ(QHUJ\5HOHDVHGLQ1XFOHDU5HDFWLRQV
5DGLRDFWLYH'HFD\
7KH5DQGRP1DWXUHRI5DGLRDFWLYH'HFD\
$FWLYLW\ 7KH'HFD\&RQVWDQW
+DOI/LIH
0$66'()(&7 18&/($5%,1',1*(1(5*<
(1(5*< 0$66(48,9$/(1&(
(QHUJ\ 0DVV(TXLYDOHQFH
(LQVWHLQVKRZHGLQKLVWKHRU\RIUHODWLYLW\WKDWPDWWHUFDQEHFRQVLGHUHGDIRUPRIHQHUJ\
DQGKHQFHKHSURSRVHG
0DVVFDQEHFRQYHUWHGLQWRHQHUJ\
(QHUJ\FDQEHFRQYHUWHGLQWRPDVV
7KLVLVNQRZQDVPDVVHQHUJ\HTXLYDOHQFHDQGFDQEHVXPPDULVHGE\WKHHTXDWLRQ
( PF

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:KHUH
( HQHUJ\ -
P PDVV NJ
6RPHH[DPSOHVRIPDVVHQHUJ\HTXLYDOHQFHDUH
7KHIXVLRQRIK\GURJHQLQWRKHOLXPLQWKHFHQWUHRIWKHVXQ
7KHmVVLRQRIXUDQLXPLQQXFOHDUSRZHUSODQWV
1XFOHDUZHDSRQV
+LJKHQHUJ\SDUWLFOHFROOLVLRQVLQSDUWLFOHDFFHOHUDWRUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
18&/($5(48$7,216
5HSUHVHQWLQJ6LPSOH1XFOHDU5HDFWLRQV
1XFOHDUUHDFWLRQVFDQEHUHSUHVHQWHGE\EDODQFHGHTXDWLRQVRIQXFOHLLQWKH$=;IRUP
7KHWRSQXPEHU$UHSUHVHQWVWKHQXFOHRQQXPEHURUWKHPDVVQXPEHU
1XFOHRQQXPEHU $ WRWDOQXPEHURISURWRQVDQGQHXWURQVLQWKHQXFOHXV
7KHORZHUQXPEHU=UHSUHVHQWVWKHSURWRQRUDWRPLFQXPEHU
3URWRQQXPEHU = WRWDOQXPEHURISURWRQVLQWKHQXFOHXV
:RUNHGH[DPSOH6LPSOHQXFOHDUUHDFWLRQV
6WHS%DODQFHWKHQXFOHRQQXPEHUV WKHWRSQXPEHU
[
6WHS5HDUUDQJHWRmQGWKHYDOXHRI[
[ ii

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
0$66'()(&7 %,1',1*(1(5*<
0DVV'HIHFW %LQGLQJ(QHUJ\
([SHULPHQWVLQWRQXFOHDUVWUXFWXUHKDYHIRXQGWKDWWKHWRWDOPDVVRIDQXFOHXVLVOHVVWKDQ
WKHVXPRIWKHPDVVHVRILWVFRQVWLWXHQWQXFOHRQV
7KLVGLlHUHQFHLQPDVVLVNQRZQDVWKHPDVVGHIHFW
0DVVGHIHFWLVGHmQHGDV
7KHGLdHUHQFHEHWZHHQDQDWRPcVPDVVDQGWKHVXPRIWKHPDVVHVRILWVSURWRQV
DQGQHXWURQV
7KHPDVVGHIHFWePRIDQXFOHXVFDQEHFDOFXODWHGXVLQJ
dP =PS $g= PQgPWRWDO
:KHUH
= SURWRQQXPEHU
$ QXFOHRQQXPEHU
PS PDVVRIDSURWRQ NJ
PQ PDVVRIDQHXWURQ NJ
PWRWDO PHDVXUHGPDVVRIWKHQXFOHXV NJ
'XHWRWKHHTXLYDOHQFHRIPDVVDQGHQHUJ\WKLVGHFUHDVHLQPDVVLPSOLHVWKDWHQHUJ\LV
UHOHDVHGLQWKHSURFHVV
6LQFHQXFOHLDUHPDGHXSRIQHXWURQVDQGSURWRQVWKHUHDUHIRUFHVRIUHSXOVLRQEHWZHHQWKH
SRVLWLYHSURWRQV
7KHUHIRUHLWWDNHVHQHUJ\LHWKHELQGLQJHQHUJ\WRKROGQXFOHRQVWRJHWKHUDVD
QXFOHXV
%LQGLQJHQHUJ\LVGHmQHGDV
7KHHQHUJ\UHTXLUHGWREUHDNDQXFOHXVLQWRLWVFRQVWLWXHQWSURWRQVDQGQHXWURQV
(QHUJ\DQGPDVVDUHSURSRUWLRQDOVRWKHWRWDOHQHUJ\RIDQXFOHXVLVOHVVWKDQWKHVXPRI
WKHHQHUJLHVRILWVFRQVWLWXHQWQXFOHRQV
7KHIRUPDWLRQRIDQXFOHXVIURPDV\VWHPRILVRODWHGSURWRQVDQGQHXWURQVLVWKHUHIRUHDQ
H[RWKHUPLFUHDFWLRQgPHDQLQJWKDWLWUHOHDVHVHQHUJ\
7KLVFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ
( dPF

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
([DP7LS
$YRLGGHVFULELQJWKHELQGLQJHQHUJ\DVWKHHQHUJ\VWRUHGLQWKHQXFOHXVgWKLV

LVQRWFRUUHFWgLWLVHQHUJ\WKDWPXVWEHSXWLQWRWKHQXFOHXVWRSXOOLWDSDUW
%LQGLQJ(QHUJ\SHU1XFOHRQ
,QRUGHUWRFRPSDUHQXFOHDUVWDELOLW\LWLVPRUHXVHIXOWRORRNDWWKHELQGLQJHQHUJ\SHU
QXFOHRQ
7KHELQGLQJHQHUJ\SHUQXFOHRQLVGHmQHGDV
7KHELQGLQJHQHUJ\RIDQXFOHXVGLYLGHGE\WKHQXPEHURIQXFOHRQVLQWKHQXFOHXV
$KLJKHUELQGLQJHQHUJ\SHUQXFOHRQLQGLFDWHVDKLJKHUVWDELOLW\
,QRWKHUZRUGVLWUHTXLUHVPRUHHQHUJ\WRSXOOWKHQXFOHXVDSDUW
,URQ $ KDVWKHKLJKHVWELQGLQJHQHUJ\SHUQXFOHRQZKLFKPDNHVLWWKHPRVWVWDEOHRI

DOOWKHHOHPHQWV
.H\)HDWXUHVRIWKH*UDSK
$WORZYDOXHVRI$
1XFOHLWHQGWRKDYHDORZHUELQGLQJHQHUJ\SHUQXFOHRQKHQFHWKH\DUHJHQHUDOO\
OHVVVWDEOH
7KLVPHDQVWKHOLJKWHVWHOHPHQWVKDYHZHDNHUHOHFWURVWDWLFIRUFHVDQGDUHWKHPRVW
OLNHO\WRXQGHUJRIXVLRQ
+HOLXP +H FDUERQ & DQGR[\JHQ 2 GRQRWmWWKHWUHQG

+HOLXPLVDSDUWLFXODUO\VWDEOHQXFOHXVKHQFHLWKDVDKLJKELQGLQJHQHUJ\SHU
QXFOHRQ
&DUERQDQGR[\JHQFDQEHFRQVLGHUHGWREHWKUHHDQGIRXUKHOLXPQXFOHL
UHVSHFWLYHO\ERXQGWRJHWKHU
$WKLJKYDOXHVRI$
7KHJHQHUDOELQGLQJHQHUJ\SHUQXFOHRQLVKLJKDQGJUDGXDOO\GHFUHDVHVZLWK$
7KLVPHDQVWKHKHDYLHVWHOHPHQWVDUHWKHPRVWXQVWDEOHDQGOLNHO\WRXQGHUJR
jVVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:RUNHGH[DPSOH%LQGLQJHQHUJ\RILURQ
6WHS&DOFXODWHWKHPDVVGHIHFW
1XPEHURISURWRQV=
1XPEHURIQHXWURQV$g= g
0DVVGHIHFWdP =PS $g= PQgPWRWDO
dP cc cc g c
dP cNJ
6WHS&DOFXODWHWKHELQGLQJHQHUJ\RIWKHQXFOHXV
%LQGLQJHQHUJ\( dPF
( c c c c-
6WHS&DOFXODWHWKHELQGLQJHQHUJ\SHUQXFOHRQ
6WHS&RQYHUWWR0H9
-hH9GLYLGHE\c
H9h0H9GLYLGHE\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
([DP7LS
&KHFNOLVWRQZKDWWRLQFOXGH DQGZKDWQRWWRLQFOXGH LQDQH[DPTXHVWLRQ

DVNLQJ\RXWRGUDZDJUDSKRIELQGLQJHQHUJ\SHUQXFOHRQDJDLQVWQXFOHRQ
QXPEHU
i<RXZLOOEHH[SHFWHGWRGUDZWKHEHVWmWFXUYH$1'DFURVVWRVKRZWKH
DQRPDO\WKDWLVKHOLXP

i'RQRWEHJLQ\RXUFXUYHDW$ WKLVLVQRWDQXFOHXV
i0DNHVXUHWRFRUUHFWO\ODEHOERWKD[HV$1'XQLWVIRUELQGLQJHQHUJ\SHU
QXFOHRQ
i<RXZLOOEHH[SHFWHGWRLQFOXGHQXPEHUVRQWKHD[HVPDLQO\DWWKHSHDNWR
VKRZWKHSRVLWLRQRILURQ )H

