+(/6,1.,81,9(56,7<2)7(&+12/2*<'HSDUWPHQWRI(OHFWULFDODQG&RPPXQLFDWLRQV(QJLQHHULQJ
%HQHGLFW6ORWWH
$&2867,&66,08/$7,21,102%,/(3+21($8',2'(6,*1
7KHVLVIRU0DVWHURI6FLHQFHGHJUHHVXEPLWWHGIRUDSSURYDOLQ(VSRR)LQODQG
6XSHUYLVRU0DWWL.DUMDODLQHQ3URI
,QVWUXFWRU-XKD%DFNPDQ06F
,
$EVWUDFW
+(/6,1.,81,9(56,7<2)7(&+12/2*<
$XWKRU %HQHGLFW6ORWWH
1DPHRIWKHVLV $FRXVWLFVVLPXODWLRQLQPRELOHSKRQHDXGLRGHVLJQ
'DWH 1XPEHURISDJHV
'HSDUWPHQW (OHFWULFDODQG&RPPXQLFDWLRQV(QJLQHHULQJ
3URIHVVRUVKLS $FRXVWLFVDQGDXGLRVLJQDOSURFHVVLQJ
6XSHUYLVRU 0DWWL.DUMDODLQHQ3URI
,QVWUXFWRU -XKD%DFNPDQ06F
7KLV WKHVLVGHDOVZLWK WKHDSSOLFDWLRQRIDFRXVWLFVPRGHOOLQJDQGVLPXODWLRQSULQFLSOHVDQGWRROVWRDFRXVWLFVGHVLJQRIPRELOHSKRQHVDQGDFFHVVRULHVHVSHFLDOO\HDUSLHFHV 7KH DFRXVWLFDOPHFKDQLFDO FRQVWUXFWLRQ RI D W\SLFDO PRELOH SKRQH DQG LWVDFFHVVRULHVLVRYHUYLHZHGFRQFHQWUDWLQJRQWKHKDQGSRUWDEOHHDUSLHFH7KHDFRXVWLFDOEHKDYLRXURIWKHHDUSLHFHLQERWKQRUPDOXVHDQGLQW\SHDSSURYDOPHDVXUHPHQWVLVH[DPLQHG LQPRUHGHWDLOZKLOHDW WKHVDPH WLPH WKHFRQFHSWRI OHDN WROHUDQFH LVLQWURGXFHG*XLGHOLQHVIRUWKHGHVLJQRIOHDNWROHUDQWHDUSLHFHVDUHGHULYHG
$EDVLFWRROER[IRUDFRXVWLFVVLPXODWLRQRIPRELOHSKRQHVDQGWKHLUDFFHVVRULHVLV EXLOW DV D ´PDFUR´ FROOHFWLRQ LQVLGH WKH0LFUR&DS9 FLUFXLW VLPXODWRU SURJUDP6RPH PRGHOV DUH GHULYHG IURP UHVXOWV SXEOLVKHG LQ OLWHUDWXUH 'RFXPHQWDWLRQ LVDGGHG WR HDFK PRGHO WR GHVFULEH LWV XVDJH DQG LWV OLPLWDWLRQV %DVLF WKHRUHWLFDOSULQFLSOHVEHKLQGHTXLYDOHQWFLUFXLWVDQGDFRXVWLFV VLPXODWLRQDUH LQWURGXFHGZKLOHH[DPLQLQJ EULHIO\ WKH DGYDQWDJHV DQG GLVDGYDQWDJHV RI DFRXVWLFV VLPXODWLRQ ZKHQDSSOLHGWRUHDOZRUOGHOHFWURPHFKDQRDFRXVWLFDOFRQVWUXFWLRQV
7KHFUHDWHGVLPXODWLRQWRROVDVZHOODVWKHGHVLJQJXLGHOLQHVDUHSXWWRXVHWRJHWKHULQSUDFWLFHWRGHVLJQDSURSHUPHFKDQLFDODFRXVWLFDOVROXWLRQIRUWKHHDUSLHFHLQDFRPPHUFLDOSKRQH7KHJRRGSHUIRUPDQFHRIWKHVLPXODWLRQWRROVLVYHULILHGE\HYDOXDWLQJSRVVLEOHHDUSLHFHVROXWLRQVDQGE\FRPSDULQJPHDVXUHPHQWVDQGVLPXODWLRQVRIKDUGZDUHSURWRW\SHV
.H\ZRUGV 6LPXODWLRQPRGHOOLQJOHDNWROHUDQFHHDUSLHFH
,,
7LLYLVWHOPl
7(.1,//,1(1.25.($.28/8
7HNLMl %HQHGLFW6ORWWH
7\|QQLPL $NXVWLLNNDPDOOLQQXVPDWNDSXKHOLQWHQDXGLRVXXQQLWWHOXVVD
3lLYlPllUl 6LYXPllUl
2VDVWR 6lKN|MDWLHWROLLNHQQHWHNQLLNDQRVDVWR
3URIHVVXXUL $NXVWLLNNDMDllQHQNlVLWWHO\WHNQLLNND
9DOYRMD 0DWWL.DUMDODLQHQSURI
2KMDDMD -XKD%DFNPDQGLSOLQV
7lPlGLSORPLW\|NlVLWWHOHH DNXVWLLNNDPDOOLQQXNVHQ MD VLPXORLQQLQSHULDDWWHLGHQ MDW\|NDOXMHQ Nl\WW|l PDWNDSXKHOLQWHQ HULW\LVHVWL PDWNDSXKHOLQWHQ NXXORNNHLGHQDNXVWLVHVVD VXXQQLWWHOXVVD 7DYDQRPDLVHQ PDWNDSXKHOLPHQ MD VHQ OLVlODLWWHLGHQDNXVWLVWDPHNDDQLVWD UDNHQQHWWD NlVLWHOOllQ O\K\HVWL NHVNLWW\HQ HQQHQ NDLNNHD SXKHOLPHQ NXXORNNHHVHHQ .XXORNNHHQ DNXVWLVWD Nl\WWl\W\PLVWl VHNl QRUPDDOLVVDNl\WW|WLODQWHHVVD HWWl W\\SSLK\YlNV\QWlPLWWDXNVLVVD NlVLWHOOllQ V\YlOOLVHPPLQ6DPDOODPllULWHOOllQYXRWRVLHWRLVXXVNlVLWHVHNlMRKGHWDDQNl\WW|NHOSRLVLDVXXQQLWWHOXRKMHLWDYXRWRVLHWRLVWHQNXXORNNHLGHQVXXQQLWWHOXDYDUWHQ
.RNRHOPDSHUXVW\|NDOXMDPDWNDSXKHOLQWHQ MD RKHLVODLWWHLGHQ DNXVWLLNDQ VLPXORLQWLDYDUWHQ ODDGLWDDQ0LFUR&DS9SLLULVLPXORLQWLRKMHOPDDQ´PDNUR´NRNRHOPDQPXRGRVVD0XXWDPDPDOOLMRKGHWDDQNLUMDOOLVXXGHVVDHVLWHW\LVWlWXORNVLVWD-RNDLVHHQPDOOLLQOLLWHWllQPDOOLQNl\WW|WDSDDMDUDMRLWXNVLDNXYDDYDWHNVWL(VLWHWllQVLMDLVN\WNHQW|MHQMDDNXVWLLNNDVLPXORLQQLQSHUXVSHULDDWWHHWNlVLWHOOllQO\K\HVWLHGXWMDKDLWDWVRYHOOHWWDHVVDVLPXORLQWLDNl\WlQQ|QVlKN|PHNDQRDNXVWLVLLQUDNHQWHLVLLQ
6LPXORLQWLW\|NDOXW MD VXXQQLWWHOXRKMHHW Nl\WHWllQ \KGHVVl NDXSDOOLVHQPDWNDSXKHOLPHQ NXXORNNHHQ PHNDQLLNNDDNXVWLLNNDUDWNDLVXQ VXXQQLWWHOXXQ 6LPXORLQWLW\|NDOXMHQ K\Yl WRLPLYXXV YDUPLVWHWDDQ Nl\PlOOl OlSL MRXNNR PDKGROOLVLD NXXORNHUDWNDLVXMD VHNl YHUWDDPDOOD VLPXORLQWLWXORNVLD MDPLWWDXVWXORNVLD SURWRW\\SHLVWlNHVNHQllQ
$YDLQVDQDW 6LPXORLQWLPDOOLQQXVYXRWRVLHWRLVXXVNXXORNH
,,,
3UHIDFH
7KLVPDVWHURIVFLHQFH WKHVLVZDVZULWWHQPDLQO\GXULQJP\ WKLUG\HDURIHPSOR\PHQWDW1RNLD0RELOH3KRQHV6DOR)LQODQG,VWDUWHGWKHZRUNOHDGLQJWRWKLVWKHVLVLQWKHVXPPHURIDVDQDXGLRGHVLJQHQJLQHHU DFTXLULQJH[SHULHQFH LQDFRXVWLFVGHVLJQRIPRELOHSKRQHV7KHWKHVLVZDVILQLVKHGLQWKHVSULQJRI:LWKRXWWKHH[SHULHQFHWKDWWKHWZRILUVW\HDUVJDYHPH ,ZRXOGQRWKDYHKDG WKHQHFHVVDU\NQRZOHGJH WR ILQLVKDZRUN OLNHWKLV
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
:KLOHZULWLQJWKLVWKHVLV,KDGWKUHHJRDOVLQPLQG
• WRFUHDWHDGRFXPHQWWKDWFRXOGEHXVHGE\RWKHUSHRSOHDVDQHGXFDWLQJDQGLQWHUHVWLQJLQWURGXFWLRQWRDFRXVWLFVPRGHOOLQJDQGVLPXODWLRQ
• WR OHDYHEHKLQGPHDSLHFHRIJRRGGRFXPHQWDWLRQRI WKHGHYHORSPHQWRI WKHSURGXFWZKRVHGHVLJQ,ZDVLQYROYHGLQDQG
• WRFUHDWHDEDVLFWRROER[IRUDFRXVWLFVVLPXODWLRQWKDWFRXOGEHXVHGLQWKHIXWXUH
)LQLVKLQJWKLV WKHVLVDQGLWVDFFRPSDQ\LQJVLPXODWLRQPRGHOFROOHFWLRQKDVWDNHQD ORWRIWLPHEXW,DPYHU\VDWLVILHGZLWKWKHUHVXOWDQG,KRSHWKDWWKHZKROHGRFXPHQWFDQEHRIJRRGXVHWRRWKHUSHRSOHZKRZDQWWROHDUQPRUHDERXWWKLVLQWHUHVWLQJWRSLF
%HQHGLFW6ORWWH
,9
&RQWHQWV
,QWURGXFWLRQ
$W\SLFDOPRELOHSKRQH 7KHKDQGSRUWDEOHDQGLWVDFFHVVRULHV
7KHKDQGSRUWDEOH &RPPRQDFFHVVRULHV
6SHHFKWUDQVPLVVLRQ 7KHQHWZRUN 6SHHFKSURSHUWLHVDQGFRGLQJ 7UDQVGXFHUV 7\SHDSSURYDO
8VHULQWHUIDFH $OHUWLQJ .H\SDGWRQHVDQGRWKHUVLJQDOV
$XGLRWUDQVGXFHUV 3ULQFLSOHVRIRSHUDWLRQ
'\QDPLFWUDQVGXFHUV (OHFWURPDJQHWLFWUDQVGXFHUV (OHFWUHWWUDQVGXFHUV 3LH]RHOHFWULFWUDQVGXFHUV
7UDQVGXFHUFKRLFHV (DUSLHFHVDQGHDUSKRQHV /RXGVSHDNHUV 0LFURSKRQHV %X]]HUV
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ 7KHNH\VWRDFRXVWLFVVLPXODWLRQ $QDORJLHV
7KHWKUHHSULPDU\GRPDLQV 5DGLDWLRQDVDIRXUWKGRPDLQ 6XPPDU\RIDQDORJLHV
%DVLFFRPSRQHQWVDQGTXDQWLWLHV *HQHUDOLPSHGDQFH 5HVLVWDQFH ,QGXFWDQFH &DSDFLWDQFH ,QWHUFRQQHFWLQJWKHGRPDLQV
$GYDQWDJHVRIVLPXODWLRQ (YDOXDWLRQRIEDVLFVROXWLRQV 7UDQVGXFHUVSHFLILFDWLRQ 7XQLQJDQGRSWLPL]DWLRQ 9HULILFDWLRQ :KHQPHDVXUHPHQWLVKDUGRULPSRVVLEOH
5HVWULFWLRQV
9
1RQOLQHDULW\ 0RGHODYDLODELOLW\ 3K\VLFDOVL]HYHUVXVZDYHOHQJWK 7UDQVGXFHULUUHJXODULWLHV 7KHUHDOLW\LVWKUHHGLPHQVLRQDO 8QNQRZQGLPHQVLRQV &RQYHUJHQFH
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ 6WDUWLQJSRLQWDQGPHWKRGV
2EMHFWLYHV 6LPXODWRUIHDWXUHV
6\VWHPWRSRORJ\ 7UDQVGXFHUV 0HDVXULQJHTXLSPHQW /RDGV 'ULYLQJFLUFXLWU\ 6LJQDOV 6HOHFWLRQRIEXLOGLQJEORFNV
$FRXVWLFVVLPXODWLRQDVSDUWRIDGHYHORSPHQWSURFHVV ,PSOHPHQWDWLRQ
*OREDOGHILQLWLRQV 6KDSHDQGQDPLQJFRQYHQWLRQV 3DUDOOHOFRQQHFWLRQ ,PSHGDQFHV 6RXUFHVWUDQVIRUPLQJWZRSRUWVDQGJURXQGV 3K\VLFDOVWUXFWXUHV
&DYLWLHV +ROHV 'XFWV 2WKHUVWUXFWXUHV
$LUORDG $LUORDGVIRUVSHFLILFUDGLDWRUJHRPHWULHV (QGFRUUHFWLRQV 5DGLDWLRQUHVLVWDQFHV
'RPDLQLQWHUIDFHV 5DGLDWLRQ
6SKHULFDODQGSODQHZDYHV 5DGLDWLRQDFRXVWLFDOGRPDLQLQWHUIDFHV 2WKHUUDGLDWLRQPDFURV
7UDQVGXFHUV '\QDPLFORXGVSHDNHUV (OHFWUHWPLFURSKRQHV
0HDVXULQJHTXLSPHQW 3UREHVDQGDQQRWDWRUV &RPSRXQGPDFURV 2WKHUPDFURV
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV 0HFKDQLFVDQGPDVVSURGXFWLRQ
6DYLQJVL]H
9,
0HFKDQLFDOWROHUDQFHV ,QGXVWULDOGHVLJQ 0DVVSURGXFWLRQ
$FRXVWLFVDQGWKHHQYLURQPHQW (QYLURQPHQWDOFRQGLWLRQV 5)VKLHOGLQJ %DFNJURXQGDQGKDQGOLQJQRLVH :LQGQRLVH (FKR (DUSLHFHSHUIRUPDQFH
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH /HDNWROHUDQFH²ZKDWDQGZK\
3HUIRUPDQFHUHTXLUHPHQWV 7HVWDQGPHDVXUHPHQWUHTXLUHPHQWV %DFNJURXQGWKHRU\ 3UDFWLFDOLPSOHPHQWDWLRQ
7KHWUDQVGXFHUFRPSRQHQW '\QDPLFHDUSLHFHFDSVXOHLQWKUHHGRPDLQV '\QDPLFHDUSLHFHFDSVXOHLQWKHDFRXVWLFDOGRPDLQ 0XOWLSOHPDVVHTXLYDOHQWFLUFXLW
0HFKDQLFDOFRQILJXUDWLRQV /RZHULQJWKHRXWSXWLPSHGDQFH
,QWHUQDOVWUXFWXUHRIWKHHDUSLHFHFDSVXOH 0HFKDQLFDOVWUXFWXUHVEHKLQGWKHHDUSLHFHFDSVXOH )URQWFDYLW\DQGKROHV /HDNVLQVLGHWKHSKRQH
6WDELOL]LQJWKHRXWSXWYROXPHYHORFLW\ &RPELQDWLRQPHWKRGVDQGPRGLILFDWLRQV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH 7KHVWDUWLQJSRLQW
/HDNWROHUDQFHDQGSUHYLRXVHDUSLHFHV 7KHQHZWUDQVGXFHU 7KHQHZSKRQH 'HVLJQDQGSURGXFWLRQUHTXLUHPHQWV 6ROXWLRQVWDUWLQJSRLQWOHDNLQPHDVXUHPHQW
'HVLJQUXOHV 3HUIRUPDQFH 6LPXODWLRQVYVPHDVXUHPHQWV
6ROXWLRQDOWHUQDWLYHV 1RIURQWOHDNVROXWLRQ ,QWHUQDOOHDNLQWRSDUDOOHOFDYLW\VROXWLRQ ,QWHUQDOOHDNLQWRVLGHFDYLW\VROXWLRQ ([WHUQDOOHDNLQWRVLGHFDYLW\VROXWLRQ
6ROXWLRQ²WKHILQDOFKRLFH 'LPHQVLRQLQJ
)URQWKROHV ([WHUQDOOHDNKROHV /HDNVLQWKHEDFNFDYLW\
)LQDOVLPXODWLRQPRGHO
9,,
7KHILQDOHDUSLHFH &RQFOXVLRQV
5HIHUHQFHV
$SSHQGL[,:DYHOHQJWKVDQGGLPHQVLRQV,
$SSHQGL[,,$QDORJRXVTXDQWLWLHV ,,4XDQWLWLHVDQGXQLWV ,,&RQYHUVLRQIDFWRUV,,
$SSHQGL[,,,'HULYDWLRQV,,,+ROHV ,,,
&LUFXODUKROH ,,,5HFWDQJXODUKROH ,,,
'XFWV ,,,&LUFXODUGXFW ,,,5HFWDQJXODUGXFW ,,,
$LUORDG ,,,&LUFXODUUDGLDWRU ,,,
5DGLDWLRQRIRQHUDGLDWRULQWRKDOIVSDFH ,,,5DGLDWLRQRIRQHUDGLDWRULQWRDQ\VROLGDQJOH ,,,0XWXDOLQWHUDFWLRQRIVHYHUDOUDGLDWRUV ,,,6XPPDU\ ,,,
5HFWDQJXODUUDGLDWRU ,,,2QHUDGLDWRU ,,,0XWXDOLQWHUDFWLRQRIVHYHUDOUDGLDWRUV ,,,6XPPDU\ ,,,
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV ,9&RQVWDQWDQGIXQFWLRQGHILQLWLRQV ,96KDSHVHOHFWULFDOGHILQLWLRQVDQGGHVFULSWLRQV ,9