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
18&/($5)86,21 ),66,21
1XFOHDU)XVLRQ )LVVLRQ
1XFOHDU)XVLRQ
)XVLRQLVGHmQHGDV
7KHIXVLQJWRJHWKHURIWZRVPDOOQXFOHLWRSURGXFHDODUJHUQXFOHXV
/RZPDVVQXFOHL VXFKDVK\GURJHQDQGKHOLXP FDQXQGHUJRIXVLRQDQGUHOHDVHHQHUJ\
)RUWZRQXFOHLWRIXVHERWKQXFOHLPXVWKDYHKLJKNLQHWLFHQHUJ\
7KLVLVEHFDXVHWKHSURWRQVLQVLGHWKHQXFOHLDUHSRVLWLYHO\FKDUJHGZKLFKPHDQVWKDW
WKH\UHSHORQHDQRWKHU
,WWDNHVDJUHDWGHDORIHQHUJ\WRRYHUFRPHWKHHOHFWURVWDWLFIRUFHVRWKLVLVZK\LWLVFDQRQO\
EHDFKLHYHGLQDQH[WUHPHO\KLJKHQHUJ\HQYLURQPHQWVXFKDVVWDUhVFRUH
:KHQWZRSURWRQVIXVHWKHHOHPHQWGHXWHULXPLVSURGXFHG
,QWKHFHQWUHRIVWDUVWKHGHXWHULXPFRPELQHVZLWKDWULWLXPQXFOHXVWRIRUPDKHOLXP
QXFOHXVSOXVWKHUHOHDVHRIHQHUJ\ZKLFKSURYLGHVIXHOIRUWKHVWDUWRFRQWLQXHEXUQLQJ
1XFOHDU)LVVLRQ
)LVVLRQLVGHmQHGDV
7KHVSOLWWLQJRIDODUJHDWRPLFQXFOHXVLQWRVPDOOHUQXFOHL
+LJKPDVVQXFOHL VXFKDVXUDQLXP FDQXQGHUJRmVVLRQDQGUHOHDVHHQHUJ\
)LVVLRQPXVWmUVWEHLQGXFHGE\mULQJQHXWURQVDWDQXFOHXV
:KHQWKHQXFOHXVLVVWUXFNE\DQHXWURQLWVSOLWVLQWRWZRRUPRUHGDXJKWHUQXFOHL
'XULQJmVVLRQQHXWURQVDUHHMHFWHGIURPWKHQXFOHXVZKLFKLQWXUQFDQFROOLGHZLWKRWKHU
QXFOHLZKLFKWULJJHUVDFDVFDGHHlHFW
7KLVOHDGVWRDFKDLQUHDFWLRQZKLFKODVWVXQWLODOORIWKHPDWHULDOKDVXQGHUJRQHmVVLRQRU
WKHUHDFWLRQLVKDOWHGE\DPRGHUDWRU
1XFOHDUmVVLRQLVWKHSURFHVVZKLFKSURGXFHVHQHUJ\LQQXFOHDUSRZHUVWDWLRQVZKHUHLWLV
ZHOOFRQWUROOHG
:KHQQXFOHDUmVVLRQLVQRWFRQWUROOHGWKHFKDLQUHDFWLRQFDQFDVFDGHWRSURGXFHWKHHlHFWV
RIDQXFOHDUERPE

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
([DP7LS
:KHQDQDWRPXQGHUJRHVQXFOHDUmVVLRQWDNHQRWHWKDWH[WUDQHXWURQVDUH

HMHFWHGE\WKHQXFOHXVDQGQRWIURPWKHmVVLRQSURGXFWV
6LJQLmFDQFHRI%LQGLQJ(QHUJ\SHU1XFOHRQ
$WORZYDOXHVRI$
$WWUDFWLYHQXFOHDUIRUFHVEHWZHHQQXFOHRQVGRPLQDWHRYHUUHSXOVLYHHOHFWURVWDWLF
IRUFHVEHWZHHQSURWRQV
,QWKHULJKWFRQGLWLRQVQXFOHLXQGHUJRIXVLRQ
,QIXVLRQWKHPDVVRIWKHQXFOHXVWKDWLVFUHDWHGLVVOLJKWO\OHVVWKDQWKHWRWDOPDVVRIWKH
RULJLQDOQXFOHL
7KHPDVVGHIHFWLVHTXDOWRWKHELQGLQJHQHUJ\WKDWLVUHOHDVHGVLQFHWKHQXFOHXVWKDW
LVIRUPHGLVPRUHVWDEOH
$WKLJKYDOXHVRI$
5HSXOVLYHHOHFWURVWDWLFIRUFHVEHWZHHQIRUFHVEHJLQWRGRPLQDWHDQGWKHVHIRUFHV
WHQGWREUHDNDSDUWWKHQXFOHXVUDWKHUWKDQKROGLWWRJHWKHU
,QWKHULJKWFRQGLWLRQVQXFOHLXQGHUJRjVVLRQ
,QmVVLRQDQXQVWDEOHQXFOHXVLVFRQYHUWHGLQWRPRUHVWDEOHQXFOHLZLWKDVPDOOHUWRWDOPDVV
7KLVGLlHUHQFHLQPDVVWKHPDVVGHIHFWLVHTXDOWRWKHELQGLQJHQHUJ\WKDWLV
UHOHDVHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
&$/&8/$7,1*(1(5*<5(/($6(',118&/($55($&7,216
&DOFXODWLQJ(QHUJ\5HOHDVHGLQ1XFOHDU5HDFWLRQV
7KHELQGLQJHQHUJ\LVHTXDOWRWKHDPRXQWRIHQHUJ\UHOHDVHGLQIRUPLQJWKHQXFOHXVDQG
FDQEHFDOFXODWHGXVLQJ
( dP F
:KHUH
( %LQGLQJHQHUJ\UHOHDVHG -
eP PDVVGHIHFW NJ
F VSHHGRIOLJKW PV
7KHGDXJKWHUQXFOHLSURGXFHGDVDUHVXOWRIERWKmVVLRQDQGIXVLRQKDYHDKLJKHUELQGLQJ
HQHUJ\SHUQXFOHRQWKDQWKHSDUHQWQXFOHL
7KHUHIRUHHQHUJ\LVUHOHDVHGDVDUHVXOWRIWKHPDVVGLlHUHQFHEHWZHHQWKHSDUHQWQXFOHL
DQGWKHGDXJKWHUQXFOHL

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:RUNHGH[DPSOH&DOFXODWLQJHQHUJ\UHOHDVHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
3DUW D
6WHS%DODQFHWKHQXPEHURISURWRQVRQHDFKVLGH ERWWRPQXPEHU
c [QS ZKHUHQSLVWKHQXPEHURISURWRQVLQF
[QS g
7KHUHIRUHFPXVWEHDQHXWURQ
6WHS%DODQFHWKHQXPEHURIQXFOHRQVRQHDFKVLGH
c [
[ g
7KHUHIRUHQHXWURQVDUHJHQHUDWHGLQWKHUHDFWLRQ
3DUW E
6WHS)LQGWKHELQGLQJHQHUJ\RIHDFKQXFOHXV
7RWDOELQGLQJHQHUJ\RIHDFKQXFOHXV %LQGLQJHQHUJ\SHUQXFOHRQc0DVVQXPEHU
%LQGLQJHQHUJ\RI6U c 0H9
%LQGLQJHQHUJ\RI;H c 0H9
%LQGLQJHQHUJ\RI8 c 0H9
6WHS&DOFXODWHWKHGLlHUHQFHLQHQHUJ\EHWZHHQWKHSURGXFWVDQGUHDFWDQWV
(QHUJ\UHOHDVHGLQUHDFWLRQ (6U(;Hg(8
(QHUJ\UHOHDVHGLQUHDFWLRQ g
(QHUJ\UHOHDVHGLQUHDFWLRQ 0H9
3DUW F
6LQFHUHDFWLRQUHOHDVHVPRUHHQHUJ\WKDQUHDFWLRQLWVHQGSURGXFWVZLOOKDYHDKLJKHU
ELQGLQJHQHUJ\SHUQXFOHRQ
+HQFHWKH\ZLOOEHPRUHVWDEOH
7KLVLVEHFDXVHWKHPRUHHQHUJ\LVUHOHDVHGWKHIXUWKHULWPRYHVXSWKHJUDSKRIELQGLQJ
HQHUJ\SHUQXFOHRQDJDLQVWQXFOHRQQXPEHU $
6LQFHDWKLJKYDOXHVRI$ELQGLQJHQHUJ\SHUQXFOHRQJUDGXDOO\GHFUHDVHVZLWK$
1XFOHDUUHDFWLRQVZLOOWHQGWRIDYRXUWKHPRUHVWDEOHURXWHWKHUHIRUHUHDFWLRQLVPRUH
OLNHO\WRKDSSHQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
5$',2$&7,9('(&$<
7+(5$1'201$785(2)5$',2$&7,9('(&$<
7KH5DQGRP1DWXUHRI5DGLRDFWLYH'HFD\
5DGLRDFWLYHGHFD\LVGHmQHGDV
7KHVSRQWDQHRXVGLVLQWHJUDWLRQRIDQXFOHXVWRIRUPDPRUHVWDEOHQXFOHXV
UHVXOWLQJLQWKHHPLVVLRQRIDQDOSKDEHWDRUJDPPDSDUWLFOH
7KHUDQGRPQDWXUHRIUDGLRDFWLYHGHFD\FDQEHGHPRQVWUDWHGE\REVHUYLQJWKHFRXQWUDWHRI
D*HLJHU0XOOHU *0 WXEH
:KHQD*0WXEHLVSODFHGQHDUDUDGLRDFWLYHVRXUFHWKHFRXQWVDUHIRXQGWREH
LUUHJXODUDQGFDQQRWEHSUHGLFWHG
(DFKFRXQWUHSUHVHQWVDGHFD\RIDQXQVWDEOHQXFOHXV
7KHVHnXFWXDWLRQVLQFRXQWUDWHRQWKH*0WXEHSURYLGHHYLGHQFHIRUWKH
UDQGRPQHVVRIUDGLRDFWLYHGHFD\
&KDUDFWHULVWLFVRI5DGLRDFWLYH'HFD\
5DGLRDFWLYHGHFD\LVERWKVSRQWDQHRXVDQGUDQGRP
$VSRQWDQHRXVSURFHVVLVGHmQHGDV
$SURFHVVZKLFKFDQQRWEHLQeXHQFHGE\HQYLURQPHQWDOIDFWRUV
7KLVPHDQVUDGLRDFWLYHGHFD\FDQQRWEHDlHFWHGE\HQYLURQPHQWDOIDFWRUVVXFKDV
7HPSHUDWXUH
3UHVVXUH
&KHPLFDOFRQGLWLRQV
$UDQGRPSURFHVVLVGHmQHGDV
$SURFHVVLQZKLFKWKHH[DFWWLPHRIGHFD\RIDQXFOHXVFDQQRWEHSUHGLFWHG
,QVWHDGWKHQXFOHXVKDVDFRQVWDQWSUREDELOLW\LHWKHVDPHFKDQFHRIGHFD\LQJLQDJLYHQ
WLPH
7KHUHIRUHZLWKODUJHQXPEHUVRIQXFOHLLWLVSRVVLEOHWRVWDWLVWLFDOO\SUHGLFWWKHEHKDYLRXURI
WKHHQWLUHJURXS