,PSHGDQFHV ,96RXUFHVWUDQVIRUPLQJWZRSRUWVDQGJURXQGV ,93K\VLFDOVWUXFWXUHV ,9$LUORDG ,9'RPDLQLQWHUIDFHV ,95DGLDWLRQ ,97UDQVGXFHUV ,90HDVXULQJHTXLSPHQW ,93UREHVDQGDQQRWDWRUV ,9&RPSRXQGPDFURV ,90LVFHOODQHRXVPDFURV ,90DFURVFUHDWHGHVSHFLDOO\IRUWKHVLVVLPXODWLRQV ,9
8QLPSOHPHQWHGPDFURV ,90HQXVWUXFWXUH ,9
$SSHQGL[90RGHOVRIHDUSLHFHFDSVXOH 9
$SSHQGL[9,0HDVXUHPHQWVHWXS9,
9,,,
$EEUHYLDWLRQV
&$' &RPSXWHUDLGHGGHVLJQ
'$, 'LJLWDODXGLRLQWHUIDFH
'63 'LJLWDOVLJQDOSURFHVVLQJ
'70) 'XDOWRQHPXOWLIUHTXHQF\
(76, (XURSHDQ7HOHFRPPXQLFDWLRQV6WDQGDUGV,QVWLWXWH
)(0 )LQLWHHOHPHQWPHWKRG
*60 *OREDO6\VWHPIRU0RELOH&RPPXQLFDWLRQV
,78 ,QWHUQDWLRQDO7HOHFRPPXQLFDWLRQ8QLRQ
/5*3 /RXGQHVVUDWLQJJXDUGULQJSRVLWLRQ
5) 5DGLRIUHTXHQF\
63/ 6RXQGSUHVVXUHOHYHO
5/& 5HVLVWDQFHLQGXFWDQFHFDSDFLWDQFH
FJV &HQWLPHWUHVJUDPPHVDQGVHFRQGV
PNV 0HWUHVNLORJUDPPHVDQGVHFRQGV 6,V\VWHP
,;
6\PEROV
$ $UHD
% 0DJQHWLFIOX[GHQVLW\
& &DSDFLWDQFH
( (QHUJ\
) )RUFH
* &RQGXFWDQFH
, ,PSXOVHLQWHQVLW\
. &RPSUHVVLELOLW\
/ ,QGXFWDQFH
3 3RZHU
5 5HVLVWDQFH
9 9ROXPH
< $GPLWWDQFH
= ,PSHGDQFH
F 6SHHGRIVRXQG
G 'LDPHWHU
I )UHTXHQF\
K +HLJKW
L &XUUHQW
N &RHIILFLHQW
O /HQJWKOHQJWKLQIORZGLUHFWLRQ
P 0DVV
Q 1XPEHU
S 3UHVVXUH
T 9ROXPHYHORFLW\FKDUJH
W 7LPHWKLFNQHVV
X 9ROWDJH
Y 9HORFLW\
Z :LGWK
[ 'LVSODFHPHQW
;
Φ 0DJQHWLFIOX[
Ω 6ROLGDQJOH
α 9ROWDJHWUDQVIRUPDWLRQUDWLRGDPSLQJFRHIILFLHQWFRHIILFLHQW
β 7UDQVFRQGXFWDQFHFRHIILFLHQW
γ 3URSDJDWLRQFRQVWDQWFRHIILFLHQW
η (IILFLHQF\
λ :DYHOHQJWK
µ &RHIILFLHQWRIYLVFRVLW\
ω $QJXODUIUHTXHQF\
ρ 'HQVLW\
D $FRXVWLFDO
E %DFN
F &KDUDFWHULVWLFYRLFHFRLO
H (DUSLHFH
I )URQW
K +RXVLQJ
O /HDN
P 0HFKDQLFDOPXWXDOPRYLQJ
U 5DGLDWLRQUHVRQDQFH
V 6SHFLILFVSHDNHUVROLGDQJOH
X 8VHU
Y 9LVFRVLW\
[ $GGLWLRQDO
LQ ,QSXW
PD[ 0D[LPXP
PLQ 0LQLPXP
,QWURGXFWLRQ
,QWURGXFWLRQ
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
0DQ\ DXGLR VLJQDO SURFHVVLQJPHWKRGV DUH DYDLODEOH LQPRGHUQPRELOH WHOHSKRQ\7KHVH DUH XVHG PDLQO\ WR LPSURYH WKH TXDOLW\ RI WUDQVPLWWHG VSHHFK EXW D SDUW RI WKHDFRXVWLFDOEHKDYLRXURIWKHSKRQHZLOODOZD\VUHPDLQDQRXWFRPHRILWVEDVLFPHFKDQLFDODFRXVWLFDOGHVLJQ0HFKDQLFDOO\PRELOHSKRQHVDUHJHWWLQJVPDOOHUDOOWKHWLPHZKLOHWKHLUSHUIRUPDQFHLVLPSURYLQJDQGQHZVROXWLRQVDUHLQYHQWHG7KHVKULQNLQJGLPHQVLRQVDGGWRWKHFKDOOHQJHRIJRRGDFRXVWLFVGHVLJQ
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
$W\SLFDOPRELOHSKRQH
$W\SLFDOPRELOHSKRQH
$OWKRXJKWKHUHDUHPDQ\PDQXIDFWXUHUVDURXQGDQGHDFKRIWKHPSURGXFHVWKHLURZQUDQJHRIPRELOHSKRQHVZLWKPRGHOVDLPHGDWGLIIHUHQWFRQVXPHUJURXSVWKHSULQFLSOHVEHKLQGWKH XVH RI WKH SKRQHV UHPDLQ WKH VDPH0RELOH SKRQHV DQG WKHLU DFFHVVRULHV ORRN IDLUO\VLPLODURUDWOHDVWZRUNYHU\PXFKWKHVDPHZD\7KLVFKDSWHUSURYLGHVVRPHEDVLFEDFNJURXQGLQIRUPDWLRQRQWKHSK\VLFDODSSHDUDQFHPRXQWLQJDQGXVHRISKRQHVDQGDFFHVVRULHV$OVRWKHWUDQVPLVVLRQQHWZRUNLVSUHVHQWHGEULHIO\VLQFHLWLVHDVLO\WKHPRVWVLJQLILFDQWERWWOHQHFNLQWHUPVRIVSHHFKTXDOLW\
7KHKDQGSRUWDEOHDQGLWVDFFHVVRULHV
7KHKDQGSRUWDEOH
7KHWHUPKDQGSRUWDEOHLVXVHGWRGHQRWHDVLQJOHSDFNDJHKRXVLQJDOOWKHHOHFWURQLFVDQGPHFKDQLFDOSDUWVRIDPRELOHSKRQHDVRSSRVHGWRDXQLWZLWKDVHSDUDWHKDQGVHW%HLQJWKHPDLQSDUWRIDPRELOHSKRQHVHWWKHKDQGSRUWDEOHFRQWDLQVHYHU\WKLQJWKDWLVQHFHVVDU\WRPDNHDQGUHFHLYHFDOOV6SHFLILFDOO\
• DPLFURSKRQHFORVHWRWKHXVHU¶VPRXWK• DVPDOOORXGVSHDNHUHDUSLHFHFORVHWRWKHXVHU¶VHDU• DEX]]HURURWKHUDOHUWLQJGHYLFHWRVLJQDODQLQFRPLQJFDOO• FRQQHFWRUVIRUDFFHVVRULHVDQGFKDUJLQJ• RWKHUSDUWVVXFKDVDQDQWHQQDDUHFKDUJHDEOHEDWWHU\SDFNDNH\ERDUGDGLVSOD\D5)
SRZHUDPSOLILHUDQGRWKHUHOHFWURQLFV
)LJXUH$KDQGSRUWDEOH WKHH[DPSOHVKRZQKHUH LV WKH1RNLDZKRVHHDUSLHFHZLOOEHWKHWRSLFRIFKDSWHULQWKLVWKHVLV
7KH KDQGSRUWDEOHPD\ DOVR EH HTXLSSHGZLWK DPRYLQJ OLG RU FRYHU WR SURWHFW WKH NH\VIURP EHLQJ SUHVVHG E\ PLVWDNH 6XFK D OLG VOLGH RU IOLS PD\ SUHVHQW VRPH DGGLWLRQDOSUREOHPVIRUDQDXGLRGHVLJQHUDVZLOOEHVHHQODWHU
$W\SLFDOPRELOHSKRQH
&RPPRQDFFHVVRULHV
)RUWKHVDNHRIERWKFRQYHQLHQFHDQGVDIHW\DFDUGULYHUVKRXOGDYRLGXVLQJRQHKDQGWRKROG WKHSKRQHZKLOH WDONLQJDQGGULYLQJDW WKHVDPH WLPH+DQGVIUHHNLWV FDUNLWV DUHDYDLODEOH WRPRVWPRELOHSKRQHV ,Q VRPHFRXQWULHVKDQGVIUHHNLWV DUH HYHQ UHTXLUHGE\ODZLIWKHSKRQHLVWREHXVHGZKLOHGULYLQJ
$KDQGVIUHHNLWLVDFRPELQDWLRQRIDORXGVSHDNHUDQGDPLFURSKRQHXVXDOO\WREHPRXQWHGRQWKHGDVKERDUGRIWKHFDU7KHPLFURSKRQHSLFNVXSWKHYRLFHRIWKHGULYHURURWKHUSDVVHQJHUDQGWKHVSHHFKQRUPDOO\GLUHFWHGWRWKHHDUSLHFHLVDPSOLILHGDQGVHQWWRWKH ORXGVSHDNHU ZKLFK LV HQFORVHG LQ VRPHNLQG RI ER[ WR SURYLGH D JRRG HQRXJKEDVVUHVSRQVH %HFDXVH ERWK WKH PLFURSKRQH DQG WKH ORXGVSHDNHU DUH ORFDWHG PXFK IDUWKHUDZD\ IURP WKH XVHU¶V PRXWK DQG HDUV WKDQ WKH PLFURSKRQH DQG HDUSLHFH RI WKH DERYHPHQWLRQHGKDQGSRUWDEOH VSHFLDO FDUHPXVW EH WDNHQ WR VXSSUHVV H[WUD EDFNJURXQGQRLVH7KHORXGVRXQGIURPWKH ORXGVSHDNHU LV IUHH WR WUDYHO WR WKHPLFURSKRQHZKLFKZLWKRXWFRXQWHUDFWLRQVZRXOGOHDGWRVHYHUHHFKRDQGKRZOLQJ(FKRLVGHVFULEHGEHORZ
$KHDGVHW LV OLNHDQRUPDOKHDGSKRQHRUHDUSKRQHZLWKDQDGGHGPLFURSKRQH DQGWKXVWKHKHDGVHWIUHHVWKHXVHU¶VKDQGVEXWLVQRWDVVXVFHSWLEOHWREDFNJURXQGQRLVHLQWHUIHUHQFHDQGKRZOLQJDVDKDQGVIUHHNLW7KLVLVVLPSO\EHFDXVHERWKWKHPLFURSKRQHDQGWKHHDUSKRQHRUKHDGSKRQHDUHORFDWHGFORVHUWRWKHPRXWKDQGHDU UHVSHFWLYHO\ZKLFKDOORZVWKHPWRIXQFWLRQPRUHRSWLPDOO\
(DUO\PRELOHSKRQHVXVHGWRKDYHVHSDUDWHKDQGVHWVEXWKDQGVHWVDUHDOVRDYDLODEOHWRVPDOOSRFNHWVL]HSKRQHVWRJLYHDGGLWLRQDOIOH[LELOLW\$VHSDUDWHKDQGVHWLVFRQYHQLHQWIRUH[DPSOHZKHQWKHSKRQHLVPRXQWHGRQWKHGDVKERDUGZLWKDKDQGVIUHHNLW7KHXVHUPD\WKHQVZLWFKEHWZHHQKDQGVIUHHDQGKDQGVHWRSHUDWLQJPRGH)URPWKHDFRXVWLFVGHVLJQSRLQWRIYLHZDKDQGVHWLVYHU\VLPLODUWRDKDQGSRUWDEOH
)LJXUH 7\SLFDOPRELOH SKRQH DFFHVVRULHV IURP WRS OHIW WR ULJKW KDQGVHW KHDGVHWKDQGVIUHH NLW PLFURSKRQH KDQGVIUHH NLW ORXGVSHDNHU $OO RI WKHVH DFFHVVRULHV DUH IRU1RNLDSKRQHV
$W\SLFDOPRELOHSKRQH
6SHHFKWUDQVPLVVLRQ
0RVWRIWKHUHVWULFWLRQVRQVSHHFKWUDQVPLVVLRQDUHGXHWRWKHPDMRUSDUWRI WKHWUDQVPLVVLRQSDWKWKHWUDQVPLVVLRQQHWZRUNFRQQHFWLQJWKHPRELOHWHUPLQDOWRWKHRWKHUSDUW\2EWDLQLQJ D JRRG HQRXJK VSHHFK TXDOLW\ LV D TXHVWLRQ RI UHFRJQL]LQJ WKH UHVWULFWLRQV RQWUDQVPLVVLRQTXDOLW\NQRZLQJWKHSURSHUWLHVRIKXPDQVSHHFKDQGKDYLQJDVRXQGUHSURGXFWLRQLQWKHPRELOHSKRQHWKDWGRHVQRWWRRPXFKGHJUDGHZKDWLVOHIWRIWKHWUDQVPLWWHGVSHHFK
7KHQHWZRUN
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
2QH RI WKHPRVW LPSRUWDQW RI WKHVH LV HFKRZKLFK LV FDXVHGPRVWO\ E\ XQZDQWHGFRXSOLQJIURPHDUSLHFHWRPLFURSKRQHLQDWHOHSKRQHKDQGVHW&RPELQHGZLWKVLJQDOSURFHVVLQJDQGWUDQVPLVVLRQGHOD\VSUHVHQWLQWKHQHWZRUNWKHRWKHUSDUW\ZLOOKHDUHFKRHVRIKLVRUKHURZQYRLFHZKLOHVSHDNLQJRQWKHWHOHSKRQH7KHWUDQVPLVVLRQGHOD\LVHVSHFLDOO\SURQRXQFHGLQPRGHUQGLJLWDOQHWZRUNVGXH WR WKHKHDY\VLJQDOSURFHVVLQJ)RU WKLVUHDVRQVSHFLDOHFKRFDQFHOODWLRQPHWKRGVDUHXVHGWRSUHYHQWWKHHFKRLQJIURPGLVWXUELQJWKHFRQYHUVDWLRQ>@
6SHHFKSURSHUWLHVDQGFRGLQJ
,W LV LPSRUWDQW WR VDYH EDQGZLGWK E\ LQFRUSRUDWLQJ DQ HIILFLHQW FRGLQJ PHWKRG LQ WKHWUDQVPLVVLRQ 7KLV VKRXOG KDSSHQ ZLWKRXW XQQHFHVVDULO\ GHJUDGLQJ WKH LQWHOOLJLELOLW\ RIVSHHFK 6SHHFK WUDQVPLVVLRQ WKHUHIRUH LPSOLHV D FRPSURPLVH EHWZHHQPD[LPL]LQJ WUDQVPLVVLRQ TXDOLW\ DQG PLQLPL]LQJ WUDQVPLVVLRQ EDQGZLGWK 5HVHDUFK DQG H[SHULHQFH KDYHSRLQWHGRXW WKHZHOONQRZQIDFW WKDWVSHHFKPD\EHEDQGSDVVILOWHUHGWRUHGXFH LWVEDQGZLGWKFRQVLGHUDEO\ZLWKRXWDQ\FRUUHVSRQGLQJORVVLQLQWHOOLJLELOLW\>@
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
$W\SLFDOPRELOHSKRQH
7UDQVGXFHUV
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
7\SHDSSURYDO
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
)LJXUH $Q H[DPSOH RI D VSHHFK WUDQVPLVVLRQ IUHTXHQF\ UHVSRQVH UHTXLUHPHQW WKHUHFHLYLQJIUHTXHQF\UHVSRQVHOLPLWVVSHFLILHGIRUPRELOHWHUPLQDOVLQWKH*60V\VWHP>@7KHPLQLPXPDOORZDEOHEDQGZLGWKLV+]WRN+]G%YDOXHVDUHUHODWLYHQRWDEVROXWH
$W\SLFDOPRELOHSKRQH
8VHULQWHUIDFH
7KHXVHULQWHUIDFHRIDPRELOHSKRQHLQFOXGHVDFRXSOHRIIHDWXUHVWKDWEHORQJWRWKHGRPDLQ RI DXGLR GHVLJQ ,Q DGGLWLRQ WR NH\V WR GLDO QXPEHUV DQG WKH GLVSOD\ZKHUH WH[W LVGLVSOD\HGVRPHLQIRUPDWLRQLVDOVRVXSSOLHGWRWKHPRELOHSKRQHXVHUDVVRXQG
$OHUWLQJ
7KH DOHUWLQJ VLJQDO UHSURGXFHG WKURXJK WKH EX]]HU DQG LQGLFDWLQJ DQ LQFRPLQJ FDOO LVGHILQLWHO\WKHPRVWLPSRUWDQWRIDOOXVHULQWHUIDFHVRXQGVLJQDOV,WVKRXOGEHORXGHQRXJKWRGUDZDWWHQWLRQWRDQLQFRPLQJFDOOHYHQLQUDWKHUQRLV\HQYLURQPHQWVEXW\HWLWVKRXOGQRWEHKDUPIXOWRWKHHDULIWKHWHOHSKRQHDFFLGHQWDOO\ULQJVZKLOHKHOGDWDVKRUWGLVWDQFHIURP WKH HDU7KH VKULQNLQJGLPHQVLRQVRIPRELOH SKRQHKDQGSRUWDEOHV EULQJ WKHEX]]HUFORVHUWRWKHHDUSLHFHZKLFKLVDSRWHQWLDOULVN
0RGHUQPRELOHSKRQHVKDYHPDQ\GLIIHUHQWDOHUWLQJVLJQDOFKRLFHV8VXDOO\PRVWRIWKHPDUHPXVLFDOPHORGLHVULQJLQJWXQHV7KLVSODFHVVRPHUHTXLUHPHQWVRQWKHSHUIRUPDQFHRIWKHEX]]HU,WLVGLIILFXOWLQJHQHUDOWRFRPELQHKLJKORXGQHVVRIWKHDOHUWLQJVLJQDOZLWKVPRRWKHTXDOO\ORXGUHVSRQVHRIVHYHUDOGLIIHUHQWIUHTXHQFLHVXVHGLQULQJLQJWXQHV7\SLFDOO\LIDORXGVLJQDOLVZDQWHGUHVRQDQFHKDVWREHWDNHQDGYDQWDJHRIE\FKRRVLQJDEX]]HUZLWKVRPHVWURQJUHVRQDQFHDQGDVLJQDOIUHTXHQF\ WKDWFRLQFLGHVZLWK WKDW UHVRQDQFHLQVXFKDZD\WKDWWKHVRXQGSUHVVXUHOHYHO63/LVERRVWHG