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
([DP7LS
0DNHVXUH\RXFDQGHmQHZKDWFRQVWLWXWHVDUDGLRDFWLYHGHFD\DUDQGRP
SURFHVVDQGDVSRQWDQHRXVGHFD\gWKHVHDUHDOOYHU\FRPPRQH[DP
TXHVWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
$&7,9,7< 7+('(&$<&2167$17
$FWLYLW\ 7KH'HFD\&RQVWDQW
6LQFHUDGLRDFWLYHGHFD\LVVSRQWDQHRXVDQGUDQGRPLWLVXVHIXOWRFRQVLGHUWKHDYHUDJH
QXPEHURIQXFOHLZKLFKDUHH[SHFWHGWRGHFD\SHUXQLWWLPH
7KLVLVNQRZQDVWKHDYHUDJHGHFD\UDWH
$VDUHVXOWHDFKUDGLRDFWLYHHOHPHQWFDQEHDVVLJQHGDGHFD\FRQVWDQW
7KHGHFD\FRQVWDQWfLVGHmQHGDV
7KHSUREDELOLW\WKDWDQLQGLYLGXDOQXFOHXVZLOOGHFD\SHUXQLWRIWLPH
:KHQDVDPSOHLVKLJKO\UDGLRDFWLYHWKLVPHDQVWKHQXPEHURIGHFD\VSHUXQLWWLPHLVYHU\
KLJK
7KLVVXJJHVWVLWKDVDKLJKOHYHORIDFWLYLW\
$FWLYLW\RUWKHQXPEHURIGHFD\VSHUXQLWWLPHFDQEHFDOFXODWHGXVLQJ
:KHUH
$ DFWLYLW\RIWKHVDPSOH %T
e1 QXPEHURIGHFD\HGQXFOHL
eW WLPHLQWHUYDO V
f GHFD\FRQVWDQW V
1 QXPEHURIQXFOHLUHPDLQLQJLQDVDPSOH
7KHDFWLYLW\RIDVDPSOHLVPHDVXUHGLQ%HFTXHUHOV %T
$QDFWLYLW\RI%TLVHTXDOWRRQHGHFD\SHUVHFRQGRUV
7KLVHTXDWLRQVKRZV
7KHJUHDWHUWKHGHFD\FRQVWDQWWKHJUHDWHUWKHDFWLYLW\RIWKHVDPSOH
7KHDFWLYLW\GHSHQGVRQWKHQXPEHURIXQGHFD\HGQXFOHLUHPDLQLQJLQWKHVDPSOH
7KHPLQXVVLJQLQGLFDWHVWKDWWKHQXPEHURIQXFOHLUHPDLQLQJGHFUHDVHVZLWKWLPHg
KRZHYHUIRUFDOFXODWLRQVLWFDQEHRPLWWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:RUNHGH[DPSOH'HFD\FRQVWDQW
3DUW D
0DVV fJ cJ
0ROHFXODUPDVVRIDPHULFLXP
6WHS:ULWHGRZQWKHHTXDWLRQUHODWLQJQXPEHURIQXFOHLPDVVDQGPROHFXODUPDVV
ZKHUH1$LVWKH$YRJDGURFRQVWDQW
6WHS&DOFXODWHWKHQXPEHURIQXFOHL
3DUW E
6WHS:ULWHWKHHTXDWLRQIRUDFWLYLW\
$FWLYLW\$ e1
6WHS5HDUUDQJHIRUGHFD\FRQVWDQWfDQGFDOFXODWHWKHDQVZHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
7KH([SRQHQWLDO1DWXUHRI5DGLRDFWLYH'HFD\
,QUDGLRDFWLYHGHFD\WKHQXPEHURIQXFOHLIDOOVYHU\UDSLGO\ZLWKRXWHYHUUHDFKLQJ]HUR
6XFKDPRGHOLVNQRZQDVH[SRQHQWLDOGHFD\
7KHJUDSKRIQXPEHURIXQGHFD\HGQXFOHLDQGWLPHKDVDYHU\GLVWLQFWLYHVKDSH
(TXDWLRQVIRU5DGLRDFWLYH'HFD\
7KHQXPEHURIXQGHFD\HGQXFOHL1FDQEHUHSUHVHQWHGLQH[SRQHQWLDOIRUPE\WKHHTXDWLRQ
1 1HgeW
:KHUH
1 WKHLQLWLDOQXPEHURIXQGHFD\HGQXFOHL ZKHQW
f GHFD\FRQVWDQW V
W WLPHLQWHUYDO V
7KHQXPEHURIQXFOHLFDQEHVXEVWLWXWHGIRURWKHUTXDQWLWLHVIRUH[DPSOHWKHDFWLYLW\$LV
GLUHFWO\SURSRUWLRQDOWR1VRLWFDQEHUHSUHVHQWHGLQH[SRQHQWLDOIRUPE\WKHHTXDWLRQ
$ $HgeW
7KHUHFHLYHGFRXQWUDWH&LVUHODWHGWRWKHDFWLYLW\RIWKHVDPSOHKHQFHLWFDQDOVREH
UHSUHVHQWHGLQH[SRQHQWLDOIRUPE\WKHHTXDWLRQ
& &HgeW
7KHH[SRQHQWLDOIXQFWLRQH
7KHV\PEROHUHSUHVHQWVWKHH[SRQHQWLDOFRQVWDQW
,WLVDSSUR[LPDWHO\HTXDOWRH
2QDFDOFXODWRULWLVVKRZQE\WKHEXWWRQH[
7KHLQYHUVHIXQFWLRQRIH[LVOQ \ NQRZQDVWKHQDWXUDOORJDULWKPLFIXQFWLRQ
7KLVLVEHFDXVHLIH[ \WKHQ[ OQ \

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:RUNHGH[DPSOH([SRQHQWLDOGHFD\
'HFD\FRQVWDQWe \HDU
7LPHLQWHUYDOW \HDUV
%RWKTXDQWLWLHVKDYHWKHVDPHXQLWVRWKHUHLVQRQHHGIRUFRQYHUVLRQ
6WHS:ULWHWKHHTXDWLRQIRUDFWLYLW\LQH[SRQHQWLDOIRUP
$ $HgeW
6WHS5HDUUDQJHWKHHTXDWLRQIRUWKHUDWLREHWZHHQ$DQG$
6WHS&DOFXODWHWKHUDWLR$$
7KHUHIRUHWKHDFWLYLW\RI6WURQWLXPGHFUHDVHVE\DIDFWRURIRU
DIWHU\HDUV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
+$/)/,)(
+DOI/LIH'HmQLWLRQ
+DOIOLIHLVGHmQHGDV
7KHWLPHWDNHQIRUWKHLQLWLDOQXPEHURIQXFOHLWRUHGXFHE\KDOI
7KLVPHDQVZKHQDWLPHHTXDOWRWKHKDOIOLIHKDVSDVVHGWKHDFWLYLW\RIWKHVDPSOHZLOODOVR
KDOI
7KLVLVEHFDXVHDFWLYLW\LVSURSRUWLRQDOWRWKHQXPEHURIXQGHFD\HGQXFOHL$j1
&DOFXODWLQJ+DOI/LIH
7RmQGDQH[SUHVVLRQIRUKDOIOLIHVWDUWZLWKWKHHTXDWLRQIRUH[SRQHQWLDOGHFD\
1 1HgeW
:KHUH
1 QXPEHURIQXFOHLUHPDLQLQJLQDVDPSOH
1 WKHLQLWLDOQXPEHURIXQGHFD\HGQXFOHL ZKHQW
f GHFD\FRQVWDQW V
W WLPHLQWHUYDO V
:KHQWLPHWLVHTXDOWRWKHKDOIOLIHWdWKHDFWLYLW\1RIWKHVDPSOHZLOOEHKDOIRILWVRULJLQDO
YDOXHVR1 d1
7KHIRUPXODFDQWKHQEHGHULYHGDVIROORZV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
7KHUHIRUHKDOIOLIHWdFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ
7KLVHTXDWLRQVKRZVWKDWKDOIOLIHWdDQGWKHUDGLRDFWLYHGHFD\UDWHFRQVWDQWfDUHLQYHUVHO\
SURSRUWLRQDO
7KHUHIRUHWKHVKRUWHUWKHKDOIOLIHWKHODUJHUWKHGHFD\FRQVWDQWDQGWKHIDVWHUWKHGHFD\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
1XFOHDU3K\VLFV k
:RUNHGH[DPSOH&DOFXODWLQJKDOIOLIH
6WHS&RQYHUWWKHKDOIOLIHLQWRVHFRQGV
\HDUV cccc cV
6WHS:ULWHWKHHTXDWLRQIRUKDOIOLIH
6WHS5HDUUDQJHIRUfDQGFDOFXODWH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
&217(176
8OWUDVRXQG ;UD\V
7KH3LH]RHOHFWULF7UDQVGXFHU
*HQHUDWLQJ 8VLQJ8OWUDVRXQG
6SHFLoF$FRXVWLF,PSHGDQFH
,QWHQVLW\5HpHFWLRQ&RHqFLHQW
$WWHQXDWLRQRI8OWUDVRXQGLQ0DWWHU
3URGXFWLRQ 8VHRI;UD\V
$WWHQXDWLRQRI;UD\VLQ0DWWHU
&RPSXWHG7RPRJUDSK\6FDQQLQJ
3(76FDQQLQJ
5DGLRDFWLYH7UDFHUV
$QQLKLODWLRQLQ3(76FDQQLQJ
'HWHFWLQJ*DPPD5D\VIURP3(76FDQQLQJ
8/75$6281' ;5$<6
7+(3,(=2(/(&75,&75$16'8&(5
7KH3LH]RHOHFWULF7UDQVGXFHU
7KHSLH]RHOHFWULFHnHFWLVGHoQHGDV
7KHDELOLW\RISDUWLFXODUPDWHULDOVWRJHQHUDWHDSRWHQWLDOGLcHUHQFH SG
E\WUDQVIHUULQJPHFKDQLFDOHQHUJ\WRHOHFWULFDOHQHUJ\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
$WUDQVGXFHULVDQ\GHYLFHWKDWFRQYHUWVHQHUJ\IURPRQHIRUPWRDQRWKHU
3LH]RHOHFWULF&U\VWDOV
$WWKHKHDUWRIDSLH]RHOHFWULFWUDQVGXFHULVDSLH]RHOHFWULFFU\VWDO
3LH]RHOHFWULFFU\VWDOVDUHPDWHULDOVZKLFKSURGXFHDSGZKHQWKH\DUHGHIRUPHG
7KLVGHIRUPDWLRQFDQEHE\FRPSUHVVLRQRUVWUHWFKLQJ
,IDSGLVDSSOLHGWRDSLH]RHOHFWULFFU\VWDOWKHQLWGHIRUPVDQGLIWKHSGLVUHYHUVHGWKHQ
LWH[SDQGV
,IWKLVLVDQDOWHUQDWLQJSGWKHQWKHFU\VWDOZLOOYLEUDWHDWWKHVDPHIUHTXHQF\DVWKH
DOWHUQDWLQJYROWDJH
&U\VWDOVPXVWEHFXWWRDFHUWDLQVL]HLQRUGHUWRLQGXFHUHVRQDQFH
2QHRIWKHPRVWFRPPRQSLH]RHOHFWULFFU\VWDOVLVTXDUW]ZKLFKLVPDGHIURPDODWWLFHRI
VLOLFRQGLR[LGHDWRPV
:KHQWKHODWWLFHLVGLVWRUWHGWKHVWUXFWXUHEHFRPHVFKDUJHGFUHDWLQJDQHOHFWULFoHOG
DQGDVDUHVXOWDQHOHFWULFFXUUHQW
,IDQHOHFWULFFXUUHQWLVDSSOLHGWRWKHFU\VWDOWKHQWKLVFDXVHVWKHVKDSHRIWKHODWWLFH
WRDOWHUQDWHZKLFKSURGXFHVDVRXQGZDYH
'XHWRWKHFRQYHQWLRQDOGLUHFWLRQRIHOHFWULFFXUUHQWLWZLOOpRZIURPWKHSRVLWLYHWR
QHJDWLYHUHJLRQRIWKHFU\VWDO
$SSOLFDWLRQVRIWKH3LH]RHOHFWULF7UDQVGXFHU
0LFURSKRQH
$SLH]RHOHFWULFPLFURSKRQHGHWHFWVSUHVVXUHYDULDWLRQVLQVRXQGZDYHV
7KHVHFDQWKHQEHFRQYHUWHGWRDQHOHFWULFDOVLJQDOIRUSURFHVVLQJ
8OWUDVRXQG
,QDSLH]RHOHFWULFWUDQVGXFHUDQDOWHUQDWLQJSGLVDSSOLHGWRSURGXFHXOWUDVRXQG
ZDYHVDQGVHQWLQWRWKHSDWLHQWjVERG\
7KHUHWXUQLQJXOWUDVRXQGZDYHVLQGXFHDSGLQWKHWUDQVGXFHUIRUDQDO\VLVE\D
KHDOWKFDUHSURIHVVLRQDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
*(1(5$7,1* 86,1*8/75$6281'
*HQHUDWLQJ8OWUDVRXQG
$QXOWUDVRXQGLVGHoQHGDV
$KLJKIUHTXHQF\VRXQGDERYHWKHUDQJHRIKXPDQKHDULQJ
7KLVLVDERYHN+]DOWKRXJKLQPHGLFDODSSOLFDWLRQVWKHIUHTXHQFLHVFDQEHXSWRWKH0+]
UDQJH
$QXOWUDVRXQGWUDQVGXFHULVPDGHXSRIDSLH]RHOHFWULFFU\VWDODQGHOHFWURGHVZKLFKSURGXFH
DQDOWHUQDWLQJSG
7KHFU\VWDOLVKHDYLO\GDPSHGXVXDOO\ZLWKHSR[\UHVLQWRVWRSWKHFU\VWDOIURPYLEUDWLQJWRR
PXFK
7KLVSURGXFHVVKRUWSXOVHVDQGLQFUHDVHVWKHUHVROXWLRQRIWKHXOWUDVRXQGGHYLFH
$SLH]RHOHFWULFFU\VWDOFDQDFWDVERWKDUHFHLYHURUWUDQVPLWWHURIXOWUDVRXQG
:KHQLWLVUHFHLYLQJXOWUDVRXQGLWFRQYHUWVWKHVRXQGZDYHVLQWRDQDOWHUQDWLQJSG
:KHQLWLVWUDQVPLWWLQJXOWUDVRXQGLWFRQYHUWVDQDOWHUQDWLQJSGLQWRVRXQGZDYHV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH
*HQHUDWLRQ
$QDOWHUQDWLQJSGLVDSSOLHGDFURVVDSLH]RHOHFWULFFU\VWDOFDXVLQJLWWRFKDQJH
VKDSH
7KHDOWHUQDWLQJSGFDXVHVWKHFU\VWDOWRYLEUDWHDQGSURGXFHXOWUDVRXQGZDYHV
7KHFU\VWDOYLEUDWHVDWWKHIUHTXHQF\RIWKHDOWHUQDWLQJSGVRWKHFU\VWDOPXVWEH
FXWWRDVSHFLoFVL]HLQRUGHUWRSURGXFHUHVRQDQFH
'HWHFWLRQ
:KHQWKHXOWUDVRXQGZDYHUHWXUQVWKHFU\VWDOYLEUDWHVZKLFKSURGXFHVDQDOWHUQDWLQJ
SGDFURVVWKHFU\VWDO
7KLVUHFHLYHGVLJQDOFDQWKHQEHSURFHVVHGDQGXVHGIRUPHGLFDOGLDJQRVLV
8VLQJ8OWUDVRXQGLQ0HGLFDO,PDJLQJ
,QDQXOWUDVRXQGVFDQQHUWKHWUDQVGXFHUVHQGVRXWDEHDPRIVRXQGZDYHVLQWRWKHERG\
7KHVRXQGZDYHVDUHUHpHFWHGEDFNWRWKHWUDQVGXFHUE\ERXQGDULHVEHWZHHQWLVVXHVLQWKH
SDWKRIWKHEHDP
)RUH[DPSOHWKHERXQGDU\EHWZHHQpXLGDQGVRIWWLVVXHRUWLVVXHDQGERQH
:KHQWKHVHHFKRHVKLWWKHWUDQVGXFHUWKH\JHQHUDWHHOHFWULFDOVLJQDOVWKDWDUHVHQWWRWKH
XOWUDVRXQGVFDQQHU
8VLQJWKHVSHHGRIVRXQGDQGWKHWLPHRIHDFKHFKRjVUHWXUQWKHVFDQQHUFDOFXODWHVWKH
GLVWDQFHIURPWKHWUDQVGXFHUWRWKHWLVVXHERXQGDU\
7KHVHGLVWDQFHVFDQEHXVHGWRJHQHUDWHWZRGLPHQVLRQDOLPDJHVRIWLVVXHVDQGRUJDQV
7KHIUHTXHQF\RIWKHXOWUDVRXQGLVLPSRUWDQWEHFDXVH
7KHKLJKHUWKHIUHTXHQF\RIWKHXOWUDVRXQGWKHKLJKHUWKHUHVROXWLRQDQGWKHVPDOOHU
VWUXFWXUHVWKDWFDQEHGLVWLQJXLVKHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
7KHXOWUDVRXQGJLYHVWZRPDLQSLHFHVRILQIRUPDWLRQDERXWWKHERXQGDU\
'HSWKWKHWLPHEHWZHHQWUDQVPLVVLRQDQGUHFHLSWRIWKHSXOVH WKHWLPHGHOD\
1DWXUHDPRXQWRIWUDQVPLWWHGLQWHQVLW\UHFHLYHG ZLOOYDU\GHSHQGLQJRQWKHW\SHRI
WLVVXH
:RUNHGH[DPSOH
$SXOVHRIXOWUDVRXQGLVHPLWWHGE\WKHSLH]RHOHFWULFFU\VWDO
7KLVLVUHpHFWHGIURPWKHERXQGDULHVEHWZHHQPHGLD
7KHUHpHFWHGSXOVHLVGHWHFWHGE\WKHXOWUDVRXQGWUDQVPLWWHU
7KHVLJQDOLVWKHQSURFHVVHGDQGGLVSOD\HGRQWKHVFUHHQIRUWKHKHDOWKFDUHZRUNHUWR
DQDO\VHDQGXVHIRUPHGLFDOGLDJQRVLV
7KHLQWHQVLW\RIWKHUHjHFWLRQJLYHVLQIRUPDWLRQDERXWWKHQDWXUHRIWKHERXQGDU\
7KHWLPHEHWZHHQWUDQVPLVVLRQDQGUHFHLSWRIWKHSXOVH WKHWLPHGHOD\ JLYHV