2QWKHRWKHUKDQGVXFKUHVRQDQFHVDOVRHPSKDVL]HFHUWDLQQRWHVLQULQJLQJWXQHVDQGPDNHWKHPVRXQGWRRSURQRXQFHG7KHULQJLQJWXQHVPXVWEHFKRVHQZLWKFDUHNHHSLQJWKHDFRXVWLFDOSURSHUWLHVRIWKHEX]]HULQPLQG,WLVDOVRHVVHQWLDOWRNQRZWKDWWKHEX]]HUPD\KDYH D GLIIHUHQW UHVRQDQFH IUHTXHQF\ZKHQPRXQWHG LQVLGH WKH SKRQH WKDQZKHQ LQ IUHHVSDFH7KHUHDVRQIRUWKLVLVWKDWWKHDFRXVWLFDOORDGRQWKHEX]]HULVGLIIHUHQWLQERWKWKHVHFDVHV([DPSOHVRIWKHVDPHSKHQRPHQRQZLOOEHJLYHQODWHUIRUHDUSLHFHV
.H\SDGWRQHVDQGRWKHUVLJQDOV
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
$XGLRWUDQVGXFHUV
$XGLRWUDQVGXFHUV
7KLVFKDSWHUZLOOSUHVHQWWKHSK\VLFDOSULQFLSOHVEHKLQGWKHWUDQVGXFHUW\SHVHQFRXQWHUHGLQPRELOHSKRQHVDQGDFFHVVRULHVLQRUGHUWRH[SODLQWKHLUSURSHUWLHVDVZHOODVWKHVLPXODWLRQPRGHOVDQGHTXDWLRQVDSSHDULQJ LQVXEVHTXHQWFKDSWHUV$OVR W\SLFDO FKDUDFWHULVWLFVDQGIDFWRUVDIIHFWLQJWKHFKRLFHRIWUDQVGXFHUW\SHIRUHDFKJLYHQDSSOLFDWLRQDUHGLVFXVVHG
7KHZRUGHDUSLHFHKDVEHHQXVHGVRIDUWRGHQRWHWKHVPDOOORXGVSHDNHUKHOGDJDLQVWWKHHDULQDKDQGVHWRUKDQGSRUWDEOH$GGLWLRQDOPHFKDQLFDOVWUXFWXUHVPD\EHEXLOWDURXQGVXFKD ORXGVSHDNHU WR FKDQJH LWV DFRXVWLFDOSURSHUWLHV)RU WKLV UHDVRQ WKH WHUPHDUSLHFHFDSVXOHZLOOEHXVHGKHUHDIWHUWRGHQRWHWKHDFWXDOWUDQVGXFHUFRPSRQHQWZKLOHJHQHUDOO\HDUSLHFHZLOOPHDQWKHZKROHHDUSLHFHDVVHPEO\XQOHVVWKHGLVWLQFWLRQLVREYLRXVIURPWKHFRQWH[W7KHVDPHJRHVIRUPLFURSKRQHFDSVXOHDQGPLFURSKRQH
3ULQFLSOHVRIRSHUDWLRQ
'\QDPLFWUDQVGXFHUV
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
) %OL
X %OY
=
=
ZKHUH)LVWKHIRUFH%LVWKHPDJQHWLFIOX[GHQVLW\OLVWKHOHQJWKRIWKHFRQGXFWRULQVLGHWKHPDJQHWLFILHOGXLVWKHYROWDJHLLVWKHFXUUHQWDQGYLVWKHYHORFLW\XDQGLDUHHOHFWULFDOTXDQWLWLHVZKLOH)DQGYDUHPHFKDQLFDOTXDQWLWLHV(TVGHVFULEHWKHWUDQVGXFWLRQEHWZHHQHOHFWULFDODQGPHFKDQLFDOTXDQWLWLHV
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
5HDG\PDGH HDUSLHFH FDSVXOHV KDYH VRPH NLQG RI KRXVLQJ EXLOW DURXQG WKHP 7KHDFRXVWLFDOSURSHUWLHVRIVXFKKRXVLQJVYDU\TXLWHDORW6RPHHDUSLHFHFDSVXOHVKDYHWKHLUEDFNDQGIURQWFRPSOHWHO\RSHQLQVRPHFDVHVRQHRUWZRRIWKHPLVFRYHUHGZLWKDOD\HU
$XGLRWUDQVGXFHUV
RISRURXVPDWHULDODQGLQVRPHFDVHVWKHEDFNLVFORVHGRUDOPRVWFORVHG7KLVKDVDJUHDWHIIHFWRQWKHDFRXVWLFDOEHKDYLRXU
)LJXUH$W\SLFDOG\QDPLFHDUSLHFHFDSVXOHRUVPDOOG\QDPLFORXGVSHDNHU
(OHFWURPDJQHWLFWUDQVGXFHUV
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
(OHFWURPDJQHWLFWUDQVGXFHUVFDQEHPDGHWRKDYHJRRGVSHHFKUHSURGXFWLRQSURSHUWLHVEXW LQPRELOHSKRQHV LW LVPXFKPRUHFRPPRQ WRHPSOR\ WKHPDVEX]]HUV IRU ORXGDOHUWLQJVLJQDOVRQO\,QW\SLFDOEX]]HUVWKHPRWLRQRIWKHPRYLQJGLDSKUDJPLVQRQOLQHDU'XULQJRSHUDWLRQWKHGLDSKUDJPLVQRWNHSWFRQILQHGWRLWVOLQHDUUHJLRQRIPRYHPHQWEXWUDWKHU GULYHQ EHWZHHQ LWV WZR H[WUHPHV RI PD[LPXP GLVSODFHPHQW 7KLV FUHDWHV VWURQJKDUPRQLFVWKDWHQKDQFHWKHVXEMHFWLYHORXGQHVVRIWKHDOHUWLQJVLJQDO
7KHPHFKDQLFDOVWUXFWXUHRIDQHOHFWURPDJQHWLF WUDQVGXFHU LVVLPSOH7\SLFDOO\ WKHDVVHPEO\LVDVVKRZQLQWKHSLFWXUHEHORZ7KHULPRIWKHPHPEUDQHLVVXSSRUWHGE\WKHWUDQVGXFHUKRXVLQJ,WVKRXOGEHQRWHGWKDWWKHVKDSHRIWKHKRXVLQJDVZHOODVWKHSODFHPHQWRIWKHVRXQGSRUWPD\YDU\TXLWHDORW
)LJXUH$W\SLFDOHOHFWURPDJQHWLFEX]]HU
$XGLRWUDQVGXFHUV
(OHFWUHWWUDQVGXFHUV
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´ILJXUHRIHLJKW´GLUHFWLRQDOFKDUDFWHULVWLFLWLVDELGLUHFWLRQDOPLFURSKRQH
$OWKRXJKSUHVVXUHPLFURSKRQHVDUHLQHIIHFWFORVHGDWWKHEDFNDYHU\VPDOOSUHVVXUHHTXDOL]DWLRQRSHQLQJPXVWVWLOOEHSURYLGHGWRSUHYHQWIOXFWXDWLRQVLQWKHVWDWLFDWPRVSKHULFSUHVVXUH RUYHU\ ORZIUHTXHQF\VRXQGV IURPGLVSODFLQJ WKHPHPEUDQH IURP LWV HTXLOLEULXPSRVLWLRQ
)LJXUH$W\SLFDOHOHFWUHWSUHVVXUHPLFURSKRQH$SUHVVXUHJUDGLHQWPLFURSKRQHZRXOGKDYHRQHRUDIHZELJRSHQLQJVLQVWHDGRIWKHYHU\VPDOOSUHVVXUHHTXDOL]DWLRQKROH
$XGLRWUDQVGXFHUV
3LH]RHOHFWULFWUDQVGXFHUV
3LHFHV RI VRPHPDWHULDOV IRU H[DPSOH 5RFKHOOH VDOW DPPRQLXP GLK\GURJHQ SKRVSKDWHDQG OHDG ]LUFRQDWH WLWDQDWH > S S S @ KDYH WKH SURSHUW\ RIFKDQJLQJVKDSHSURSRUWLRQDOO\WRDQH[WHUQDOHOHFWULFILHOG9LFHYHUVDIRUFHGGHIRUPDWLRQRIWKHVHOHDGVWRSURSRUWLRQDOSRWHQWLDOGLIIHUHQFHVRQWKHLUVXUIDFH0DWHULDOVRIWKLVNLQGDUH FDOOHG SLH]RHOHFWULF 7KHUH DUH ERWK FU\VWDOOLQH DQG FHUDPLF SLH]RHOHFWULF PDWHULDOVDYDLODEOH7KHUHODWLRQEHWZHHQVKDSHDQGHOHFWULF ILHOGPDNHVSLH]RHOHFWULFPDWHULDOVXVDEOHLQSLH]RHOHFWULFWUDQVGXFHUV
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
7UDQVGXFHUFKRLFHV
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
)LJXUH)URPWRSOHIWWRULJKWPLFURSKRQHVEX]]HUVVPDOOORXGVSHDNHUDQGHDUSLHFHFDSVXOHV7KHHDUSLHFHFDSVXOHWRWKHOHIWYLHZHGLQGHWDLOLQFKDSWHULVXVHGLQWKH1RNLDDQGKDVDGLDPHWHURIPP3LFWXUHVE\SHUPLVVLRQRI0DWVXVKLWD&RUS6WDU0LFURQLFV&R/WGDQG3KLOLSV6SHDNHU6\VWHPV
$XGLRWUDQVGXFHUV
(DUSLHFHVDQGHDUSKRQHV
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
/RXGVSHDNHUV
/RXGVSHDNHUVDUHXVHGLQKDQGVIUHHNLWV2IVXFKORXGVSHDNHUVLVUHTXLUHGRQO\WKDWWKH\EHFRQYHQLHQWO\VPDOODQGFDSDEOHRIUHSURGXFLQJLQWHOOLJLEOHVSHHFK3ULFHLVDQRWKHULPSRUWDQW FULWHULRQ IRU WKH DFFHVVRU\PDQXIDFWXUHU &XUUHQWO\ WKHUH DUH QR RIILFLDO UHTXLUHPHQWVRQWKHLUIUHTXHQF\UHVSRQVHFRQWUDU\WRWKHVLWXDWLRQLQW\SHDSSURYDORISKRQHV
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
0LFURSKRQHV
(OHFWUHWPLFURSKRQHVDUHWKHW\SLFDOFKRLFHVIRUPRELOHSKRQHVDQGDFFHVVRULHV7KH\FDQEHPDGHYHU\VPDOODQGWKHLUDFRXVWLFDOSURSHUWLHVDUHIDUFORVHUWRWKHLGHDOWKDQWKRVHRIHDUSLHFHV HDUSKRQHVDQG ORXGVSHDNHUV7KH VL]HDGYDQWDJH LV LPSRUWDQW LQPRELOHSKRQHGHVLJQEXWUHGXFLQJPLFURSKRQHVL]HDOVRPHDQVOHVVVHQVLWLYLW\'LPHQVLRQVRIDURXQGPPDUHFRPPRQ'\QDPLFPLFURSKRQHVDUHQRWVXLWDEOHIRUXVHLQPRELOHSKRQHVGXHWRWKHLUODUJHUVL]HDQGLQWHUIHUHQFHSLFNXSE\WKHYRLFHFRLO
$XGLRWUDQVGXFHUV
%X]]HUV
,QPRELOHSKRQHVEX]]HUVDUHQRWXVHGIRUVSHHFKUHSURGXFWLRQ7KHLURQO\SXUSRVHLV WRHPLW ORXG HQRXJK DOHUWLQJ DQG ZDUQLQJ VLJQDOV )RU WKLV UHDVRQ LW GRHV QRW PDWWHU KRZPXFKWKH\GLVWRUW WKH LQFRPLQJHOHFWULFVLJQDODV ORQJDV WKHUHVXOWDQWVRXQG LV VXEMHFWLYHO\ORXGHQRXJKDQGQRWWRRXQSOHDVDQWDWWKHLQWHQGHGIUHTXHQFLHV
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
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
3ULQFLSOHVRIDFRXVWLFV VLPXODWLRQ
7KLVFKDSWHUGHDOVZLWK WKHEDVLF WKHRUHWLFDOSULQFLSOHV WKDW DOORZRQH WRDSSO\ WRROV DQGPHWKRGV IRU HOHFWULF FLUFXLW DQDO\VLV WR DFRXVWLFV DQG PHFKDQLFV ZKLFK EHORQJV WR WKHVDPHILHOGVLQFHSK\VLFDOWUDQVGXFHUVZLWKPRYLQJSDUWVDUHHPSOR\HG+RZWKHVHPHWKRGVDUHSUDFWLFDOO\LPSOHPHQWHGZLOOEHYLHZHGLQWKHQH[WFKDSWHU
7KHNH\VWRDFRXVWLFVVLPXODWLRQ
&RPSXWHU SURJUDPV IRU HOHFWULF FLUFXLW VLPXODWLRQ DUH ZLGHO\ XVHG E\ FLUFXLW GHVLJQHUV7KHVHSURJUDPVKHUHDIWHUFDOOHGVLPXODWRUVDUHW\SLFDOO\DEOHWRUXQDWOHDVWWUDQVLHQW$&DQG'&DQDO\VHVRQFLUFXLWV7KH\DUHWKHQDEOHWRRXWSXWUHVXOWVWRDILOHDSULQWHURUWKHVFUHHQ&LUFXLWV DUH GHVFULEHG XVLQJ VLPSOH WH[W VWDWHPHQWV REH\LQJ D VSHFLILF V\QWD[ RUGUDZQRQWKHVFUHHQXVLQJDJUDSKLFDOHGLWRU7KHEHVWNQRZQFLUFXLWVLPXODWRU LV63,&(LQ YDULRXV DSSHDUDQFHV ,Q VRPHPRUH DGYDQFHG V\VWHPV VXFK DV$3/$& WKH FLUFXLWGHVFULSWLRQ DSSURDFKHV D SURJUDPPLQJ ODQJXDJH ZKLFK DOORZV WKH GHVLJQHU WR LQFOXGHRSWLPL]DWLRQURXWLQHVRURWKHUVSHFLDOIXQFWLRQV>@
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
$QDORJLHV
7KHWKUHHSULPDU\GRPDLQV
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
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
• HTXLYDOHQWFLUFXLWVVKRXOGEHHDV\WRFUHDWHDQG• WKHVLPXODWLRQVRIWZDUHVKRXOGEHDEOHWRRXWSXWWKHQHFHVVDU\LQIRUPDWLRQ
6LPXODWRUVRXWSXWQRGHYROWDJHVDQGEUDQFKFXUUHQWV,QDGGLWLRQWRWKHVHFKDUJHVWRUHGLQFDSDFLWRUV DQG PDJQHWLF IOX[HV LQ LQGXFWRUV DUH GLUHFWO\ DYDLODEOH LQ W\SLFDO VLPXODWRUV7KLVFDQEHWDNHQDGYDQWDJHRIE\FKRRVLQJDVXLWDEOHVHWRITXDQWLWLHV7KHILUVWUHTXLUHPHQWPHDQVWKDWLWVKRXOGEHDVVWUDLJKWIRUZDUGDVSRVVLEOHWRVNHWFKDQHTXLYDOHQWFLUFXLWZKHQWKHPHFKDQRDFRXVWLFDOWRSRORJ\RIWKHV\VWHPLVNQRZQ
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
7DEOH%DVLFDQDORJRXVTXDQWLWLHVLQWKHHOHFWULFDOPHFKDQLFDODQGDFRXVWLFDOGRPDLQVLPSHGDQFHDQDORJ\
(OHFWULFDOGRPDLQ 0HFKDQLFDOGRPDLQ $FRXVWLFDOGRPDLQ9ROWDJH )RUFH 3UHVVXUH&XUUHQW 9HORFLW\ )ORZUDWH
)ORZUDWHDVPHQWLRQHGDERYH LV FDOOHGYROXPHYHORFLW\ LQDFRXVWLFV%RWKSUHVVXUHDQGIORZUDWHDUHGHILQHGDV LQIOXLGSK\VLFV7KHDQDORJ\GHILQHGDERYHLVFDOOHG LPSHGDQFHDQDORJ\RUGLUHFWDQDORJ\$QRWKHUZHOONQRZQDQDORJ\FDOOHGDGPLWWDQFHDQDORJ\PRELOLW\DQDORJ\RULQYHUVHDQDORJ\LVIRUPHGE\H[FKDQJLQJWKHUROHVRIYROWDJHDQGFXUUHQW>S@,QWKLVDQDORJ\WKHYROWDJHFRUUHVSRQGVWRYHORFLW\DQGIORZUDWHDQGFXUUHQWFRUUHVSRQGVWRIRUFHDQGSUHVVXUH
7DEOH $OWHUQDWLYH DQDORJRXV TXDQWLWLHV LQ WKH HOHFWULFDOPHFKDQLFDO DQG DFRXVWLFDOGRPDLQVDGPLWWDQFHDQDORJ\
(OHFWULFDOGRPDLQ 0HFKDQLFDOGRPDLQ $FRXVWLFDOGRPDLQ&XUUHQW )RUFH 3UHVVXUH9ROWDJH 9HORFLW\ )ORZUDWH
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
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
5DGLDWLRQDVDIRXUWKGRPDLQ
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
7KHUDGLDWLRQGRPDLQDVLWZLOOEHFDOOHGKHUHDIWHUFDQEHVHHQDVDPRGLILFDWLRQRIWKHDFRXVWLFDOGRPDLQGHVFULEHGSUHYLRXVO\
7DEOH5HODWLRQRIUDGLDWLRQGRPDLQWRFRPPRQDFRXVWLFDOGRPDLQ
$FRXVWLFDOGRPDLQ 5DGLDWLRQGRPDLQSSUHVVXUH SSUHVVXUHTYROXPHYHORFLW\ YSDUWLFOHYHORFLW\
2IFRXUVHVRXQGUDGLDWLRQLVDQDFRXVWLFDOSKHQRPHQRQMXVWDVDLUIORZDQGDLUFRPSUHVVLRQLQFRQILQHGVSDFHVDQGLQWKDWUHVSHFWWKHUDGLDWLRQGRPDLQLVDOVR´DFRXVWLFDO´+RZHYHULQRUGHUWRGLVWLQJXLVKWKLVGRPDLQDVGHILQHGKHUHIURPWKHDFRXVWLFDOGRPDLQDVGHILQHG DERYH DQG LQ FRPPRQ DFRXVWLFV OLWHUDWXUH LW ZDV JLYHQ WKH VSHFLDO QDPH´UDGLDWLRQGRPDLQ´ ,PSHGDQFHVKDYHDVSHFLDOPHDQLQJ LQ WKH UDGLDWLRQGRPDLQVHHEHORZEXWPRVWRWKHUTXDQWLWLHVDQGHTXLYDOHQFHVLQWKHUDGLDWLRQGRPDLQZLOOQRWEHH[DPLQHGDQ\IXUWKHUEHFDXVHWKHUDGLDWLRQGRPDLQZLOOQRWEHXVHGWKLVWKHVLV
6XPPDU\RIDQDORJLHV
$OOWKHQHHGHGTXDQLWLWLHVFDQEHGHULYHGIURPWKHIHZRQHVFKRVHQDERYHDGGLQJDOVRWKHWLPHWZKLFKLVLGHQWLFDOLQDOOGRPDLQV7KLVLVVWUDLJKWIRUZDUGDQGWKHGHWDLOVZLOOQRWEHSUHVHQWHGKHUHGXHWRODFNRIVSDFH7KHWDEOHEHORZVKRZVDOOWKHXVHIXOTXDQWLWLHVWKHLUXQLWVLQWKH6,V\VWHPDQGWKHLUGHILQLWLRQVER[HGHTXDWLRQV
7DEOH 6XPPDU\ RI DQDORJLHV XVHG LQ WKLV WKHVLV 6RPH TXDQWLWLHV WKDW DUH QRW RIWHQXVHGDQGRUGRQRWKDYHDQ\HVWDEOLVKHGQDPHDUHOHIWRXW
(OHFWULFDO 0HFKDQLFDODGPLWWDQFHDQDORJ\
$FRXVWLFDOLPSHGDQFHDQDORJ\
5DGLDWLRQ
9ROWDJHX 9HORFLW\Y 3UHVVXUHS 3UHVVXUHSYROW9 PV SDVFDO3D SDVFDO3D&XUUHQWL )RUFH) 9ROXPHYHORFLW\T 3DUWLFOHYHORFLW\YDPSHUH$ QHZWRQ1 PV PV&KDUJHT ,PSXOVH, 9ROXPH9 3DUWLFOHGLVSODFHPHQW[
FRXORPE& 1V P PGT LGW= G, )GW= G9 TGW= G[ YGW=
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
0DJQHWLFIOX[Φ
'LVSODFHPHQW[
ZHEHU:E PHWHUPG XGWΦ = G[ YGW=
,PSHGDQFH= 0HFKDQLFDODGPLWWDQFH<P
$FRXVWLFLPSHGDQFH=D
6SHFLILFDFRXVWLFLPSHGDQFH=DV
RKPΩ P1V 3DVP 3DVP
=XL
= <Y)P = =
STD = =
SYDV =
$GPLWWDQFH< 0HFKDQLFDOLPSHGDQFH=P
$FRXVWLFDGPLWWDQFH<D
PKR 1VP P3DV
<LX
= =)YP = <
TSD =
5HVLVWDQFH5 0HFKDQLFDOFRQGXFWDQFHUHVSRQVLYHQHVV
*P
$FRXVWLFUHVLVWDQFH 5D
RKPΩ P1V 3DVP
5XL
= *Y)P = 5
STD =
&RQGXFWDQFH* 0HFKDQLFDOUHVLVWDQFH5P
$FRXVWLFFRQGXFWDQFH*D
PKR 1VP P3DV
*LX
= *)YP = *
TSD =
,QGXFWDQFH/ 0HFKDQLFDOFDSDFLWDQFHFRPSOLDQFH&P
$FRXVWLFLQGXFWDQFHLQHUWDQFH /D
KHQU\+ P1 NJP
X /GLGW
= Y &G)GWP= S /
GTGWD=
/GGL
= Φ&
G[G)P = /
SGWGTD =
&DSDFLWDQFH& 0HFKDQLFDOLQGXFWDQFH/P PDVVP
$FRXVWLFFDSDFLWDQFH&D
IDUDG) NLORJUDPNJ P3D
L &GXGW
= ) /GYGWP= T &
GSGWD=
>GX
= / PG,GYP = = &
G9GSD =
3RZHU3 3RZHU3 3RZHU3 ,QWHQVLW\,ZDWW: ZDWW: ZDWW: :P
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
(QHUJ\( (QHUJ\( (QHUJ\(MRXOH- MRXOH- MRXOH-G( 3GW= G( 3GW= G( 3GW=
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
%DVLFFRPSRQHQWVDQGTXDQWLWLHV
7KLVVHFWLRQSURYLGHVDPRUHGHWDLOHGORRNDWWKHGHILQLWLRQVRIWKHYDULRXVLPSHGDQFHVDQGWKHZD\V WKDW WKH\ DUH GLVJXLVHG LQ UHDOPHFKDQLFV DQG DFRXVWLFV 6XFK XQGHUVWDQGLQJ LVHVVHQWLDO LQ RUGHU WR EH DEOH WR H[WUDFW FRPSRQHQWV IRU WKH HTXLYDOHQW FLUFXLWV IURP UHDOZRUOGDFRXVWLFDOV\VWHPV
7KH6,PNVV\VWHPLVXVHGWKURXJKRXWLQWKLVWKHVLVDOWKRXJKIRUPHUO\WKHFJVV\VWHPFHQWLPHWUHVJUDPPHVDQGVHFRQGVLQVWHDGRIPHWUHVNLORJUDPPHVDQGVHFRQGVZDVXVHG DOPRVW H[FOXVLYHO\ LQ DFRXVWLFV 7KH LQWHUUHODWLRQV EHWZHHQ WKHVH V\VWHPV DUH WDEXODWHGLQDSSHQGL[,,
*HQHUDOLPSHGDQFH
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
)URPWKHGHILQLWLRQVLWFDQEHGHGXFHGWKDWWKHDFRXVWLFDQGPHFKDQLFDOLPSHGDQFHVIRUDJLYHQFDVHDUHUHODWHGDVIROORZV
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
==
$DP=
ZKHUH $ LVWKHVXUIDFHDUHD5HVLVWDQFHVLQGXFWDQFHVDQGFDSDFLWDQFHVZLOOEHYLHZHGQH[W7KHUHDUHSUDFWLFDOO\
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
5HVLVWDQFH
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
• PHFKDQLFDOGDPSLQJIRUH[DPSOHWRUHGXFHYLEUDWLRQRUVPRRWKRXWDPHFKDQLFDOUHVRQDQFHDQG
• VXVSHQVLRQORVVHVH[DPSOHWKHVXVSHQVLRQRIDORXGVSHDNHUPHPEUDQH
$SXUHDFRXVWLF UHVLVWDQFH XQLW3DVPRU NJPV FDQEH YLHZHG DV DQ LGHDO YLVFRXVIRUFHRSSRVLQJWKHIORZRIDPDVVOHVVPHGLXPZKRVHSUHVVXUHLVSWKURXJKDK\SRWKHWLFDOVXUIDFH)URPHTIRUVRPHJLYHQFDVH
55
$DP=
$FRXVWLFUHVLVWDQFHLVW\SLFDOO\GXHWRWKHYLVFRVLW\RIWKHPHGLXPDLULWVHOI7KLVYLVFRVLW\LVHVSHFLDOO\SURQRXQFHGLQ
• VPDOOKROHV• QDUURZVOLWVDQG• OD\HUVRIFORWK
7KHUHDUHDOZD\VYLVFRVLW\ORVVHVSUHVHQWZKHQDLUIORZVWKURXJKPHFKDQLFDOVWUXFWXUHV7RPRGHO WKLV LPSRUWDQWEHKDYLRXU WKHFRUUHVSRQGLQJDFRXVWLFUHVLVWDQFHPXVWEH WDNHQLQWRDFFRXQW2IFRXUVH LIVRPHRWKHUDFRXVWLF LPSHGDQFHSUHGRPLQDWHVRQHPD\GLVFDUG WKHYLVFRXVUHVLVWDQFHXQOHVVWRRPXFKDFFXUDF\LVORVW
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
,QGXFWDQFH
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
//
$P$D
P= =
ZKHUH $ LVWKHVXUIDFHDUHDRYHUZKLFKWKHSUHVVXUHDFWVDQGP LV WKHPRYLQJPDVV$SXUHDFRXVWLFLQGXFWDQFHZRXOGEHIRUPHGE\DYROXPHRIPHGLXPPRYLQJZLWKRXWFRPSUHVVLRQDQGYLVFRXVORVVHV7\SLFDOFDVHVZKHUHDFRXVWLFLQGXFWDQFHVPD\EHODUJHDUH
• LQVPDOORSHQLQJV• LQORQJWXEHVRUGXFWV
7KHVPDOOHUWKHDUHDWKHELJJHUWKHDFRXVWLFLQGXFWDQFHEHFDXVHWKHDUHDLVLQWKHGHQRPLQDWRULQHT
&DSDFLWDQFH
$SXUHPHFKDQLFDOFDSDFLWDQFH XQLWP1RUVNJ LV IRUPHGE\D IRUFH WKDW LVSURSRUWLRQDO WRGLVSODFHPHQWDV LVXQGHUVWRRG ORRNLQJDW WKHGHILQLWLRQ LQ WDEOH7KLV LV WKHNLQGRIEHKDYLRXUVKRZQE\DQLGHDOVSULQJDQGWKHPHFKDQLFDOFDSDFLWDQFHLVVLPSO\WKHUHFLSURFDORIWKHVSULQJFRQVWDQWUDWLRRIIRUFHWRGLVSODFHPHQWIURPHTXLOLEULXP7\SLFDOPHFKDQLFDOFDSDFLWDQFHVDUH
• VXVSHQVLRQVDURXQGDORXGVSHDNHUFRQHIRUH[DPSOHDQG• IOH[LEOHPHPEUDQHV
$QDORJRXVO\DQDFRXVWLFFDSDFLWDQFHXQLWP3DRUPVNJLVIRUPHGE\DSUHVVXUHWKDWLVSURSRUWLRQDOWRDFKDQJHRIYROXPH,IDSUHVVXUHDFWVWRFKDQJHVRPHFORVHGYROXPHLWZLOOEHRSSRVHGE\DSUHVVXUHSURSRUWLRQDOWRWKHFKDQJHRIYROXPH%\GHILQLWLRQRIFRPSUHVVLELOLW\RIDQLGHDOIOXLGWKHDFRXVWLFFDSDFLWDQFHIRUVRPHYROXPHRIIOXLGLVHTXDOWRWKHSURGXFWRIFRPSUHVVLELOLW\DQGHTXLOLEULXPYROXPH
& .9D =
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
ZKHUH. LV WKHFRPSUHVVLELOLW\,QRWKHUZRUGVDFRXVWLFFDSDFLWDQFHDQGYROXPHDUHSURSRUWLRQDO IRU D JLYHQ FRPSUHVVLEOH IOXLG ,Q WKLV SDUWLFXODU FDVH WKH IOXLG LV WKH DLU WKDWSURSDJDWHV VRXQG5HDO DLU LV QRW DQ LGHDO IOXLG KHQFH D UHDOZRUOG DFRXVWLF FDSDFLWDQFHZLOOSUDFWLFDOO\DOZD\VKDYHORVVHV)LQDOO\IURPHT
& $ &D P=
$FRXVWLFFDSDFLWDQFHDSSHDUVZKHQHYHUWKHIORZRIPHGLXPLVRSSRVHGE\DSUHVVXUHSURSRUWLRQDO WR WKHFKDQJHRIYROXPH$FDYLW\RIDLU LVE\IDU WKHPRVW W\SLFDOFDVHZLWKDVPDOOFDYLW\DSSHDULQJDVDVPDOODFRXVWLFFDSDFLWDQFHDQGYLFHYHUVD
,QWHUFRQQHFWLQJWKHGRPDLQV
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
E E
D D
( )
D D EE
= =α
α
α WXUQVUDWLR LHYROWDJHWUDQVIRUPDWLRQUDWLR
E E
D D
( )
E D DE
= =β
β
β WUDQVFRQGXFWDQFH
)LJXUH ,GHDO WRS WUDQVIRUPHU DQG ERWWRP J\UDWRU DQG WKHLU FKDUDFWHULVWLF HTXDWLRQV7KHTXDQWLWLHVDYROWDJHDQGEFXUUHQWPD\UHSUHVHQWDQ\DQDORJRXVTXDQWLWLHVDVGHVFULEHGDERYH
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
$VSHFLDOFRPSOLFDWLRQDULVHVIURPWKHH[FKDQJHRIRQO\RQHTXDQWLW\LQJRLQJIURPWKHDFRXVWLFDOGRPDLQWRWKHUDGLDWLRQGRPDLQDQGYLFHYHUVD8VLQJWKHUHODWLRQVGHILQHGDERYH LW FDQEH VHHQ WKDW LQ WKLV FDVH WKHGRPDLQ LQWHUIDFHKDV WREH D WUDQVIRUPHUZLWKGLIIHUHQW WUDQVIRUPDWLRQ UDWLRV IRU YROWDJH DQG FXUUHQW WKH YROWDJH WUDQVIRUPDWLRQ UDWLR
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
PXVWEHXQLW\SUHVVXUHRQERWKVLGHVZKLOHWKHFXUUHQWWUDQVIRUPDWLRQUDWLRPXVWGHSHQGRQWKHUDGLDWLQJDUHDYROXPHYHORFLW\RQRQHVLGHDQGSDUWLFOHYHORFLW\RQWKHRWKHUVLGHVHHWDEOH
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
$GYDQWDJHVRIVLPXODWLRQ
%HIRUHJRLQJ LQWRPRUHGHWDLO VRPHDGYDQWDJHVRI VLPXODWLRQDUHSUHVHQWHG LQ DJHQHUDOPDQQHU0DQ\RIWKHVWDWHPHQWVKHUHZLOOEHH[HPSOLILHGLQODWHUFKDSWHUVZKHUHSUDFWLFDOFDVHVDUHYLHZHG7KH VDPHJRHV IRU WKHGLVDGYDQWDJHVDQG UHVWULFWLRQVPHQWLRQHGDW WKHHQGRIWKLVFKDSWHU
(YDOXDWLRQRIEDVLFVROXWLRQV
7KHSURFHGXUHRIFKDQJLQJSDUDPHWHUVDQGURXWLQJFRQQHFWLRQVLVIDVWDQGVLPSOHLQVLPXODWLRQHVSHFLDOO\LIDJUDSKLFDOVFKHPDWLFVHGLWRULVDYDLODEOH&KDQJLQJFRPSRQHQWYDOXHVUHSUHVHQWVFKDQJLQJHOHFWULFPHFKDQLFDODQGDFRXVWLF LPSHGDQFHVDQGFKDQJLQJFRQQHFWLRQVPHDQVFUHDWLQJQHZIORZSDWKVIRUFXUUHQWLHDLULQWKHDFRXVWLFDOGRPDLQ$OOWKLVLVHVSHFLDOO\JRRGDWDQHDUO\VWDJH LQ WKHGHYHORSPHQWRIDSURGXFWZKHQQRRUYHU\ OLWWOHKDUGZDUHLVDYDLODEOH6LPXODWLRQLVWKHQXVHIXOZKHQHYDOXDWLQJZKLFKKDUGZDUHVROXWLRQWRXVH7KHUHDUHRIWHQVHYHUDOPHFKDQLFDOGHVLJQDQGWUDQVGXFHUFKRLFHV
,WLVFOHDUWKDWVRPHSDUWRIWKHV\VWHPPXVWEHVSHFLILHGEHIRUHVWDUWLQJWRVHDUFKIRUWKHEHVW VROXWLRQ7U\LQJGLIIHUHQWPHFKDQLFDO VROXWLRQVQHHGVDPRGHORI WKH WUDQVGXFHUDQGYLFHYHUVD7KH WDVNEHFRPHVGLIILFXOW LI WKHUH DUH WRRPDQ\XQVSHFLILHGSDUDPHWHUV3ULFHPHFKDQLFDO FRPSOH[LW\ ZKLFK GLUHFWO\ DIIHFWV WKH SURGXFWLRQ SURFHVV DVZHOO DVZDWHUDQGGXVWUHVLVWDQFHDUHRWKHULPSRUWDQWIDFWRUV,QDQ\FDVH LW LVDJUHDWDGYDQWDJHWKDWKDUGZDUHLVQRWQHFHVVDULO\QHHGHGDWDOOIRUVXFKHDUO\VWDJHWDVNVDV
• HYDOXDWLQJWKHDFRXVWLFDOSHUIRUPDQFHRIYDULRXVSKRQHPHFKDQLFDOGHVLJQRSWLRQV• ILQGLQJWKHEHVWPRXQWLQJRSWLRQRIWKHWUDQVGXFHUFRPSRQHQWLQVLGHWKHSKRQH• FKHFNLQJZKHWKHURUQRWVRPHLQWHQGHGWUDQVGXFHUFDQEHSURWHFWHGE\DGXVWDQGZDWHU