LQIRUPDWLRQDERXWWKHGHSWKRIWKHERXQGDU\
([DP7LS
PDUNH[DPTXHVWLRQVDERXWWKLVWRSLFDUHYHU\FRPPRQPDNHVXUH\RX
SUDFWLFHZULWLQJDERXWXVLQJDQGGHWHFWLQJXOWUDVRXQGVLQIXOOFRKHUHQW

VHQWHQFHVZLWKFRUUHFWVSHOOLQJDQGJUDPPDU:ULWLQJVKRUWRUYDJXHDQVZHUV
FRXOGORVH\RXPDUNVDVZHOODVPLVVSHOOLQJZRUGV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
63(&,),&$&2867,&,03('$1&(
6SHFLoF$FRXVWLF,PSHGDQFH
7KHDFRXVWLFLPSHGDQFH=RIDPHGLXPLVGHoQHGDV
7KHSURGXFWRIWKHVSHHGRIWKHXOWUDVRXQGLQWKHPHGLXPDQGWKHGHQVLW\
RIWKHPHGLXP
7KLVTXDQWLW\GHVFULEHVKRZPXFKUHVLVWDQFHDQXOWUDVRXQGEHDPHQFRXQWHUVDVLWSDVVHV
WKURXJKDWLVVXH
$FRXVWLFLPSHGDQFHFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ
= eF
:KHUH
= DFRXVWLFLPSHGDQFH NJPV
h WKHGHQVLW\RIWKHPDWHULDO NJP
F WKHVSHHGRIVRXQGLQWKHPDWHULDO PV
7KLVHTXDWLRQWHOOVXV
7KHKLJKHUWKHGHQVLW\RIDWLVVXHWKHJUHDWHUWKHDFRXVWLFLPSHGDQFH
7KHIDVWHUWKHXOWUDVRXQGWUDYHOVWKURXJKWKHPDWHULDOWKHJUHDWHUWKHDFRXVWLF
LPSHGDQFHDOVR
7KLVLVEHFDXVHVRXQGWUDYHOVIDVWHULQGHQVHUPDWHULDOV
6RXQGLVIDVWHVWLQVROLGVDQGVORZHVWLQJDVHV
7KHFORVHUWKHSDUWLFOHVLQWKHPDWHULDOWKHIDVWHUWKHYLEUDWLRQVFDQPRYHWKURXJK
WKHPDWHULDO

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
$WWKHERXQGDU\EHWZHHQPHGLDRIGLnHUHQWDFRXVWLFLPSHGDQFHVVRPHRIWKHZDYHHQHUJ\
LVUHjHFWHGDQGVRPHLVWUDQVPLWWHG
7KHJUHDWHUWKHGLhHUHQFHLQDFRXVWLFLPSHGDQFHEHWZHHQWKHWZRPHGLDWKHJUHDWHUWKH
UHpHFWLRQDQGWKHVPDOOHUWKHWUDQVPLVVLRQ
7ZRPDWHULDOVZLWKWKHVDPHDFRXVWLFLPSHGDQFHZRXOGJLYHQRUHpHFWLRQ
7ZRPDWHULDOVZLWKDODUJHGLnHUHQFHLQYDOXHVZRXOGJLYHPXFKODUJHUUHpHFWLRQV
$LUKDVDQDFRXVWLFLPSHGDQFHRI=DLU NJPV
6NLQKDVDQDFRXVWLFLPSHGDQFHRI=VNLQ dNJPV
7KHODUJHGLnHUHQFHPHDQVXOWUDVRXQGZRXOGEHVLJQLoFDQWO\UHpHFWHGKHQFHD
FRXSOLQJJHOLVQHFHVVDU\
7KHFRXSOLQJJHOXVHGKDVDVLPLODU=YDOXHWRVNLQPHDQLQJWKDWYHU\OLWWOHXOWUDVRXQG
LVUHpHFWHG

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH&DOFXODWLQJERQHGHQVLW\
6WHS:ULWHGRZQNQRZQTXDQWLWLHV
$FRXVWLFLPSHGDQFHRIERQH= cNJPV
6SHHGRIXOWUDVRXQGLQERQHF PV
6WHS:ULWHRXWWKHHTXDWLRQIRUDFRXVWLFLPSHGDQFH
= eF
6WHS5HDUUDQJHIRUGHQVLW\DQGFDOFXODWH
([DP7LS
$FRPPRQPLVWDNHLVWRFRQIXVHWKHFLQWKHDFRXVWLFLPSHGDQFHHTXDWLRQIRU

WKHVSHHGRIOLJKWiGRQjWGRWKLV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
,17(16,7<5()/(&7,21&2()),&,(17
,QWHQVLW\5HpHFWLRQ&RHqFLHQW
7KHLQWHQVLW\UHpHFWLRQFRHqFLHQWeLVGHoQHGDV
7KHUDWLRRIWKHLQWHQVLW\RIWKHUHeHFWHGZDYHUHODWLYHWRWKHLQFLGHQW
WUDQVPLWWHG ZDYH
7KLVFDQEHFDOFXODWHGXVLQJWKHIUDFWLRQ
:KHUH
e LQWHQVLW\UHpHFWLRQFRHqFLHQW
,5 LQWHQVLW\RIWKHUHpHFWHGZDYH :P
, LQWHQVLW\RIWKHLQFLGHQWZDYH :P
= DFRXVWLFLPSHGDQFHRIRQHPDWHULDO NJPV
= DFRXVWLFLPSHGDQFHRIDVHFRQGPDWHULDO NJPV
7KLVHTXDWLRQZLOOEHSURYLGHGRQWKHGDWDVKHHWIRU\RXUH[DP
7KLVUDWLRVKRZV
,IWKHUHLVDODUJHGLnHUHQFHEHWZHHQWKHLPSHGDQFHRIWKHWZRPDWHULDOVWKHQPRVW
RIWKHHQHUJ\ZLOOEHUHpHFWHG
,IWKHLPSHGDQFHLVWKHVDPHWKHQWKHUHZLOOEHQRUHjHFWLRQ
&RXSOLQJ0HGLXP
:KHQXOWUDVRXQGLVXVHGLQPHGLFDOLPDJLQJDFRXSOHULVQHHGHGEHWZHHQWKHWUDQVGXFHU
DQGWKHERG\
7KHVRIWWLVVXHVRIWKHERG\DUHPXFKGHQVHUWKDQDLU
,IDLULVSUHVHQWEHWZHHQWKHWUDQVGXFHUDQGWKHERG\WKHQDOPRVWDOOWKHXOWUDVRXQGHQHUJ\
ZLOOEHUHpHFWHG
7KHFRXSOLQJJHOLVSODFHGEHWZHHQWKHWUDQVGXFHUDQGWKHERG\DVVNLQDQGWKHFRXSOLQJJHO
KDYHDVLPLODUGHQVLW\VROLWWOHXOWUDVRXQGLVUHpHFWHG
7KLVLVDQH[DPSOHRILPSHGDQFHPDWFKLQJ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH,QWHQVLW\UHpHFWLRQFRHqFLHQW
3DUW D
,QFLGHQWLQWHQVLW\ 7UDQVPLWWHGLQWHQVLW\5HjHFWHGLQWHQVLW\
, ,7,5
3DUW E L
6WHS:ULWHGRZQWKHHTXDWLRQIRULQWHQVLW\UHpHFWLRQFRHqFLHQWe

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
6WHS:ULWHGRZQWKHDFRXVWLFLPSHGDQFHVIRUJHODQGVRIWWLVVXH
*HO= cNJPV
6RIWWLVVXH= cNJPV
6WHS&DOFXODWHWKHLQWHQVLW\UHpHFWLRQFRHqFLHQW
7KLVUHVXOWPHDQVWKDWRQO\RIWKHLQFLGHQWLQWHQVLW\ZLOOEHUHpHFWHG
ZLWKWKHUHPDLQLQJEHLQJWUDQVPLWWHG
3DUW E LL
6WHS:ULWHGRZQWKHDFRXVWLFLPSHGDQFHVIRUDLUDQGVRIWWLVVXH
$LU= cNJPV
6RIWWLVVXH= cNJPV
6WHS&DOFXODWHWKHLQWHQVLW\UHpHFWLRQFRHqFLHQW
7KLVUHVXOWPHDQVWKDWRIWKHLQFLGHQWLQWHQVLW\ZLOOEHUHpHFWHGZLWK
QRQHEHLQJWUDQVPLWWHG
3DUW F
$WWKHDLUVRIWWLVVXHERXQGDU\WKHLQWHQVLW\UHpHFWLRQFRHqFLHQWLVel
7KHUHIRUHZLWKRXWJHOWKHUHLVDOPRVWFRPSOHWHUHpHFWLRQiQRXOWUDVRXQGLV
WUDQVPLWWHGWKURXJKWKHVNLQ
$WWKHJHOVRIWWLVVXHERXQGDU\WKHLQWHQVLW\UHpHFWLRQFRHqFLHQWLVe
7KHUHIRUHWKHJHOHQDEOHVDOPRVWFRPSOHWHWUDQVPLVVLRQRIWKHXOWUDVRXQG
WKURXJKWKHVNLQZLWKYHU\OLWWOHUHpHFWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
$77(18$7,212)8/75$6281',10$77(5
$WWHQXDWLRQRI8OWUDVRXQGLQ0DWWHU
$WWHQXDWLRQRIXOWUDVRXQGLVGHoQHGDV
7KHUHGXFWLRQRIHQHUJ\GXHWRWKHDEVRUSWLRQRIXOWUDVRXQGDVLWWUDYHOV
WKURXJKDPDWHULDO
7KHDWWHQXDWLRQFRHqFLHQWRIWKHXOWUDVRXQGLVH[SUHVVHGLQGHFLEHOVSHUFHQWLPHWUHORVW
IRUHYHU\LQFUHPHQWDOLQFUHDVHLQPHJDKHUW]IUHTXHQF\
*HQHUDOO\G%FPLVORVWIRUHYHU\0+]
7KHLQWHQVLW\,RIWKHXOWUDVRXQGGHFUHDVHVZLWKGLVWDQFH[DFFRUGLQJWRWKHHTXDWLRQ
, ,Hgd[
:KHUH
, WKHLQWHQVLW\RIWKHLQFLGHQWEHDP :P
, WKHLQWHQVLW\RIWKHUHpHFWHGEHDP :P
g WKHDEVRUSWLRQFRHqFLHQW P
[ GLVWDQFHWUDYHOOHGWKURXJKWKHPDWHULDO P
7KHDEVRUSWLRQFRHqFLHQWgZLOOYDU\IURPPDWHULDOWRPDWHULDO
$WWHQXDWLRQLVQRWDPDMRUSUREOHPLQXOWUDVRXQGVFDQQLQJDVWKHVFDQUHOLHVRQWKHUHpHFWLRQ
RIWKHXOWUDVRXQGVDWERXQGDULHVRIPDWHULDOV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH$WWHQXDWLRQRIXOWUDVRXQG
3DUW D
6WHS
:ULWHGRZQWKHHTXDWLRQIRULQWHQVLW\UHpHFWLRQFRHqFLHQWe