VKLHOGPHPEUDQHZLWKRXWSHUIRUPDQFHVXIIHULQJDQG• HYDOXDWLQJWUDQVGXFHUFRPSRQHQWVRIYDULRXVEUDQGVLQWKHLQWHQGHGSKRQHPHFKDQLFV
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
7UDQVGXFHUVSHFLILFDWLRQ
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
• FUHDWLQJDQLQLWLDOWUDQVGXFHUPRGHOXQOHVVRQHLVDYDLODEOH• VSHFLI\LQJ UHTXLUHG RXWSXW FDSDELOLW\ RI D WUDQVGXFHU FRPSRQHQWZKHQ WKHPHFKDQLFV
GHVLJQPRXQWLQJLQSXWVLJQDODPSOLWXGHHWFDUHNQRZQ• WHVWLQJSRVVLEOHLPSURYHPHQWVWRDQDYDLODEOHWUDQVGXFHUFRPSRQHQWDQG• VSHFLI\LQJPD[LPXPDOORZDEOHWROHUDQFHVRIJLYHQWUDQVGXFHUSDUDPHWHUV
7XQLQJDQGRSWLPL]DWLRQ
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
9HULILFDWLRQ
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
$OOGHFHQWVLPXODWRUVKDYHVRPHNLQGRI0RQWH&DUORRUZRUVWFDVHDQDO\VLVRSWLRQWRYHULI\ WKHHIIHFWRI WKH LQHYLWDEOH WROHUDQFHV ,I VRPHSDUWLFXODU VROXWLRQDSSHDUV WREHYHU\VHQVLWLYHWRWROHUDQFHVRUVPDOODLUOHDNVWKDWVROXWLRQFDQEHHLWKHUPRGLILHGRUGLVFDUGHGWRJLYHZD\WRDQRWKHUEHWWHUVROXWLRQ$OOWKLVLVFKHDSDQGTXLFNXVLQJVLPXODWLRQEXWFKDQJLQJ WKHDFRXVWLFVRUPHFKDQLFVVROXWLRQDWD ODWHU VWDJH LQ WKHSURGXFWGHYHORSPHQWSURFHVVLVFRVWO\DQGWLPHFRQVXPLQJ
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
:KHQPHDVXUHPHQWLVKDUGRULPSRVVLEOH
7KH VPDOO GLPHQVLRQVRIPRELOH SKRQHV DQG WKHLU WUDQVGXFHUV FRPSOLFDWHPHDVXUHPHQWV7R H[DPLQH VD\ WKH H[FXUVLRQ RI DPLFURSKRQHPHPEUDQH WKH VRXQGSUHVVXUH LQVLGH DVPDOOFDYLW\RUWKHIRUFHVDFWLQJRQWKHPRYLQJWUDQVGXFHUSDUWVRQHQHHGVWRKDYHVSHFLDOL]HGHTXLSPHQWDWKDQG,QVRPHFDVHVVXFKPHDVXUHPHQWVDUHHYHQLPSRVVLEOHOHDYLQJWKHHQJLQHHUZLWKRWKHUPHWKRGVVXFKDVHVWLPDWLRQKDQGFDOFXODWLRQRUVLPXODWLRQ2I WKHVHWKUHHVLPXODWLRQLVWKHEHVWFKRLFHLQWHUPVRIVLPSOLFLW\DQGDFFXUDF\SURYLGHGRIFRXUVHWKDWJRRGPRGHOVDUHDYDLODEOH
5HVWULFWLRQV
1RQOLQHDULW\
7\SLFDOVLPXODWRUVDUHQRWFDSDEOHRIVLPXODWLQJQRQOLQHDUEHKDYLRXULQWKHIUHTXHQF\GRPDLQ7KLVLVEHFDXVHDQRSHUDWLQJSRLQWDQDO\VLVLVPDGHILUVWDQGWKHQWKHFLUFXLWLVOLQHDUL]HG DURXQG WKDW RSHUDWLQJ SRLQW > S @ ,Q WKLV SURFHVV DOO QRQOLQHDULW\ LV ORVW QRPDWWHUKRZZHOOPRGHOOHG7KHPRVWLPSRUWDQWQRQOLQHDULWLHVLQUHDOZRUOGHOHFWURDFRXVWLFVDUH
• WKHQRQOLQHDUFRPSUHVVLRQDQGIORZRIDLU• QRQOLQHDUEHKDYLRXURIPDWHULDOVVXVSHQVLRQVPHPEUDQHVDQG• QRQOLQHDULW\UHVXOWLQJIURPWKHFRQVWUXFWLRQRI WUDQVGXFHUVQRQXQLIRUPPDJQHWLFILHOG
DURXQGWKHYRLFHFRLOHWF
2IFRXUVHQRQOLQHDULW\FDQEHQHJOHFWHGLIVPDOOVLJQDOEHKDYLRXURQO\LVVLPXODWHG8VLQJVLPXODWRUVWKDWSURSHUO\VXSSRUWQRQOLQHDULW\GLVWRUWLRQHIIHFWVFDQEHH[DPLQHGLIDOOWKHUHOHYDQWQRQOLQHDULWLHV DUHEXLOW LQWR WKH HTXLYDOHQW FLUFXLW8VXDOO\ WKLVPHDQV WKDW VRPHFRPSRQHQWVKDYHPDWKHPDWLFDOH[SUHVVLRQVLQVWHDGRIFRQVWDQWYDOXHV7KH0LFUR&DS9YHUVLRQVLPXODWRUFDQQRWVLPXODWHQRQOLQHDULW\LQWKHIUHTXHQF\GRPDLQEXWIRUWXQDWHO\LWFDQKDQGOHIUHTXHQF\GHSHQGHQWFRPSRQHQWYDOXHVZKLFKLVDIHDWXUH WKDWZLOOEHSXW WRXVHLQWKLVWKHVLV
0RGHODYDLODELOLW\
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
,QSULQFLSOHDWUDQVGXFHUIRUZKLFKQRPRGHOLVDYDLODEOHFDQEHPRGHOOHGDVDWZRSRUWZLWKUHOHYDQWSDUDPHWHUVVXFKDVLQSXWDQGRXWSXWLPSHGDQFHZLWKRQHRIWKHVHEHLQJHOHFWULFDQGWKHRWKHURQHDFRXVWLF&LUFXLWV\QWKHVLVPHWKRGVFDQEHDSSOLHGRUDPDWKH
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
PDWLFDOH[SUHVVLRQRUHYHQUDZPHDVXUHPHQWGDWDPRGHOOLQJWKHPHDVXUHGEHKDYLRXUFDQEHLQFOXGHGLQWKHHTXLYDOHQWFLUFXLW²SURYLGHGWKDWWKHVLPXODWRUVXSSRUWVVXFKPRGHOV8QNQRZQHOHFWULFLPSHGDQFHVFDQEHPHDVXUHGXVLQJVRPHRIWKHPRUHDGYDQFHGPXOWLPHWHUVRUDQDO\]HUVRQ WKHPDUNHWEXWQRFRPPHUFLDOPXOWLPHWHUVH[LVW IRUDFRXVWLF LPSHGDQFHV7KXVDFRXVWLF LPSHGDQFHVKDYH WREHPHDVXUHGXVLQJSUHVVXUHRU IORZJHQHUDWRUVDQGSUREHVRUPRUHFRPPRQO\WHUPLQDWLQJDWUDQVPLVVLRQOLQHZLWKWKHLPSHGDQFHWREHPHDVXUHGDQGFDOFXODWLQJLWVYDOXHZLWKWKHDLGRID6PLWKGLDJUDPRUVLJQDODQDO\]HU
$PRGHOREWDLQHGGLUHFWO\ IURPUHVXOWVRIPHDVXUHPHQWV LVSUREDEO\PRUHDFFXUDWHWKDQDOXPSHGFLUFXLWPRGHOWXQHGE\KDQGZLWKYDOXHVWDNHQIURPPDQXIDFWXUHUVSHFLILFDWLRQV 7KH GLVDGYDQWDJH LV WKDW WKH SLFWXUH RI VHYHUDO LQWHUQDO SHUIRUPDQFH SDUDPHWHUV LVORVWDQGRQHVLQJOHLPSHGDQFHFDQQRWEHLVRODWHG)RUH[DPSOHLWPD\QRWEHSRVVLEOHWRVLPXODWHZKDW KDSSHQVZKHQ VRPH LQWHUQDOPHFKDQLFDO GLPHQVLRQ FKDQJHV GXH WR WROHUDQFHV
3K\VLFDOVL]HYHUVXVZDYHOHQJWK
7KHPRGHOOLQJRIPHFKDQLFDOVWUXFWXUHVXVLQJVLPSOHHTXLYDOHQWFLUFXLWVZLWKOXPSHGFRPSRQHQWV LV UHVWULFWHG E\ RQH RI WKH LPSRUWDQW GLIIHUHQFHV EHWZHHQ HOHFWULF FLUFXLWV DQGDFRXVWLFVDWDXGLRIUHTXHQFLHV,QHOHFWULFFLUFXLWVWKHZDYHOHQJWKVDUHIDUJUHDWHUWKDQWKHFRPSRQHQWGLPHQVLRQVHYHQDW WKHKLJKHVWDXGLRIUHTXHQFLHV6XFK LVQRWQHFHVVDULO\ WKHFDVHIRUPHFKDQLFDOGLPHQVLRQVHQFRXQWHUHGLQPRELOHSKRQHV*HQHUDOO\WRSHUPLWWKHXVHRI OXPSHG FRPSRQHQWV LQ HTXLYDOHQW FLUFXLWV WKHSK\VLFDO GLPHQVLRQVRI WKHPHFKDQLFDOVWUXFWXUHV WKDW DUH WR EHPRGHOOHG VKRXOG EH FRQVLGHUDEO\ VPDOOHU WKDQ WKH VRXQGZDYHOHQJWKDWDOOIUHTXHQFLHVXVHG,IWKH\DUHXVHRIOXPSHGDFRXVWLFLPSHGDQFHVLVMXVWLILHG
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π°ZKLFKFRUUHVSRQGVWRDWZHOIWKRIWKHZDYHOHQJWKJLYHVWKHPD[LPXPGLPHQVLRQVPPDWN+]DQGFPDWN+]$WDEOHRIWKHVHFDQEHIRXQGLQDSSHQGL[,
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
7UDQVGXFHULUUHJXODULWLHV
(DUSLHFHFDSVXOHV DQG ORXGVSHDNHUV IHHGLQJ WKHQHWZRUNFRQVLVWLQJRI DFRXVWLF LPSHGDQFHVRI WKH VXUURXQGLQJPHFKDQLFV DQG DLUPXVW EHPRGHOOHG DFFXUDWHO\ HQRXJK WR JHWUHOLDEOHUHVXOWV7KHVPDOOPLFURSKRQHVXVHGLQPRELOHSKRQHVKDYHIHZLUUHJXODULWLHVDQGDUH W\SLFDOO\ HDV\ WR PRGHO (DUSLHFH WUDQVGXFHUV RQ WKH RWKHU KDQG PD\ KDYH VHYHUDOUHVRQDQFHVLQVLGHWKHLULQWHQGHGIUHTXHQF\UDQJH7KHVHQRWRQO\VKDSHWKHIUHTXHQF\UH
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
VSRQVHRI WKH WUDQVGXFHUE\ LWVHOIEXWPD\DOVR LQWHUDFWZLWKDFRXVWLF LPSHGDQFHV LQ WKHVXUURXQGLQJPHFKDQLFV
%UHDNXSPRGHV RI WUDQVGXFHUPHPEUDQHV DUHZHOONQRZQ VRXUFHV RI IUHTXHQF\ UHVSRQVHLUUHJXODULWLHV:KHQWKHVHRFFXUWKHUHDUHSRLQWVRQWKHPHPEUDQHVXUIDFHPRYLQJZLWKGLIIHUHQWDQGHYHQRSSRVLWHSKDVHV >S@7KLVFDQKDSSHQ IDUEHORZ WKH IUHTXHQFLHVZKHUHWKHPHPEUDQHLVQRORQJHUQHJOLJLEO\VPDOOFRPSDUHGWRWKHZDYHOHQJWK%UHDNXSPRGHVDUHQRWPRGHOOHGE\OXPSHGHTXLYDOHQWFLUFXLWV+RZHYHUE\GLYLGLQJWKHPHPEUDQH LQWR VHYHUDO VPDOOHU SDUWV VXUIDFH HOHPHQWV DQG FUHDWLQJ LQWHUFRQQHFWHGOXPSHGFLUFXLWPRGHOV IRUHDFKSDUWDW OHDVWVRPHRI WKHEUHDNXSPRGHVFDQEHPDGH WRDSSHDULQDVLPXODWLRQ7KHVDPHSULQFLSOHRIGLYLGLQJLVHPSOR\HGLQVRFDOOHGILQLWHHOHPHQWPHWKRG)(0DQDO\VLV
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
7KHUHDOLW\LVWKUHHGLPHQVLRQDO
$LU IORZDQGVRXQG UDGLDWLRQDUH WKUHHGLPHQVLRQDOSK\VLFDOSURFHVVHV7KLV LVQRW WDNHQLQWRDFFRXQWZKHQOXPSHGFRPSRQHQWVDQGRQHGLPHQVLRQDOWUDQVPLVVLRQOLQHVDUHXVHG,QPRVW VLPSOH VLWXDWLRQV WKLV GRHV QRWPDWWHU +RZHYHU LI PRUH WKDQ RQH GLPHQVLRQ RI DFDYLW\LVFRPSDUDEOHWRRUODUJHUWKDQWKHZDYHOHQJWKLWLVFOHDUWKDWWKHSUREOHPFKDQJHVIURPRQHWRWZRRUWKUHHGLPHQVLRQVDQGVSHFLDOFDUHPXVWEHWDNHQWRVLPXODWHVXFKFDVHV
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
8QNQRZQGLPHQVLRQV
5HOLDEOHVLPXODWLRQLVQRWSRVVLEOHLI WKHUHDUHXQNQRZQPHFKDQLFDOGLPHQVLRQVRU WUDQVGXFHUSURSHUWLHV,QVXFKDFDVHRQHFDQVZHHSWKHXQNQRZQTXDQWLW\RYHUVRPHUDQJHRISRVVLEOH YDOXHV WR VHH KRZ LW DIIHFWV WKH UHVXOW ,I WKH UHVXOW LV LQVHQVLWLYH HQRXJK WR WKHFKDQJHGTXDQWLW\WKHQWKHVLWXDWLRQLVTXLWHVDIH,IRQWKHFRQWUDU\WKHUHLVDORWRIGHYLDWLRQ LW LV SUREDEOH WKDW WKHPHDVXUHPHQW UHVXOWV RI UHDO KDUGZDUH ZLOO QRW ORRN OLNH WKHVLPXODWLRQ8QNQRZQ GLPHQVLRQV DSSHDU LQ HTXLYDOHQW FLUFXLWV DV XQNQRZQ LPSHGDQFHV7DNLQJLQWRDFFRXQWWKHVPDOOSK\VLFDOGLPHQVLRQVHQFRXQWHUHGLQPRELOHSKRQHVLWFDQEHKDUGWRPHDVXUHWKHVHDFFXUDWHO\DQGUHOLDEO\
3ULQFLSOHVRIDFRXVWLFVVLPXODWLRQ
&RQYHUJHQFH
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
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
%XLOGLQJ FLUFXLWV IRU VLPXODWLRQ
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´EODFN ER[HV´ WKDW FDQ WDNH SK\VLFDO SURSHUWLHV GLPHQVLRQV PDWHULDO FRQVWDQWVHWFDVLQSXWSDUDPHWHUVDQGFDOFXODWHFRUUHVSRQGLQJLQWHUQDOFRPSRQHQWYDOXHVDXWRPDWLFDOO\)XOOGHVFULSWLRQVRIDOOPDFURVFUHDWHGIRUWKLVWKHVLVDUHQRWLQFOXGHGLQWKHWH[W7KHFRPSOHWHPDFURVFKHPDWLFVDQGQDPHVDVZHOODVWKHPHQXVWUXFWXUHFDQEHIRXQGLQDSSHQGL[,9
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
6WDUWLQJSRLQWDQGPHWKRGV
2EMHFWLYHV
.QRZLQJWKHJRDORIFUHDWLQJDKDQG\DQGYHUVDWLOHDFRXVWLFVVLPXODWLRQSDFNDJHLQ WKLVFDVHHVSHFLDOO\IRUPRELOHSKRQHVDQGWKHLUDFFHVVRULHVDVWDUWLQJSRLQWLVHVWDEOLVKHGE\UHDOL]LQJWKDWVXFKDVLPXODWLRQSDFNDJHVKRXOG
• EHIOH[LEOH\HWHDV\WRXVH• EHDEOHWRVLPXODWHUHOHYDQWV\VWHPVZLWKSURSHUDFFXUDF\• DFFHSWPHDVXUDEOHSK\VLFDOSURSHUWLHVGLPHQVLRQVHWFRIREMHFWVDVLQSXWSDUDPHWHUV• DOORZWKHXVHUWRGHILQHFXVWRPFRPSRQHQWVDQG• EHDEOHWRRXWSXWQHFHVVDU\LQIRUPDWLRQDERXWWKHEHKDYLRXURIWKHV\VWHP