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
6WHS
&DOFXODWHWKHLQWHQVLW\UHpHFWLRQFRHqFLHQW
7KLVPHDQVWKDWRIWKHLQWHQVLW\LVUHjHFWHGDWWKHLQWHUIDFHEHWZHHQIDWDQG
PXVFOH7KLVUHjHFWHGLQWHQVLW\ZLOOPRYHEDFNWKURXJKWKHIDWWRZDUGVVXUIDFH6
3DUW E
6WHS
7KHLQWHQVLW\RIWKHXOWUDVRXQGSXOVHLVDnHFWHGWLPHV
$WWHQXDWLRQIURPWKHVXUIDFH6WRWKHIDWPXVFOHERXQGDU\
5HpHFWLRQDWWKHERXQGDU\
$WWHQXDWLRQIURPWKHERXQGDU\EDFNWRWKHVXUIDFH6
$IWHUEHLQJWUDQVPLWWHGLQWKHIDWWKHLQWHQVLW\DWVXUIDFH6LVJLYHQWREH,
7KHUHIRUHWKHLQWHQVLW\LV,DWWKHIDWPXVFOHERXQGDU\DQGDVWKHXOWUDVRXQGPRYHV
WKURXJKWKHIDWLWJHWVDWWHQXDWHGDQGWKHQHZLQWHQVLW\DWWKHVXUIDFH6LVQRZ,
,QFLGHQWLQWHQVLW\HTXDOWRWKHLQWHQVLW\RIWKHUHjHFWHGSXOVH, ,cHgd[
7UDQVPLWWHGLQWHQVLW\, ,
$EVRUSWLRQFRHkFLHQWd P
7KLFNQHVVRIIDW [

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
6WHS
:ULWHRXWWKHHTXDWLRQIRUDWWHQXDWLRQ
, ,Hgd[
6WHS
6XEVWLWXWHLQYDOXHVIRULQWHQVLW\DQGVLPSOLI\
, >,cHgd[@cHgd[
Hgd[
6WHS
5HDUUDQJHDQGWDNHWKHQDWXUDOORJRIERWKVLGHV
6WHS
5HDUUDQJHDQGFDOFXODWHWKHWKLFNQHVV[
([DP7LS
7KHLQWHQVLW\HTXDWLRQZLOOQRWEHSURYLGHGIRU\RXRQ\RXUH[DPGDWDVKHHW

VRPDNHVXUH\RXUHPHPEHUWKLV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
352'8&7,21 86(2);5$<6
3URGXFWLRQRI;UD\V
;UD\VDUHVKRUWZDYHOHQJWKKLJKIUHTXHQF\SDUWRIWKHHOHFWURPDJQHWLFVSHFWUXP
7KH\KDYHZDYHOHQJWKVLQWKHUDQJHkWRkP
;UD\VDUHSURGXFHGZKHQIDVWPRYLQJHOHFWURQVUDSLGO\GHFHOHUDWHDQGWUDQVIHUWKHLUNLQHWLF
HQHUJ\LQWRSKRWRQVRI(0UDGLDWLRQ
3URGXFLQJ;UD\V
$WWKHFDWKRGH QHJDWLYHWHUPLQDO WKHHOHFWURQVDUHUHOHDVHGE\WKHUPLRQLFHPLVVLRQ
7KHHOHFWURQVDUHDFFHOHUDWHGWRZDUGVWKHDQRGH SRVLWLYHWHUPLQDO DWKLJKVSHHG
:KHQWKHHOHFWURQVERPEDUGWKHPHWDOWDUJHWWKH\ORVHVRPHRIWKHLUNLQHWLFHQHUJ\E\
WUDQVIHUULQJLWWRSKRWRQV
7KHHOHFWURQVLQWKHRXWHUVKHOOVRIWKHDWRPV LQWKHPHWDOWDUJHW PRYHLQWRWKHVSDFHVLQ

WKHORZHUHQHUJ\OHYHOV
$VWKH\PRYHWRORZHUHQHUJ\OHYHOVWKHHOHFWURQVUHOHDVHHQHUJ\LQWKHIRUPRI;UD\
SKRWRQV
:KHQDQHOHFWURQLVDFFHOHUDWHGLWJDLQVHQHUJ\HTXDOWRWKHHOHFWURQYROWWKLVHQHUJ\FDQEH
FDOFXODWHGXVLQJ
(PD[ H9
7KLVLVWKHPD[LPXPHQHUJ\WKDWDQ;UD\SKRWRQFDQKDYH
7KHUHIRUHWKHPD[LPXP;UD\IUHTXHQF\IPD[RUWKHPLQLPXPZDYHOHQJWKfPLQWKDWFDQEH
SURGXFHGLVFDOFXODWHGXVLQJWKHHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:KHUH
H FKDUJHRIDQHOHFWURQ &
9 YROWDJHDFURVVWKHDQRGH 9
K 3ODQFNjVFRQVWDQW -V
F VSHHGRIOLJKW PV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH3URGXFWLRQRI;UD\V
3DUW D
3KRWRQVDUHSURGXFHGZKHQHYHUDFKDUJHGSDUWLFOHLVDFFHOHUDWHGWRZDUGVDPHWDO
WDUJHW
7KHZDYHOHQJWKRIWKHSKRWRQVGHSHQGVRQWKHPDJQLWXGHRIWKHDFFHOHUDWLRQ
7KHHOHFWURQVZKLFKKLWWKHWDUJHWKDYHDGLVWULEXWLRQRIDFFHOHUDWLRQVWKHUHIRUHD
FRQWLQXRXVVSHFWUXPRIZDYHOHQJWKVLVREVHUYHG
3DUW E
7KHPLQLPXPZDYHOHQJWKLVHTXDOWR
7KLVHTXDWLRQVKRZVWKHPD[LPXPHQHUJ\RIWKHHOHFWURQFRUUHVSRQGVWRWKH
PLQLPXPZDYHOHQJWK
7KHUHIRUHWKHKLJKHUWKHDFFHOHUDWLRQWKHVKRUWHUWKHZDYHOHQJWK
$WVKRUWZDYHOHQJWKVWKHVKDUSFXWRnRFFXUVDVHDFKHOHFWURQSURGXFHVDVLQJOH
SKRWRQVRDOOWKHHOHFWURQHQHUJ\LVJLYHQXSLQRQHFROOLVLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
8VLQJ;UD\VLQ0HGLFDO,PDJLQJ
;UD\VKDYHEHHQKLJKO\GHYHORSHGWRSURYLGHGHWDLOHGLPDJHVRIVRIWWLVVXHDQGHYHQEORRG
YHVVHOV
:KHQWUHDWLQJSDWLHQWVWKHDLPVDUHWR
5HGXFHWKHH[SRVXUHWRUDGLDWLRQDVPXFKDVSRVVLEOH
,PSURYHWKHFRQWUDVWRIWKHLPDJH
5HGXFLQJ([SRVXUH
;UD\VDUHLRQLVLQJPHDQLQJWKH\FDQFDXVHGDPDJHWROLYLQJWLVVXHDQGFDQSRWHQWLDOO\
OHDGWRFDQFHURXVPXWDWLRQV
7KHUHIRUHKHDOWKFDUHSURIHVVLRQDOVPXVWHQVXUHSDWLHQWVUHFHLYHWKHPLQLPXPGRVDJH
SRVVLEOH
,QRUGHUWRGRWKLVDOXPLQLXPiOWHUVDUHXVHG
7KLVLVEHFDXVHPDQ\ZDYHOHQJWKVRI;UD\DUHHPLWWHG
/RQJHUZDYHOHQJWKVRI;UD\DUHPRUHSHQHWUDWLQJWKHUHIRUHWKH\DUHPRUHOLNHO\WR
EHDEVRUEHGE\WKHERG\
7KLVPHDQVWKH\GRQRWFRQWULEXWHWRWKHLPDJHDQGSRVHPRUHRIDKHDOWKKD]DUG
7KHDOXPLQLXPVKHHWDEVRUEVWKHVHORQJZDYHOHQJWK;UD\VPDNLQJWKHPVDIHU
&RQWUDVW 6KDUSQHVV
&RQWUDVWLVGHoQHGDV
7KHGLcHUHQFHLQGHJUHHRIEODFNHQLQJEHWZHHQVWUXFWXUHV
&RQWUDVWDOORZVDFOHDUGLnHUHQFHEHWZHHQWLVVXHVWREHVHHQ
,PDJHFRQWUDVWFDQEHLPSURYHGE\
8VLQJWKHFRUUHFWOHYHORI;UD\KDUGQHVVKDUG;UD\VIRUERQHVVRIW;UD\VIRU
WLVVXH
8VLQJDFRQWUDVWPHGLD
6KDUSQHVVLVGHoQHGDV
+RZZHOOGHdQHGWKHHGJHVRIVWUXFWXUHVDUH
,PDJHVKDUSQHVVFDQEHLPSURYHGE\
8VLQJDQDUURZHU;UD\EHDP
5HGXFLQJ;UD\VFDWWHULQJE\XVLQJDFROOLPDWRURUOHDGJULG
6PDOOHUSL[HOVL]H

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
$77(18$7,212);5$<6,10$77(5
$WWHQXDWLRQRI;UD\VLQ0DWWHU
%RQHVDEVRUE;UD\UDGLDWLRQ
7KLVLVZK\WKH\DSSHDUZKLWHRQWKH;UD\SKRWRJUDSK
:KHQWKHFROOLPDWHGEHDPRI;UD\VSDVVHVWKURXJKWKHSDWLHQWjVERG\WKH\DUHDEVRUEHG
DQGVFDWWHUHG
7KHDWWHQXDWLRQRI;UD\VFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQ
, ,Hgd[
:KHUH
, WKHLQWHQVLW\RIWKHLQFLGHQWEHDP :P
, WKHLQWHQVLW\RIWKHUHpHFWHGEHDP :P
g WKHOLQHDUDEVRUSWLRQFRHqFLHQW P
[ GLVWDQFHWUDYHOOHGWKURXJKWKHPDWHULDO P
7KHDWWHQXDWLRQFRHqFLHQWDOVRGHSHQGVRQWKHHQHUJ\RIWKH;UD\SKRWRQV
7KHLQWHQVLW\RIWKH;UD\GHFD\VH[SRQHQWLDOO\
7KHWKLFNQHVVRIWKHPDWHULDOWKDWZLOOUHGXFHWKH;UD\EHDPRUDSDUWLFXODUIUHTXHQF\WRKDOI
LWVRULJLQDOYDOXHLVNQRZQDVWKHKDOIWKLFNQHVV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH$WWHQXDWLRQRI;UD\VLQPDWWHU

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
3DUW D
6WHS
/LQHDUDEVRUSWLRQFRHqFLHQWIRUPXVFOHg FP
'LVWDQFHWUDYHOOHGWKURXJKWKHPXVFOH[ FP
6WHS
:ULWHRXWWKHHTXDWLRQIRUDWWHQXDWLRQDQGUHDUUDQJH
, ,Hgd[
6WHS
6XEVWLWXWHLQYDOXHVDQGFDOFXODWHWKHUDWLR
3DUW E
6WHS
/LQHDUDEVRUSWLRQFRHqFLHQWIRUPXVFOHgP FP
/LQHDUDEVRUSWLRQFRHqFLHQWIRUERQHgE FP
'LVWDQFHWUDYHOOHGWKURXJKWKHPXVFOH[P FP
'LVWDQFHWUDYHOOHGWKURXJKWKHERQH[E FP

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
6WHS
:ULWHRXWWKHHTXDWLRQIRUDWWHQXDWLRQIRUWZRPHGLDDQGUHDUUDQJH
6WHS
6XEVWLWXWHLQYDOXHVDQGFDOFXODWHWKHUDWLR
6WHS
:ULWHDFRQFOXGLQJVWDWHPHQW
(DFKUDWLRJLYHVDPHDVXUHRIWKHDPRXQWRIWUDQVPLVVLRQRIWKHEHDP
$JRRGFRQWUDVWLVZKHQ
7KHUHLVDODUJHGLnHUHQFHEHWZHHQWKHLQWHQVLWLHV
7KHUDWLRLVPXFKOHVVWKDQ
7KHUHIRUHERWKLPDJHVKDYHDJRRGFRQWUDVW

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
&20387('7202*5$3+<6&$11,1*
&RPSXWHG7RPRJUDSK\6FDQQLQJ
$VLPSOH;UD\LPDJHFDQSURYLGHXVHIXOEXWOLPLWHGLQIRUPDWLRQDERXWLQWHUQDOVWUXFWXUHVLQ
D'LPDJH
:KHQDPRUHFRPSUHKHQVLYHLPDJHLVQHHGHGDFRPSXWHULVHGD[LDOWRPRJUDSK\ &$7RU
&7 VFDQLVXVHG
7KHPDLQIHDWXUHVRIWKHRSHUDWLRQRID&7VFDQDUHDVIROORZV
$Q;UD\WXEHURWDWHVDURXQGWKHVWDWLRQDU\SDWLHQW
$&7VFDQQHUWDNHV;UD\LPDJHVRIWKHVDPHVOLFHDWPDQ\GLnHUHQWDQJOHV
7KLVSURFHVVLVUHSHDWHGWKHQLPDJHVRIVXFFHVVLYHVOLFHVDUHFRPELQHGWRJHWKHU
$FRPSXWHUSLHFHVWKHLPDJHVWRJHWKHUWREXLOGD'LPDJH
7KLV'LPDJHFDQEHURWDWHGDQGYLHZHGIURPGLnHUHQWDQJOHV
$GYDQWDJHV 'LVDGYDQWDJHVRI&$76FDQV
$GYDQWDJHV
3URGXFHVPXFKPRUHGHWDLOHGLPDJHV
&DQGLVWLQJXLVKEHWZHHQWLVVXHVZLWKVLPLODUDWWHQXDWLRQFRHqFLHQWV
3URGXFHVD'LPDJHRIWKHERG\E\FRPELQLQJWKHLPDJHVDWHDFKGLUHFWLRQ
'LVDGYDQWDJHV
7KHSDWLHQWUHFHLYHVDPXFKKLJKHUGRVHWKDQDQRUPDO;UD\
3RVVLEOHVLGHHnHFWVIURPWKHFRQWUDVWPHGLD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH
;UD\
7KHVLPSOH;UD\LPDJHLQYROYHVWDNLQJDVLQJOHH[SRVXUH
7KLVSURGXFHVDVLQJOH'LPDJH
&7VFDQ
7KH&7VFDQUHTXLUHVWDNLQJVHYHUDOH[SRVXUHVRIDVOLFHIURPPDQ\GLnHUHQWDQJOHV
7KLVLVWKHQUHSHDWHGIRUGLnHUHQWVOLFHVEHIRUHEHLQJFRPELQHGWRJHWKHUWREXLOGD'LPDJH
7KLVLQYROYHVWDNLQJDPXFKJUHDWHUH[SRVXUHWKDQWKHVLPSOH;UD\

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
3(76&$11,1*
5$',2$&7,9(75$&(56
5DGLRDFWLYH7UDFHUV
$UDGLRDFWLYHWUDFHULVGHoQHGDV
$UDGLRDFWLYHVXEVWDQFHWKDWFDQEHDEVRUEHGE\WLVVXHLQRUGHUWRVWXG\WKH
VWUXFWXUHDQGIXQFWLRQRIRUJDQVLQWKHERG\
5DGLRDFWLYHLVRWRSHVVXFKDVWHFKQHWLXPPRUjXRULQHDUHVXLWDEOHIRUWKLV
SXUSRVHEHFDXVH
7KH\ERWKELQGWRRUJDQLFPROHFXOHVVXFKDVJOXFRVHRUZDWHUZKLFKDUHUHDGLO\
DYDLODEOHLQWKHERG\
7KH\ERWKHPLWJDPPD c UDGLDWLRQDQGGHFD\LQWRVWDEOHLVRWRSHV
7HFKQHWLXPPKDVDVKRUWKDOIOLIHRIKRXUV LWLVDVKRUWOLYHGIRUPRI
7HFKQHWLXP
)OXRULQHKDVDQHYHQVKRUWHUKDOIOLIHRIPLQXWHVVRWKHSDWLHQWLVH[SRVHGWR
UDGLDWLRQIRUDVKRUWHUWLPH
8VLQJ7UDFHUVLQ3(76FDQQLQJ
3RVLWURQ(PLVVLRQ7RPRJUDSK\ 3(7 LV
$W\SHRIQXFOHDUPHGLFDOSURFHGXUHWKDWLPDJHVWLVVXHVDQGRUJDQVE\
PHDVXULQJWKHPHWDEROLFDFWLYLW\RIWKHFHOOVRIERG\WLVVXHV
$FRPPRQWUDFHUXVHGLQ3(7VFDQQLQJLVDJOXFRVHPROHFXOHZLWKUDGLRDFWLYHpXRULQH
DWWDFKHGFDOOHGjXRURGHR[\JOXFRVH
7KHpXRULQHQXFOHLXQGHUJRHVbGHFD\iHPLWWLQJDSRVLWURQ bSDUWLFOH
7KHUDGLRDFWLYHWUDFHULVLQMHFWHGRUVZDOORZHGLQWRWKHSDWLHQWDQGpRZVDURXQGWKHERG\
2QFHWKHWLVVXHVDQGRUJDQVKDYHDEVRUEHGWKHWUDFHUWKHQWKH\DSSHDURQWKHVFUHHQDVD
EULJKWDUHDIRUDGLDJQRVLV
7KLVDOORZVGRFWRUVWRGHWHUPLQHWKHSURJUHVVRIDGLVHDVHDQGKRZHnHFWLYHDQ\
WUHDWPHQWVKDYHEHHQ
7UDFHUVDUHXVHGQRWRQO\IRUWKHGLDJQRVLVRIFDQFHUEXWDOVRIRUWKHKHDUWDQGGHWHFWLQJ
DUHDVRIGHFUHDVHGEORRGpRZDQGEUDLQLQMXULHVLQFOXGLQJ$O]KHLPHUjVDQGGHPHQWLD

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH3RVLWURQHPLVVLRQRIpXRULQH
6WHS
:RUNRXWZKDWZLOOEHRQWKHUHDFWDQWVDQGSURGXFWVVLGH
6WHS
:ULWHWKHQXFOHDUHTXDWLRQ