7KHVHREMHFWLYHVZHUHNHSWLQPLQGZKHQFUHDWLQJWKH0LFUR&DSDFRXVWLFVPDFURVIRUWKLVWKHVLV,QDGGLWLRQWRZKDWLVOLVWHGDERYHFDUHZDVWDNHQDOVRWRPDNHWKHDFRXVWLFVPDFURVVXLWDEOHIRUGRFXPHQWDWLRQSXUSRVHVFLUFXLWVFKHPDWLFV
$IOH[LEOHDFRXVWLFVVLPXODWLRQSDFNDJHFDQEHREWDLQHGE\LGHQWLI\LQJEDVLFREMHFWVDSSHDULQJLQHOHFWURDFRXVWLFDOV\VWHPVDQGLPSOHPHQWLQJWKHVHDVEXLOGLQJEORFNVWKDWFDQEHFRPELQHGE\WKHXVHU$QHTXLYDOHQWFLUFXLWRIYDU\LQJFRPSOH[LW\DQGDFFXUDF\FDQ
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
WKHQEHEXLOWLQWRHDFKEORFNDQGWKHEORFNFDQEHDWWDFKHGWRDVXLWDEOHJUDSKLFDOVKDSHDQGQDPH7KLVZDV WKHSULQFLSOHEHKLQG WKHFUHDWLRQRI WKH0LFUR&DSDFRXVWLFVPDFURVIRU WKLV WKHVLV1DPHVDQG VKDSHVZHUH FKRVHQ WRGHSLFW WKHSXUSRVHRI HDFKPDFUR LQ DV\VWHPDWLFDQGLQWXLWLYHZD\ WU\LQJWRNHHSLQPLQGWKHYRFDEXODU\DQGV\PEROVXVHGLQOLWHUDWXUH
7KHIROORZLQJVWHSVFDQEHLGHQWLILHGLQFUHDWLQJ0LFUR&DS9PDFURVIRUDFRXVWLFVVLPXODWLRQDVVRRQDVWKHDUHDRIDSSOLFDWLRQLQWKLVFDVHPRELOHSKRQHVKDVEHHQVSHFLILHG
• LGHQWLILFDWLRQRIGRPDLQVHOHFWULFDOPHFKDQLFDODFRXVWLFDOUDGLDWLRQDQGWKHLUH[WHQW• LGHQWLILFDWLRQDQGVHOHFWLRQRIQHHGHGDQGVLPXODEOHEXLOGLQJEORFNV• LGHQWLILFDWLRQRIUHOHYDQWLQSXWSDUDPHWHUVIRUHDFKEXLOGLQJEORFN• FUHDWLRQRIWKHHTXLYDOHQWFLUFXLWIRUHDFKEXLOGLQJEORFN• LPSOHPHQWDWLRQRIHDFKEXLOGLQJEORFNDVD0LFUR&DS9PDFUR• GRFXPHQWDWLRQRIHDFKPDFURSDUDPHWHUVXVDJHOLPLWDWLRQV• FKRLFHRIDVXLWDEOHJUDSKLFDOVKDSHDQGQDPHIRUHDFKPDFUR• SODFHPHQWRIHDFKPDFURLQDKLHUDUFKLFDOPHQXLQWKH0LFUR&DS9XVHULQWHUIDFHDQG• YHULILFDWLRQRIWKHPDFURVDFFXUDF\UHOLDELOLW\HWF
'RPDLQVZHUHLGHQWLILHGLQWKHSUHFHGLQJFKDSWHUDVZHOODVQHHGHGTXDQWLWLHV&KRRVLQJWKH ULJKW EXLOGLQJ EORFNVPHDQV WR LGHQWLI\ZKDW NLQG RI REMHFWV PHFKDQLFDO VWUXFWXUHVHOHFWULFDO FRQQHFWLRQV SK\VLFDO SKHQRPHQD VXFK DV DLU IORZ UDGLDWLRQ HWF DUH OLNHO\ WRDSSHDULQWKHV\VWHPVWKDWDUHWREHVLPXODWHG7KHEXLOGLQJEORFNVVKRXOGDOORZIOH[LEOHLQWHUFRQQHFWLRQZLWKRXWORVLQJWRRPXFKDFFXUDF\,QSXWSDUDPHWHUVVKRXOGEHNHSWJHQHUDOEXWVWLOOVLPSOHHQRXJKWRILQGDQGVXSSO\ WR WKHEXLOGLQJEORFNVVLQFHSURSHUWLHVRIIRUH[DPSOH WUDQVGXFHUVFDQEH VSHFLILHGE\PDQXIDFWXUHUV LQPDQ\ZD\V² LI VSHFLILHGDWDOO,QWKHODWWHUFDVHWKH\VKRXOGSUHIHUDEO\EHPHDVXUDEOH
7KHZHDNQHVVHV RI VLPSOH OLQHDU DQG IRU WKHPRVW SDUW OXPSHG FLUFXLW DFRXVWLFVVLPXODWLRQGLVFXVVHGLQWKHSUHFHGLQJFKDSWHUZLOOEHFRPHDSSDUHQWLQWKHORQJUXQ+RZHYHULQWKLVFDVHRQHKDVWREHVDWLVILHGZLWKOHVVDFFXUDWHUHVXOWVLQPDQ\FDVHVVLQFHWKHDOJRULWKPVRIFLUFXLW VLPXODWRUV OLNH0LFUR&DSGRQRW HYHQDOORZDQ\JHQHUDOQRQOLQHDUDQGWKUHHGLPHQVLRQDODQDO\VLV,IWKHDQDO\VLVPHWKRGLVVLPSOLILHGWKHQVRLVDOVRWKHZD\RILQSXWWLQJLQIRUPDWLRQWRWKHVLPXODWRU²QRH[WHQVLYHGDWDRQVKDSHVDQGPDWHULDOSURSHUWLHVKDVWREHVXSSOLHGEXWMXVWDIHZSDUDPHWHUVGHVFULELQJWKHVLPSOLILHGPRGHOZLOOGR
6LPXODWRUIHDWXUHV
,Q0LFUR&DS9DPDFURFRQVLVWVRIDQHTXLYDOHQWFLUFXLWVWRUHGDVDQRUPDOFLUFXLWVFKHPDWLFZLWKDJLYHQILOHQDPH$JUDSKLFDOVKDSHLV OLQNHGWRWKHILOH,QSXWSDUDPHWHUVDUHVSHFLILHG E\ D VSHFLDO WH[W VWDWHPHQW 3$5$0(7(56 SODFHG VRPHZKHUH RQ WKHPDFURVFKHPDWLF7KHPDFURFDQDOVRKDYHQDPHGLQSXWRXWSXWSLQV>S@
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
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
IURP FDOFXODWLQJ FRPSRQHQW YDOXHV7KH GUDZEDFN LV WKDW WKH SLFWXUH RIPDJQLWXGHV DQGSURSRUWLRQVRIFRPSRQHQWYDOXHVLVHDVLO\ORVWDWWKHVDPHWLPH,QPDQ\FDVHVDFRPSURPLVHLVEHVWLHWKHXVHUFDQVWLOOJRRQXVLQJVHSDUDWHUHVLVWRUVLQGXFWRUVHWFRUPL[LQJWKHPZLWKPDFURV
0LFUR&DSDOORZVRQHVKDSHDQGQDPHWREHDWWDFKHGWRRQHPDFUR,IRQHZDQWVGLIIHUHQW VKDSHV IRU VLPLODU REMHFWV KDYLQJ WKH VDPH HTXLYDOHQW FLUFXLW D VHSDUDWH PDFURPXVWEHPDGHIRUHDFKREMHFW7KHUHDUHIRXUGRPDLQVLQYROYHG)RUFODULW\DQGVLPSOLFLW\LW ZDV GHFLGHG WR XVH GLIIHUHQW GHVFULSWLYH VKDSHV IRU PDFURV LQ HDFK GRPDLQ DOWKRXJKPDQ\PDFURVKDYHVLPLODUHTXLYDOHQWFLUFXLWUHSUHVHQWDWLRQV
6\VWHPWRSRORJ\
7UDQVGXFHUV
$EDVLFHTXLYDOHQWFLUFXLWRID WUDQVGXFHU LV IRUPHGE\ LQFOXGLQJ LWV HOHFWULFPHFKDQLFDODQGDFRXVWLFLPSHGDQFHVDVFLUFXLWHOHPHQWVLQWKHFRUUHVSRQGLQJGRPDLQV(OHFWULFLPSHGDQFHVDUHGXHWRWKHHOHFWULFFLUFXLWU\LQWKH WUDQVGXFHU0HFKDQLFDO LPSHGDQFHVRULJLQDWHIURPWKHPRYLQJSDUWV$FRXVWLFLPSHGDQFHVUHVXOWIURPYDULRXVDFRXVWLFORDGVIRUH[DPSOHFDYLWLHVDQGDLU IORZURXWHV LQVLGH WKH WUDQVGXFHU&RQFUHWHH[DPSOHVRIPHFKDQLFDODQGDFRXVWLFLPSHGDQFHVZHUHJLYHQLQWKHSUHFHGLQJFKDSWHU
0HDVXULQJHTXLSPHQW
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
6WDQGDUGDUWLILFLDOPRXWKVDUHXVHGDVUDGLDWLRQVRXUFHVWRDSSUR[LPDWHWKHUDGLDWLRQIURPDW\SLFDOKXPDQPRXWK7KHVHKDYHFHUWDLQGLUHFWLRQDOFKDUDFWHULVWLFVDQGWKHLU IUHTXHQF\ UHVSRQVHVDUHFDOLEUDWHGEHIRUH HDFKPHDVXUHPHQW WR FDQFHO LQGLYLGXDOYDULDWLRQVWKDW DUH GXH WR QRQLGHDOLWLHV LQ WKHLU LQWHUQDO ORXGVSHDNHUV )RU WKHVH UHDVRQV LW GRHV QRWPDNHDQ\UHDOVHQVHWRVLPXODWHDUWLILFLDOPRXWKVLQWKLVFRQWH[W
/RDGV
$Q\REMHFWDOWHULQJWKHUDWLRRISUHVVXUHWRIORZUDWHKDVWKHHIIHFWRIDQDFRXVWLFLPSHGDQFH7KHWUDQVGXFHULVDSDUWRIWKHVDPHDFRXVWLFFLUFXLWDVDQ\DFRXVWLFORDGFRQQHFWHGWRLW,QWKHVDPHPDQQHUDVHOHFWULFVLJQDOVDUHVKDSHGDQGDOWHUHGXVLQJHOHFWULFFLUFXLWVVRPD\DOVRWKHDFRXVWLFDO UHVSRQVHRID WUDQVGXFHUEHDOWHUHGE\LQFOXGLQJYDULRXVDFRXVWLFFLUFXLWV7\SLFDOH[DPSOHVRIDFRXVWLFORDGVDUH
• HQFORVHGYROXPHVRIDLUDLUFDYLWLHV
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
• OD\HUVRIWH[WLOHFORWKRURWKHUGDPSLQJPDWHULDO• RSHQLQJVKROHVVOLWVDQG• GXFWV
7KH VRXQG WR DQG IURP WKH WUDQVGXFHUPD\EH IRUFHG WKURXJKRQH RUPRUH RI WKHVHPHFKDQLFDOVWUXFWXUHVLQRUGHUWRDOWHUWKHUHVXOWDQWIUHTXHQF\UHVSRQVH
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
$OWKRXJK UDGLDWLRQ LPSHGDQFH PD\ EH QHJOHFWHG LQ PDQ\ FDVHV LW LV YHU\ XVHIXOZKHQFDOFXODWLQJWKHUDGLDWHGDFRXVWLFSRZHU)RUH[DPSOHWKHHIIHFWLYHSRZHULVVLPSO\WKHSRZHUGLVVLSDWHGLQWKHUHVLVWDQFHPRGHOOLQJWKHUHVLVWLYHSDUWRI WKHUDGLDWLRQLPSHGDQFH0HDVXULQJWKHDFRXVWLFRXWSXWSRZHUWKLVZD\LVHDV\LQDFLUFXLWVLPXODWRUZKLOHWKHRWKHUZHOONQRZQZD\RILQWHJUDWLQJWKHUDGLDWHGVRXQGLQWHQVLW\RYHUDπVROLGDQJOHLQWKUHHGLPHQVLRQDOVSDFHZRXOGEHPXFKPRUHHODERUDWHLQDJHQHUDOFDVH
'ULYLQJFLUFXLWU\
7KHHOHFWURQLFVFRQQHFWHGWRWKHHOHFWULFDOLQSXWVRIWKHWUDQVGXFHUDUHKHUHDIWHUUHIHUUHGWRDV GULYLQJ FLUFXLWU\ *RRG H[DPSOHV DUH WKH SUHDPSOLILHU RI DPLFURSKRQH RU WKH SRZHUDPSOLILHURIDKDQGVIUHHORXGVSHDNHU$Q\RWKHUHOHFWULFDOFRPSRQHQWVVXFKDVILOWHUVDQGFURVVRYHUQHWZRUNVEHORQJWRWKLVJURXSDOVR7KHGULYLQJFLUFXLWU\LVRIFRXUVHLQFOXGHGDVLWLVLQWKHVLPXODWLRQ
6LJQDOV
,QSXWVLJQDOVLQWKHYDULRXVGRPDLQVDUHLQFOXGHGLQWKHHTXLYDOHQWFLUFXLWDVFRUUHVSRQGLQJDQDORJRXVVRXUFHV)RUH[DPSOHDQHOHFWULFVLJQDOWRWKHGULYLQJFLUFXLWU\DSSHDUVDVLWLV6RXQGSUHVVXUHDFWLQJRQDPLFURSKRQHLVVLPXODWHGDVDYROWDJHVRXUFHFRQQHFWHGWRWKHLQSXWRIWKHPLFURSKRQHHTXLYDOHQWFLUFXLW7RRXWSXWDIRUFHDVDUHVXOWRIDVLPXODWLRQWKHVLPXODWRULVWROGWRRXWSXWWKHFRUUHVSRQGLQJFXUUHQWLQWKHPHFKDQLFDOSDUWRIWKHFLUFXLW,WLVLPSRUWDQWWRNHHSLQPLQGWKDWWKHUHDUHQRQRQOLQHDUHIIHFWVOLPLWLQJVLJQDOVLQVLPXODWLRQ DV WKHUH DUH LQ WKH UHDOZRUOG )RU WKLV UHDVRQ WKH SK\VLFDO YDOLGLW\ RI WKH REWDLQHGUHVXOWPD\KDYHWREHYHULILHGVHSDUDWHO\
6HOHFWLRQRIEXLOGLQJEORFNV
$URXJKSLFWXUHRIZKDWLVQHHGHGFDQEHREWDLQHGIURPWKHDERYHRXWOLQHRIWKHV\VWHPWRVLPXODWH
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
• YDULRXVLPSHGDQFHVPHFKDQLFDODFRXVWLF• YDULRXVVRXUFHVIRUFHYHORFLW\SUHVVXUHYROXPHYHORFLW\• LQWHUGRPDLQWUDQVIRUPHUVDQGJ\UDWRUVPRGHOVRIWUDQVGXFWLRQ• PRGHOVRIPHFKDQLFDOVWUXFWXUHVVXVSHQVLRQVFDYLWLHVKROHVGXFWVHWF• PRGHOVRIVRXQGUDGLDWLRQDQGDLUORDG• JHQHUDOWUDQVGXFHUPRGHOVHDUSLHFHFDSVXOHVORXGVSHDNHUVPLFURSKRQHV• PRGHOVRIUHOHYDQWPHDVXULQJHTXLSPHQWHDUVLPXODWRUVHWFDQG• RWKHUQHFHVVDU\PDFURVWRVXSSRUWWKHDERYH
7KHZRUGPRGHO DERYH LV XVHG WRGHQRWH DQ HTXLYDOHQW FLUFXLWPRGHO LPSOHPHQWHG DV DPDFURWKDWPRGHOVWKHLWHPLQTXHVWLRQ0RGHOOLQJPHDQVFUHDWLQJDPRGHORIWKHLWHP
$FRXVWLFV VLPXODWLRQ DV SDUW RI D GHYHORSPHQWSURFHVV
)LJXUH$QH[DPSOHRIDW\SLFDODFRXVWLFVVLPXODWLRQSURFHGXUH
$FRXVWLFVVLPXODWLRQDOVRVKRXOGEHYLHZHGLQLWVSURSHUFRQWH[WDVLQILJ7KLVLVDQH[DPSOHRI KRZDFRXVWLFV VLPXODWLRQ FDQEHXVHG DV D SDUW RI D GHYHORSPHQW SURFHVV LQZKLFK D V\VWHP WUDQVGXFHU DQG VXUURXQGLQJPHFKDQLFV LV WXQHG WRPDWFK SHUIRUPDQFHUHTXLUHPHQWV7KLVLVVKRZQDVDIHHGEDFNSDWKDWWKHWRSRIWKHGLDJUDP$QRWKHUSRVVLEOHIHHGEDFNSDWKLVVKRZQDWWKHERWWRP6XFKFRPSDULVRQRIPHDVXUHGDQGVLPXODWHGUHVXOWVLVHVVHQWLDOZKHQYHULI\LQJWKHDFFXUDF\RIWKHVLPXODWLRQVMXVWDVPHQWLRQHGLQVHF$W WKH VDPH WLPH WKH VLPXODWLRQPRGHOV WKHPVHOYHV FDQ EH FRQWLQXRXVO\ LPSURYHG HJSKHQRPHQDZKRVHHIIHFWVDUHKDUGWRGHULYHWKHRUHWLFDOO\FRXOGEHDSSUR[LPDWHGEDVHGRQHPSLULFDOUHVXOWVLQWKHPRGHOV2IFRXUVHWKLVUHTXLUHVJUHDWFDUHDQGJRRGXQGHUVWDQGLQJRIDFRXVWLFV
,Q WKH DERYH GLDJUDP ´SHUIRUPDQFH UHTXLUHPHQWV´PD\PHDQ HJ UHTXLUHPHQWV RQWKHIUHTXHQF\UHVSRQVHRIDQHDUSLHFH´3KRQHPHFKDQLFV´LVWKHLQWHQGHGPHFKDQLFVRIWKHSKRQH HJ LQ WKH IRUP RI D &$' ILOH DQG VXFK GDWD LV XVHG WR EXLOGSURWRW\SHV UHDOKDUGZDUH IRU WHVWLQJSXUSRVHV$VXEVHWRI WKHGLPHQVLRQV FRQWDLQHG LQ WKH&$'ILOH LVXVHG DV SDUDPHWHUV IRU WKH VLPXODWLRQV ´PHFKDQLFDO GLPHQVLRQV´ HJ WKH GLDPHWHU DQG
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