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
$11,+,/$7,21,13(76&$11,1*
7KH3URFHVVRI$QQLKLODWLRQ
:KHQDSRVLWURQLVHPLWWHGIURPDWUDFHULQWKHERG\LWWUDYHOVOHVVWKDQDPLOOLPHWUHEHIRUHLW
FROOLGHVZLWKDQHOHFWURQ
7KHSRVLWLRQDQGWKHHOHFWURQZLOODQQLKLODWHDQGWKHLUPDVVEHFRPHVSXUHHQHUJ\LQWKH
IRUPRIWZRJDPPDUD\VZKLFKPRYHDSDUWLQRSSRVLWHGLUHFWLRQV
$QQLKLODWLRQGRHVQjWMXVWKDSSHQZLWKHOHFWURQVDQGSRVLWURQVDQQLKLODWLRQLVGHoQHGDV
:KHQDSDUWLFOHPHHWVLWVHTXLYDOHQWDQWLSDUWLFOHWKH\DUHERWKGHVWUR\HG
DQGWKHLUPDVVLVFRQYHUWHGLQWRHQHUJ\
$VZLWKDOOFROOLVLRQVWKHPDVVHQHUJ\DQGPRPHQWXPDUHFRQVHUYHG
3RVLWURQ(PLVVLRQ7RPRJUDSK\ 3(7 6FDQQLQJ
2QFHWKHWUDFHULVLQWURGXFHGWRWKHERG\LWKDVDVKRUWKDOIOLIHVRLWEHJLQVHPLWWLQJ
SRVLWURQV b LPPHGLDWHO\
7KLVDOORZVIRUDVKRUWH[SRVXUHWLPHWRWKHUDGLDWLRQ
$VKRUWKDOIOLIHGRHVPHDQWKHSDWLHQWQHHGVWREHVFDQQHGTXLFNO\DQGQRWDOO
KRVSLWDOVKDYHDFFHVVWRH[SHQVLYH3(7VFDQQHUV
,Q3(7VFDQQLQJ
3RVLWURQVDUHHPLWWHGE\WKHGHFD\RIWKHWUDFHU
7KH\WUDYHODVPDOOGLVWDQFHDQGDQQLKLODWHZKHQWKH\LQWHUDFWZLWKHOHFWURQVLQWKH
WLVVXH
7KLVDQQLKLODWLRQSURGXFHVDSDLURIJDPPDUD\SKRWRQVZKLFKWUDYHOLQRSSRVLWH
GLUHFWLRQV

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
'(7(&7,1**$00$5$<6)5203(76&$11,1*
'HWHFWLQJ*DPPD5D\VIURP3(76FDQQLQJ
7KHSDWLHQWOD\VVWDWLRQDU\LQDWXEHVXUURXQGHGE\DULQJRIGHWHFWRUV
,PDJHVRIVOLFHVRIWKHERG\FDQEHWDNHQWRVKRZWKHSRVLWLRQRIWKHUDGLRDFWLYHWUDFHUV
7KHGHWHFWRUFRQVLVWVRIWZRSDUWV
&U\VWDO6FLQWLOODWRUiZKHQWKHJDPPDUD\ cUD\ SKRWRQLVLQFLGHQWRQDFU\VWDODQ

HOHFWURQLQWKHFU\VWDOLVH[FLWHGWRDKLJKHUHQHUJ\VWDWH
$VWKHH[FLWHGHOHFWURQWUDYHOVWKURXJKWKHFU\VWDOLWH[FLWHVPRUHHOHFWURQV
:KHQWKHH[FLWHGHOHFWURQVPRYHEDFNGRZQWRWKHLURULJLQDOVWDWHWKHORVWHQHUJ\LV
WUDQVPLWWHGDVYLVLEOHOLJKWSKRWRQV
3KRWRPXOWLSOLHU7KHSKRWRQVSURGXFHGE\WKHVFLQWLOODWRUDUHYHU\IDLQWVRWKH\QHHGWREH
DPSOLoHGDQGFRQYHUWHGWRDQHOHFWULFDOVLJQDOE\DSKRWRPXOWLSOLHUWXEH
&UHDWLQJDQ,PDJHIURP3(76FDQQLQJ
7KHcUD\VWUDYHOLQVWUDLJKWOLQHVLQRSSRVLWHGLUHFWLRQVZKHQIRUPHGIURPDSRVLWURQHOHFWURQ
DQQLKLODWLRQ
7KLVKDSSHQVLQRUGHUWRFRQVHUYHPRPHQWXP
7KH\KLWWKHGHWHFWRUVLQDOLQHiNQRZQDVWKHOLQHRIUHVSRQVH
7KHWUDFHUVZLOOHPLWORWVRIcUD\VVLPXOWDQHRXVO\DQGWKHFRPSXWHUVZLOOXVHWKLV
LQIRUPDWLRQWRFUHDWHDQLPDJH
7KHPRUHSKRWRQVIURPDSDUWLFXODUSRLQWWKHPRUHWUDFHUWKDWLVSUHVHQWLQWKHWLVVXHEHLQJ
VWXGLHGDQGWKLVZLOODSSHDUDVDEULJKWSRLQWRQWKHLPDJH
$QLPDJHRIWKHWUDFHUFRQFHQWUDWLRQLQWKHWLVVXHFDQEHFUHDWHGE\SURFHVVLQJWKH
DUULYDOWLPHVRIWKHJDPPDUD\SKRWRQV
&DOFXODWLQJ(QHUJ\RI*DPPD5D\3KRWRQV
,QWKHDQQLKLODWLRQSURFHVVERWKPDVVHQHUJ\DQGPRPHQWXPDUHFRQVHUYHG
7KHJDPPDUD\SKRWRQVSURGXFHGKDYHDQHQHUJ\DQGIUHTXHQF\WKDWLVGHWHUPLQHGVROHO\
E\WKHPDVVHQHUJ\RIWKHSRVLWURQHOHFWURQSDLU
7KHHQHUJ\(RIWKHSKRWRQLVJLYHQE\
( KI PHF

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
7KHPRPHQWXPSRIWKHSKRWRQLVJLYHQE\
:KHUH
PH PDVVRIWKHHOHFWURQRUSRVLWURQ NJ
I IUHTXHQF\RIWKHSKRWRQ +]
F WKHVSHHGRIOLJKWLQDYDFXXP PVf

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
:RUNHGH[DPSOH&DOFXODWLQJHQHUJ\RIJDPPDUD\SKRWRQV
3DUW D
7RWDOPDVVLVHTXDOWRWKHPDVVRIWKHHOHFWURQDQGSRVLWURQ
P c cf cfNJ
6WHS:ULWHRXWWKHHTXDWLRQIRUPDVVHQHUJ\HTXLYDOHQFH
( PHF
6WHS6XEVWLWXWHLQYDOXHVDQGFDOFXODWHHQHUJ\(
( c c c c cf-
3DUW E
7ZRSKRWRQVDUHSURGXFHGVRWKHHQHUJ\RIRQHSKRWRQLVHTXDOWR
KDOIRIWKHWRWDOHQHUJ\
6WHS:ULWHRXWWKHHTXDWLRQIRUHQHUJ\RIDSKRWRQ
( KI
6WHS5HDUUDQJHIRUIUHTXHQF\IDQGFDOFXODWH

5(9,6,21127(6723,&48(67,2163$673$3(56
<285127(6
0HGLFDO3K\VLFV m
3DUW F
6WHS:ULWHRXWWKHHTXDWLRQIRUPRPHQWXPRIDSKRWRQ
6WHS6XEVWLWXWHLQYDOXHVDQGFDOFXODWHPRPHQWXPS

5(9,6,21127(6723,&48(67,2163$673$3(56

Phy Full Notes

Uploaded by

Copyright:

Available Formats

Phy Full Notes

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Phy Full Notes

Uploaded by

Copyright:

Available Formats

&,($/HYHO3K\VLFV  H[DPVIURP5HYLVLRQ1RWHV VDYHP\H[DPVFRXN

,QSK\VLFVHYHU\OHWWHURIWKHDOSKDEHW DQGPRVWRIWKH*UHHNDOSKDEHW LVXVHGWRUHSUHVHQW

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

- NJg PVi  NJPVi

3D 1hP NJPVi hP NJPiVi

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

)RUH[DPSOHWKHGLDPHWHURIDQDWRPLVDERXWiP P ZKHUHDVWKHZLGWK

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

:KHQWZRRUPRUHYHFWRUVDUHDGGHGWRJHWKHU RURQHLVVXEWUDFWHGIURPWKHRWKHU DVLQJOH

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVDVWDWHRIUHVW

&,($/HYHO3K\VLFV  H[DPVIURP

D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVPRWLRQZLWKFRQVWDQWYHORFLW\

&,($/HYHO3K\VLFV  H[DPVIURP

D]HURVORSH KRUL]RQWDOOLQH UHSUHVHQWVDQREMHFWXQGHUJRLQJFRQVWDQWDFFHOHUDWLRQ

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

7KH\DOVRVKRZZKHWKHUDQREMHFWLVPRYLQJIRUZDUGV SRVLWLYHGLVSODFHPHQW RUEDFNZDUGV

7KHJUDGLHQW VORSH RIDGLVSODFHPHQWWLPHJUDSKLVHTXDOWRYHORFLW\

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV  H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP5HYLVLRQ1RWHV VDYHP\H[DPVFRXN

,QSK\VLFVHYHU\OHWWHURIWKHDOSKDEHW DQGPRVWRIWKH*UHHNDOSKDEHW LVXVHGWRUHSUHVHQW

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

- NJg PVi NJPVi

3D 1hP NJPVi hP NJPiVi

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

)RUH[DPSOHWKHGLDPHWHURIDQDWRPLVDERXWiP P ZKHUHDVWKHZLGWK

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

:KHQWZRRUPRUHYHFWRUVDUHDGGHGWRJHWKHU RURQHLVVXEWUDFWHGIURPWKHRWKHU DVLQJOH

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

7KHJUDGLHQW VORSH RIDGLVSODFHPHQWWLPHJUDSKLVHTXDOWRYHORFLW\

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP

&,($/HYHO3K\VLFV H[DPVIURP