OHQJWKRIDVRXQGRXWOHWLQWKHSKRQHFRYHU7UDQVGXFHUVDPSOHVREWDLQHGIURPWKHWUDQVGXFHU PDQXIDFWXUHU DUH XVHG LQ WKHVH SUHOLPLQDU\ SURWRW\SHV WR DOORZ PHDVXUHPHQWV RISHUIRUPDQFH7KH WUDQVGXFHUVSHFLILFDWLRQDVZHOODVGDWD IURP WUDQVGXFHU VDPSOHPHDVXUHPHQWVFDQEHXVHGWRIRUPDQHTXLYDOHQWFLUFXLWRIWKHWUDQVGXFHUXQOHVVRQHLVDYDLODEOHIURPWKHPDQXIDFWXUHU
7KHERWWRPEUDQFKOHDGLQJWRWKH´VLPXODWLRQV´ER[´PHDVXULQJHTXLSPHQW´´RWKHUREMHFWV´WR´JHQHUDOSXUSRVHVLPXODWLRQPRGHOV´LVWKHSDUWRIWKHGHYHORSPHQWZRUNWKDWZLOOEHRYHUYLHZHGLQWKLVFKDSWHU7KH´JHQHUDOSXUSRVHVLPXODWLRQPRGHOV´FROOHFWLRQLVWKHUHVXOWRIWKLVZRUNDSSHQGL[,97KHPLGGOHEUDQFK´WUDQVGXFHUVSHF´´WUDQVGXFHUVDPSOHV´WR´WUDQVGXFHUHTXLYDOHQWFLUFXLW´ZDVKDQGOHGE\WKHFRPSRQHQWPDQXIDFWXUHULQWKHSUDFWLFDOFDVHYLHZHGLQWKLVWKHVLVFKDSWHUDQGWKHUHVXOWV´WUDQVGXFHUHTXLYDOHQWFLUFXLW´DUHVKRZQLQDSSHQGL[90RVWRWKHUSDUWVRIWKLVGLDJUDPDOVRDUHH[HPSOLILHGLQWKHFDVHVWXG\LQFKDSWHU)LQDOO\LWVKRXOGEHQRWHGWKDWDOOSDUWVRIWKHIORZFKDUWZLOOSUREDEO\QRWEHDFWLYHDWWKHVDPHWLPHVRPHVXESURFHGXUHVDUHPRVWHVVHQWLDODWHDUOLHUVWDJHVRIDSURMHFWZKLOHRWKHUVDUHPRUHLPSRUWDQWODWHU7KH´JHQHUDOSXUSRVHVLPXODWLRQPRGHOV´EUDQFKFDQEHDRQFHDQGIRUDOOSURFHGXUHWKDWGRHVQRWKDYHWREHUHSHDWHGRQFHWKHEDVLFPRGHOVDUHILQLVKHG
,PSOHPHQWDWLRQ
,Q WKLV VHFWLRQ WKH VHOHFWLRQ SDUDPHWHU LGHQWLILFDWLRQ PRGHOOLQJ VKDSH VHOHFWLRQ DQGPDFURLPSOHPHQWDWLRQZLOOEHEULHIO\RXWOLQHGIRUHDFKPDFURDOOPDFURVDUHGLYLGHGLQWRFDWHJRULHVIRUFODULW\$SSHQGL[,9FRQWDLQVWKHIXOOGHVFULSWLRQVRIDOOWKHFUHDWHGPDFURVLQWKHVDPHRUGHUDVEHORZ$VPHQWLRQHGWKHPDFURVDUHRQO\RXWOLQHGKHUH/DFNRIVSDFHSUHFOXGHVGHWDLOHGGHVFULSWLRQV DQGPRUH LQIRUPDWLRQPXVW EH VRXJKW LQ DSSHQGL[,9DVZHOODVLQDSSHQGL[,,,FRQWDLQLQJGHULYDWLRQVRIVRPHRIWKHPRGHOV
*OREDOGHILQLWLRQV
0LFUR&DSQHHGVWRNQRZYDOXHVRIUHOHYDQWSK\VLFDOFRQVWDQWVVXFKDVDLUGHQVLW\VSHHGRIVRXQGHWF7KHVHDUHGHILQHGLQDVHSDUDWHWH[WILOH$&28'()7;7$QRWKHUWH[WILOH78%('()7;7LQFOXGHVGHILQLWLRQVRIPDWKHPDWLFDOIXQFWLRQVWKDWDUHXVHGE\VRPHRIWKHPDFURV
6KDSHDQGQDPLQJFRQYHQWLRQV
7KHUHDUHVRPHJHQHUDOV\PEROVWKDWDUHXVHGLQVHYHUDOPDFURVKDSHVWRIXUWKHUGHVFULEHWKHSURSHUWLHVRIWKHREMHFWVWKDWWKHPDFURVDUHPRGHOOLQJ
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
$ 50(
/HWWHUVGHQRWHGRPDLQV1XPEHUHGSRUWVRQDWZRSRUWPHDQVWKDWWKHFRPSRQHQWLQTXHVWLRQLVQRQUHFLSURFDO
/RXGVSHDNHUVDQGPLFURSKRQHVDUHGHSLFWHGXVLQJ VWDQGDUG V\PEROV
*HQHUDO LPSHGDQFHV DUH GHSLFWHG E\ WKH ´ER[´ UHVLVWRU V\PEROSXUHUHVLVWDQFHVXVHWKH´]LJ]DJ´V\PERO5DGLDWLRQLPSHGDQFHVDUHVKRZQDVZDYHIURQWVGDVKHGOLQHV WRGLVWLQJXLVK WKHPIURPDFWXDO UDGLDWLRQ WKDWXVHV VROLG OLQHV'LIIHUHQW V\PEROVDUHXVHGIRUVSKHULFDODQGSODQHZDYHV
5DGLDWLRQLVVKRZQDVZDYHIURQWVVSKHULFDORUSODQHZDYHV=HURVRXQG SUHVVXUH W\SLFDOO\ RSHQLQJ WR VWDWLF DWPRVSKHULF SUHVVXUHLQDFLUFXLW LVVKRZQDV IORZOLQHVRISUHVVXUHHVFDSLQJ LQWR IUHHDLU
$VLQJOHDUURZUHVHPEOLQJDYHFWRUPHDQVDPHFKDQLFDOTXDQWLW\IRUFH YHORFLW\ RU HOHFWULFDO FXUUHQW 7ULSOH DUURZV UHVHPEOLQJIORZOLQHVRIDIOXLGLQGLFDWHDQDFRXVWLFDOTXDQWLW\SUHVVXUHYROXPH YHORFLW\ 7KH FURVVOLQH LV XVHG LQ WKH IRUFH DQG SUHVVXUHVKDSHVWRVKRZWKDWWKH\DUHDFWLQJRQDERG\RUVXUIDFH
7KHVH VKDSHV V\PEROL]H GLVSODFHPHQW PHFKDQLFDO GRPDLQ DQGYROXPHDFRXVWLFDOGRPDLQ
&RLOVDUHXVHGWRV\PEROL]HG\QDPLFWUDQVGXFWLRQFRLOZLWKFRUH HOHFWURPDJQHWLF WUDQVGXFHU6WDQGDUG FDSDFLWRU FU\VWDO DQG HOHFWUHWVKDSHVGHSLFWHOHFWURVWDWLFWUDQVGXFWLRQFU\VWDO SLH]RHOHFWULFWUDQVGXFHUHOHFWUHW HOHFWUHWWUDQVGXFHU
3DWWHUQVXVHGWRUHSUHVHQWIURPOHIWWRULJKWULJLGSK\VLFDOVWUXFWXUHVLQWKHPHFKDQLFDOGRPDLQULJLGSK\VLFDOVWUXFWXUHVLQWKHDFRXVWLFDOGRPDLQGDPSLQJPDWHULDO
0LFUR&DS9VWRUHVPDFURVDVVHSDUDWHILOHVDQGWKHRSHUDWLQJV\VWHPUHVWULFWVILOHQDPHVWRDPD[LPXPRIFKDUDFWHUVSOXVH[WHQVLRQ&,5)RUWKLVUHDVRQDQXPEHURIDEEUHYLDWLRQVZHUHFUHDWHG
= ,PSHGDQFHJHQHUDO5 5HVLVWDQFH/ ,QGXFWDQFHLQFOPDVV PHFKDQLFDOLQGXFWDQFH& &DSDFLWDQFHLQFOFRPSOLDQFH PHFKDQLFDOFDSDFLWDQFH3UE 3UREH&LU &LUFXODU5FW 5HFWDQJXODU3OQ 3ODQH6SK 6SKHULFDO$LU/$ $LUORDG
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
(QG&( (QGFRUUHFWLRQ5DG 5DGLDWLRQ'LVS 'LVSODFHPHQW9HO 9HORFLW\9RO 9ROXPH9RO9HO9RO9 9ROXPHYHORFLW\'\Q '\QDPLF(V (OHFWURVWDWLF(P (OHFWURPDJQHWLF(OFW (OHFWUHW3] 3LH]RHOHFWULF,QW ,QWHUIDFH0LF 0LFURSKRQH6SNU /RXGVSHDNHU% %DIIOH
3DUDOOHOFRQQHFWLRQ
,QSUDFWLFDOGHVLJQVVHYHUDOHTXDOO\GLPHQVLRQHGPHFKDQLFDOVWUXFWXUHVDUHRIWHQVHHQ´LQSDUDOOHO´ 7KHPRVW W\SLFDO FDVH LV DPRELOH SKRQH RU KDQGVHW FRYHUZLWK VHYHUDO VPDOOKROHVDVVRXQGRXWOHWVIRUWKHHDUSLHFHFDSVXOHXQGHUQHDWKLW$QDUUD\RILGHQWLFDOKROHVLQSDUDOOHO ZLWK HTXDO SUHVVXUH DQG YROXPH YHORFLW\ LQ HDFK KROH DW HYHU\ LQVWDQW FDQ EHPRGHOOHGDVRQHVLQJOHLPSHGDQFHHTXDOWRWKHLPSHGDQFHRIRQHKROHGLYLGHGE\WKHWRWDOQXPEHURIKROHV7KLVSULQFLSOHRIYLHZLQJVLPLODUSDUDOOHOVWUXFWXUHVRUSKHQRPHQDDVRQHVLQJOHHQWLW\ LVXVHG LQ VHYHUDORWKHUPDFURV HJ DLU ORDG HQGFRUUHFWLRQV$OORI WKHVHKDYHWKHQXPEHURIREMHFWVQRDVDSDUDPHWHU
,PSHGDQFHV
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
7KHGHILQLWLRQVRIWKHLPSHGDQFHPDFURVDUHVHOIH[SODQDWRU\6KDSHVZHUHFKRVHQWRGHSLFWWKHW\SLFDODSSHDUDQFHVRIWKHLPSHGDQFHVLQDFOHDUDQGLQWXLWLYHZD\6LPLODUV\PEROVDOVRKDYHEHHQXVHGLQWKHOLWHUDWXUHHJ>SS@
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
=P
5P /P &P=D
5D /D &D
)LJXUH,PSHGDQFHVKDSHVWRSURZDFRXVWLFDOLPSHGDQFHUHVLVWDQFHLQGXFWDQFHDQGFDSDFLWDQFHERWWRPURZWKHVDPHFRPSRQHQWVLQWKHPHFKDQLFDOGRPDLQ
7KHPHFKDQLFDOLQGXFWDQFHPDVVPDFUR/P LV WKHRQO\RQHZLWKMXVWRQHSLQLQVWHDGRIWZR7KHPDFUR LV LQWHUQDOO\JURXQGHG DQG WKHXQJURXQGHG WHUPLQDO LV FRQQHFWHG WR WKHFLUFXLW7KLVLVEHFDXVHWKHYHORFLW\YROWDJHRIWKHPDVVLVE\GHILQLWLRQUHIHUHQFHGWRWKHLQHUWLDO IUDPH ]HUR SRWHQWLDO JURXQG$OVR DPDVV LV ULJLG DQG QR YHORFLW\ YROWDJHGLIIHUHQFHVFDQH[LVWLPSO\LQJDJDLQWKDWDPDVVKDVRQHVLQJOHQRGHLQWKHFLUFXLW
6RXUFHVWUDQVIRUPLQJWZRSRUWVDQGJURXQGV
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
,QDGGLWLRQWRVLPSOHVRXUFHVWKHGRPDLQERUGHUVQHHGWUDQVIRUPLQJWZRSRUWVLGHDOWUDQVIRUPHUVDQGJ\UDWRUVLPSOHPHQWHGKHUHDVWZRFRPELQHGFRQWUROOHGYROWDJHRUFXUUHQWVRXUFHV6HHVHF
(YHU\FLUFXLWQHHGVDJURXQG*URXQGPHDQV]HURSRWHQWLDOZKLFKLVGLUHFWO\ LQWHUSUHWDEOHDV]HURYHORFLW\LQWKHPHFKDQLFDOGRPDLQDQG]HURVRXQGSUHVVXUHLQWKHDFRXVWLFDOGRPDLQ,QRWKHUZRUGVJURXQGPHDQVDQLPPRYDEOHSRLQWLQHUWLDOUHIHUHQFHIUDPHLQWKHPHFKDQLFDOGRPDLQDQGHTXLOLEULXPDWPRVSKHULFSUHVVXUH LQ WKHDFRXVWLFDOGRPDLQ)RUWKLVUHDVRQVSHFLDOVKDSHVZHUHFUHDWHGIRUPHFKDQLFDODQGDFRXVWLFJURXQGV
)RUFH9HORFLW\
9RO9HO3UHVVXUH ,GHDO7UI
,GHDO*\U
$WP3UHVV
)L[HG3W
)LJXUH 9HORFLW\ IRUFH SUHVVXUH DQG YROXPH YHORFLW\ VRXUFH LPPRYDEOH SRLQW DQGDWPRVSKHULFSUHVVXUHLGHDOJ\UDWRUDQGWUDQVIRUPHU
7KHWUDQVIRUPHUKDVLWVSRUWVQXPEHUHGZKLOHWKHJ\UDWRUKDVQRW7KLVLVWRVKRZWKDWWKHWUDQVIRUPHULVQRQUHFLSURFDODVRSSRVHGWRWKHJ\UDWRU7KHER[HVDURXQGWKHVHDUHPHDQWWR VKRZ WKDW WKH FRPSRQHQWV DUH LGHDO DQG WR IXUWKHU GLVWLQJXLVK WKHP IURP WKH EXLOWLQRQHV,WVKRXOGEHQRWHGWKDWWKH$WP3UHVVVKDSHGRHVQRWV\PEROL]HVRXQGUDGLDWLRQVHHEHORZDOWKRXJKWKHVKDSHFRXOGOHDGWRFRQIXVLRQ+RZHYHUQREHWWHUVKDSHZDVIDQFLHGDQGUDGLDWLRQVKDSHVZHUHPDGHYHU\GLIIHUHQWIURPWKLVRQHWRSUHYHQWFRQIXVLRQ
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
3OXVDQGPLQXVVLJQVLQGLFDWHWKHSRODULW\RIWKHYHORFLW\DQGSUHVVXUHVRXUFHVMXVWDVLQ WKH0LFUR&DSEXLOWLQ YROWDJH VRXUFHV ,Q WKH IRUFH DQGYROXPHYHORFLW\ VRXUFHV WKHDUURZVLQGLFDWHWKHIORZGLUHFWLRQRIWKHFRUUHVSRQGLQJFXUUHQWVWKURXJKWKHVRXUFHVMXVWDVLQWKHEXLOWLQFXUUHQWVRXUFHV
3K\VLFDOVWUXFWXUHV
7KLVFDWHJRU\RIPDFURV LVYHU\ LPSRUWDQWEXWDOVR WURXEOHVRPHVLQFH LW LV LPSRVVLEOH WRPRGHODOONLQGVRIH[LVWLQJPHFKDQLFDOVWUXFWXUHVXVLQJDOLPLWHGVHWRIPRGHOV5HDVRQVIRUWKLVFDQEHIRXQGLQWKHIDFWWKDWRQHGLPHQVLRQDOOXPSHGFLUFXLWVFDQQRWLQJHQHUDOPRGHOWKUHHGLPHQVLRQDOGLVWULEXWHGSKHQRPHQDDFFXUDWHO\WKURXJKRXWWKHDXGLRIUHTXHQF\EDQG$VDUHVXOWVRPHEDVLFVWUXFWXUHVKDYH WREH LGHQWLILHGDQGLWKHOSV LIHYHQ WKHVHFDQEHPRGHOOHGZLWKJRRGDFFXUDF\
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´KROH´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
&DYLW\/V&DYLW\
&LU+ROH 5FW+ROH
+HOPK5HV
&LU'XFW 5FW'XFW
0HPEUQ 0HPEUQ
)LJXUH &DYLW\ ORVVIUHH DQG ORVV\ +HOPKROW] UHVRQDWRU PHPEUDQHV FLUFXODU DQGUHFWDQJXODUKROHFLUFXODUDQGUHFWDQJXODUGXFW
&DYLWLHV
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
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
FDXVHWKHGLPHQVLRQVRIWKHFDYLW\DUHDVVXPHGWREHFOHDUO\VPDOOHUWKDQWKHZDYHOHQJWKLPSO\LQJWKDWQRDSSUHFLDEOHSKDVHGLIIHUHQFHVFDQH[LVW
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
+ROHV
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
$OWKRXJKDFFXUDWHIRUPXODHDUHDYDLODEOHIRUFLUFXODUKROHVDQGLQILQLWHO\ZLGHVOLWVWKHVH LQYROYHFRPSOH[%HVVHODQG WDQJHQW IXQFWLRQV WKDW WKH0LFUR&DSVLPXODWRUFDQQRWKDQGOH)RU WKLV UHDVRQSRO\QRPLDODSSUR[LPDWLRQVZHUHFUHDWHGXVLQJQXPHULFDORSWLPL]DWLRQ $OVR UHDVRQDEOH PRGLILFDWLRQV WR PRGHOV DYDLODEOH LQ DFRXVWLFV OLWHUDWXUH ZHUH
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
PDGH WR DOORZ DUELWUDU\ UHFWDQJXODU KROH DVSHFW UDWLRV QRW MXVW UDWLRV IDU IURP XQLW\ DVPRVWSXEOLVKHGPRGHOVDVVXPH
'XFWV
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
2WKHUVWUXFWXUHV
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
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
EUDQHIDVWHQHGE\LWVHGJHVZLWKRXWWHQVLRQZLOODOORZPRYHPHQWXSWRVRPHGLVSODFHPHQWOLPLWEXWVWURQJO\UHVLVWPRYHPHQWEH\RQGWKLVOLPLW
7KHUHDUHWZRPHPEUDQHPRGHOVLQWKHPDFURFROOHFWLRQ2QH0HPEUQLVVLPSOHDQGPRGHOVMXVWWKHIORZUHVLVWDQFHDFFHSWLQJWKHVSHFLILFDFRXVWLFUHVLVWDQFHDVDSDUDPHWHU7KHRWKHUPHPEUDQHPRGHO0HPEUQLVPRUHFRPSOH[DQGPRGHOVDOVRWKHHIIHFWVRIWKHILQLWHVWLIIQHVVRIWKHPHPEUDQH7KHWKUHHPHFKDQLFDOSDUDPHWHUVUHVLVWDQFHPRYLQJPDVVFRPSOLDQFHRIWKHPRXQWHGPHPEUDQHDUHJLYHQVHSDUDWHO\WRWKHPDFURDVZHOODVDIHZSDUDPHWHUVGHVFULELQJWKHJHRPHWU\RIWKHSRUHV7KHDUHDDQGWKHQXPEHURISDUDOOHOPHPEUDQHVDUHJLYHQDVSDUDPHWHUVWRERWKPHPEUDQHPDFURV
$LUORDG
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
1RZLWLVREYLRXVWKDWDUDGLDWRUZLOOVHHWZRORDGVDQLPSHGDQFHGXHWRWKHUDGLDWLRQZLWKDUHVLVWLYHSDUWDFFRXQWLQJIRUUDGLDWHGSRZHUDQGDQLQGXFWLYHSDUWDFFRXQWLQJIRUWKHDWWDFKHGDLUPDVVDQGDUHVLVWDQFHGXHWRYLVFRXVORVVHVLQWKHLPPHGLDWHYLFLQLW\RIWKHUDGLDWRU7KHFRPELQDWLRQRIWKHVHORDGVZLOOKHUHDIWHUEHFDOOHGDLUORDGWRGLVWLQJXLVKLWIURPWKHUDGLDWLRQLPSHGDQFHZKLFKDVGHILQHGKHUHGRHVQRWLQFOXGHWKHYLVFRXVORVVHV,QRWKHUZRUGVDLUORDGLVWKHVXPRIUDGLDWLRQLPSHGDQFHDQGYLVFRXVORVVUHVLVWDQFHWZRDFRXVWLFUHVLVWDQFHVDQGRQHDFRXVWLFLQGXFWDQFHDOOLQDOO
$LUORDGFRXOGEHUHDGLO\LQFOXGHGLQRWKHUPDFURV+RZHYHUWKLVZRXOGOHDGWRDQLQFRQYHQLHQWQXPEHURIFRPELQDWLRQVLWLVQRWGHVLUDEOHRUHYHQSRVVLEOHWREXLOGRQHJHQHUDOPRGHOZLWKFRQYHQLHQWLQSXWSDUDPHWHUVIRUDOONLQGVRIDLUORDG$OVRWKHUHDUHPDQ\SRVVLEOHUDGLDWRUVWXEHVRIYDULRXVFURVVVHFWLRQORXGVSHDNHUVRURWKHUYLEUDWLQJVXUIDFHV)RUWKLVUHDVRQLWZDVGHFLGHGWRFUHDWHVHSDUDWHPDFURVPRGHOOLQJQRWKLQJEXWWKHDLUORDG
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
7KHVHFDQ LQ WXUQEHFRQQHFWHG WRDQ\PDFURPRGHOOLQJD UDGLDWRURI VRPHNLQG HJ DKROHRUDORXGVSHDNHU
(QG&&LU
$LU/&LU
3OQ5DG5
(QG&5FW
$LU/&LU% $LU/5FW $LU/5FW%
6SK5DG5
)LJXUH(QG FRUUHFWLRQ IRU FLUFXODUDQG UHFWDQJXODU UDGLDWRU WRS URZ DLU ORDG RQFLUFXODUDQGUHFWDQJXODUUDGLDWRUDQ\VROLGUDGLDWLRQDQJOHRUHTXLSSHGZLWKILQLWHEDIIOHPLGGOHURZUDGLDWLRQUHVLVWDQFHRIUDGLDWRUUDGLDWLQJVSKHULFDORUSODQHZDYHVERWWRPURZ
$LUORDGVIRUVSHFLILFUDGLDWRUJHRPHWULHV
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
(QGFRUUHFWLRQV
7KHUHDUHFDVHVZKHQWKHDLU ORDGPRGHOVGHVFULEHGDERYHDUHQRWQHFHVVDU\RUQRWHYHQWKHEHVWFKRLFH*RRGH[DPSOHVDUHLUUHJXODUJHRPHWULHVWKDWDUHKDUGWRVSHFLI\XVLQJWKHQHHGHGSDUDPHWHUVFDVHVZKHQOHVVDFFXUDF\LVHQRXJKRUFDVHVZKHQVRPHFRPSOLFDWHGIUHTXHQF\ GHSHQGHQFH DSSHDUV WKDW FDQQRW EHPRGHOOHG XVLQJ WKH SUHYLRXV IRXU DLU ORDGPDFURV $OVR IRU FRPSDWLELOLW\ ZLWK FRPPRQ DFRXVWLFV PRGHOV LW LV JRRG WR LQFOXGH DFRXSOHRIPRUHVWUDLJKWIRUZDUGDLUORDGPDFURV
,QWXEHVWKHHIIHFWRIWKHYLVFRVLW\DQGLQHUWDQFHSDUWVRIWKHDLUORDGLVVLPSO\WRLQFUHDVHWKHWRWDODFRXVWLFLPSHGDQFHDERYHWKDWDVVRFLDWHGZLWKWKHDLULQVLGH)RUWKLVUHD
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
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
$FRXSOHRIJHQHUDOHQGFRUUHFWLRQPDFURVZHUHFUHDWHG7KHVHPDFURV(QG&&LUDQG(QG&5FW IRUFLUFXODUDQG UHFWDQJXODU UDGLDWRUV UHVSHFWLYHO\QHHGHQGFRUUHFWLRQFRHIILFLHQWVDVSDUDPHWHUV LQDGGLWLRQ WR WKH VXUIDFHGLPHQVLRQVRI WKH UDGLDWRU WKH\DUH WREHFRQQHFWHG WR&RHIILFLHQWV DUH JLYHQ VHSDUDWHO\ IRU WKH UHVLVWLYH YLVFRXV DQG LQGXFWLYHDWWDFKHGDLUSDUWV IRU WKHVDNHRIYHUVDWLOLW\7KHPDFURVHYHQFDQEHJLYHQ IUHTXHQF\GHSHQGHQWHQGFRUUHFWLRQFRHIILFLHQWVWRPRGHOPRUHFRPSOLFDWHGDLUORDGV
5DGLDWLRQUHVLVWDQFHV
5DGLDWLRQ UHVLVWDQFHV ZHUH LQFOXGHG DV VHSDUDWH PDFURV 6SK5DG5 3OQ5DG5 WR DOORZDVVHPEO\RIFXVWRPDLUORDGPRGHOVE\FRPELQLQJWKHPZLWKFXVWRPHQGFRUUHFWLRQV7KLVZD\DOOWKUHHSDUWVRIWKHDLUORDGFDQEHPRGHOOHGMXVWDVWKHIXOODLUORDGPDFURVGR$OVRLWLVVLPSOHWRFDOFXODWHVLPXODWHWKHDFRXVWLFRXWSXWSRZHURIDUDGLDWRUZKHQWKHUDGLDWLRQUHVLVWDQFHLVGLUHFWO\DFFHVVLEOHLQWKHVFKHPDWLF
7KHUDGLDWLRQUHVLVWDQFHRIDUDGLDWRUUDGLDWLQJVSKHULFDOZDYHVLVLQGHSHQGHQWRIUDGLDWRU GLPHQVLRQV DV ORQJ DV WKH UDGLDWRU LV VPDOO FRPSDUHG WR WKHZDYHOHQJWK DQG QRGLPHQVLRQVDUHQHHGHGDVSDUDPHWHUV>S@+RZHYHULQVRPHFDVHVVXFKDVZKHQVRXQGUDGLDWLRQLVLQWRDQDUURZWXEHRUFDYLW\RUWKHIUHTXHQF\LVYHU\KLJKWKHZDYHVDUHQRW VSKHULFDOEXWSODQH7KH UDGLDWLRQ UHVLVWDQFH LV WKHQDOVRGLIIHUHQW IURP WKH VSKHULFDOZDYHFDVHDQGDVHSDUDWHPDFURLVQHHGHG1RZWKHUDGLDWLRQUHVLVWDQFHGHSHQGVRQUDGLDWRUDUHDDQGWKHDUHDKDVWREHJLYHQDVDSDUDPHWHU
'RPDLQLQWHUIDFHV
+DYLQJIRXUGLIIHUHQWGRPDLQVPHDQVWKDWDWOHDVWWKUHHW\SHVRILQWHUIDFHVDUHQHHGHG1RZRQH RI WKHVH WKH DFRXVWLFDOUDGLDWLRQ GRPDLQ LQWHUIDFH ZLOO EH JLYHQ VSHFLDO WUHDWPHQWKHUH7KLVLVEHFDXVHRILWVVSHFLDOWKUHHGLPHQVLRQDOWUDQVPLVVLRQOLQHQDWXUHPDNLQJWKHPDFURV PRUH FRPSOLFDWHG WKDQ WKRVH IRU WKH WZR RWKHU LQWHUIDFHV $OVR WKH DFRXVWLFDOUDGLDWLRQGRPDLQLQWHUIDFHFDQEHVHHQDVEHORQJLQJWRWKHJURXSRIPDFURVPRGHOOLQJUDGLDWLRQDVDSKHQRPHQRQVR LWZLOOEHYLHZHGVHSDUDWHO\ LQ WKHQH[WVHFWLRQRQUDGLDWLRQPDFURV
7KH WZRRWKHU LQWHUIDFHVDUHYHU\VWUDLJKWIRUZDUGKRZHYHU7KH\DUHVLPSO\ WUDQVIRUPLQJTXDQWLWLHVE\PXOWLSO\LQJRUGLYLGLQJWKHPZLWKVRPHFKDUDFWHULVWLFFRQVWDQWSRVVLEO\FKDQJLQJWKHLUQDWXUHIURPDYROWDJHWRDFXUUHQWRUYLFHYHUVD ,QDG\QDPLF WUDQVGXFHUWKHHOHFWULFDOGRPDLQFXUUHQWLVWUDQVIRUPHGLQWRDPHFKDQLFDOGRPDLQIRUFHZLWKDSURSRUWLRQDOLW\FRHIILFLHQWHTXDOWRWKHWUDQVGXFHUIRUFHIDFWRU$WWKHVDPHWLPH WKHPH
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
FKDQLFDOGRPDLQYHORFLW\ LV WUDQVIRUPHG LQWRDQHOHFWULFDOGRPDLQYROWDJHZLWK WKHVDPHSURSRUWLRQDOLW\FRHIILFLHQW7KLVZDVH[SUHVVHGDERYHE\HTV
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
*RLQJ IURP WKHPHFKDQLFDO WR WKH DFRXVWLFDO GRPDLQ LQYROYHV WUDQVIRUPLQJ D PHFKDQLFDOGRPDLQYHORFLW\LQWRDQDFRXVWLFDOGRPDLQYROXPHYHORFLW\ZKLFKPHDQVPXOWLSO\LQJWKHYHORFLW\E\DUHD$QDFRXVWLFDOGRPDLQSUHVVXUHWUDQVIRUPVLQWRDPHFKDQLFDOGRPDLQIRUFHPXOWLSO\LQJDJDLQE\WKHVDPHDUHD7KLVLVHTXLYDOHQWWRVD\LQJWKDWDPHFKDQLFDODFRXVWLFDOGRPDLQLQWHUIDFHLVDJ\UDWRUZLWKWKHDUHDRIWKHFRQQHFWLQJVXUIDFHDVWKHSURSRUWLRQDOLW\FRQVWDQW
( 0 (0,QW'\Q(
0(0,QW(V
0
$0$,QW
)LJXUH(OHFWULFDOPHFKDQLFDOGRPDLQ LQWHUIDFH IRUG\QDPLF WUDQVGXFWLRQ HOHFWULFDOPHFKDQLFDO GRPDLQ LQWHUIDFH IRU HOHFWURVWDWLF WUDQVGXFWLRQ DQG PHFKDQLFDODFRXVWLFDOGRPDLQLQWHUIDFH
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
,WVKRXOGEHQRWHGHVSHFLDOO\WKDWPRGHOOLQJFRPSOHWHG\QDPLFRUHOHFWURVWDWLFWUDQVGXFHUVJHQHUDOO\UHTXLUHVDGGLWLRQDOFRPSRQHQWVLQERWKWKHHOHFWULFDODQGWKHPHFKDQLFDOGRPDLQ VXFK DV YRLFH FRLO UHVLVWDQFH DQGPHPEUDQH WR EDFN SODWH FDSDFLWDQFH (OHFWURVWDWLFWUDQVGXFWLRQZLOOQRWEHVLPXODWHGLQWKLVWKHVLV
5DGLDWLRQ
5DGLDWLRQPRGHOV DUHPDGH QHFHVVDU\ E\ WKH IDFW WKDW WKH IUHH DLU LV DQ HVVHQWLDO SDUW RIPDQ\RIWKHV\VWHPVWREHVLPXODWHG)UHHILHOGUDGLDWLRQLVQRWLQYROYHGZKHQVLPXODWLQJWKHVRXQGSUHVVXUHFUHDWHGE\DQHDUSLHFHKHOGFORVHWRWKHHDUEXWLWFRPHVLQWRSOD\HJZKHQFKHFNLQJ WKHSHUIRUPDQFHRI DKDQGVIUHH ORXGVSHDNHU)XUWKHUPRUH UDGLDWLRQ LQWRIUHH DLU FDQQRW EH GHVFULEHG XVLQJ VLPSOH OXPSHG FLUFXLWV LQ WKH DFRXVWLFDO GRPDLQ 7KHUHDVRQLVWKDWGLVWDQFHVLQYROYHGDUHW\SLFDOO\ORQJHQRXJKWRPDNHWKHILQLWHSURSDJDWLRQYHORFLW\DQGZDYHOHQJWKRIVRXQGYLVLEOHLQWKHUHVXOWV7KLVLVQRSUREOHPLIMXVWWKHIUHHILHOGVRXQGSUHVVXUHRIDORXGVSHDNHULVVLPXODWHG+RZHYHULWZLOOOHDGWRZURQJUHVXOWVLIVRPHNLQGRIIHHGEDFNZLWKDPLFURSKRQHSLFNLQJXSWKHVRXQGDWDGLVWDQFHDQGIHHGLQJLWEDFNWRWKHVRXQGVRXUFHLVXVHGVLQFHWKHQWKHORRSGHOD\LVDQHVVHQWLDOSDUDPHWHU
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
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
$FFRUGLQJ WR WKH GHVFULSWLRQ LQ WKH SUHFHGLQJ FKDSWHU UDGLDWLRQ LV VLPXODWHG XVLQJEULHIO\DIRXUWK´UDGLDWLRQ´GRPDLQZLWKYROXPHYHORFLW\H[FKDQJHGE\SDUWLFOHYHORFLW\7KHSURSDJDWLRQGHOD\VXJJHVWVDWUDQVPLVVLRQOLQHDQDORJ\+RZHYHUWKLVZRXOGEHSRVVLEOHRQO\IRUSODQHZDYHVLQDGXFW6SKHULFDOZDYHVVSUHDGRXWZKLFKPDNHVWKHVSHFLILFDFRXVWLF LPSHGDQFHGLVWDQFHGHSHQGHQWZKLFKLQ WXUQZRXOGUHTXLUHDQRQXQLIRUPWUDQVPLVVLRQ OLQH ,W KDV DOUHDG\EHHQSRLQWHGRXW WKDW WKLV OLHV EH\RQG WKH FDSDELOLWLHV RI WKH0LFUR&DSVLPXODWRU7KHUHVXOWLVWKDWWKHUDGLDWLRQPDFURVKDYHWREHPDGHPDGHQRQUHFLSURFDO
5
6QG3UHVV
$ 5
6SK:DYH
$ 5
6SK:DYH%
$ 5
3OQ:DYH
$5 5$,QW $5 5$,QW%
)LJXUH5DGLDWLRQDFRXVWLFDOGRPDLQ LQWHUIDFHJHQHUDODQGZLWK ILQLWHEDIIOHVRXQGSUHVVXUHVRXUFHVSKHULFDOZDYHUDGLDWLRQJHQHUDODQGZLWKILQLWHEDIIOHDQGSODQHZDYHUDGLDWLRQ
6SKHULFDODQGSODQHZDYHV
7KHDLU ORDGPDFURVGHVFULEHG LQVHFZHUH OHIWXQJURXQGHG ,WZDVDOVR VWDWHG WKDWWKLVZDVGRQHLQRUGHUWROHWWKHPEHFRQQHFWHGWRUDGLDWLRQPDFURV7KLVFRQYHQLHQWVROXWLRQVHSDUDWLQJDLUORDGDQGUDGLDWLRQZDVFKRVHQLQRUGHUWRPDNHWKHPDFURVDVIOH[LEOHDV SRVVLEOH ,I DFWXDO UDGLDWLRQ LV LUUHOHYDQW DQ DLU ORDG PDFUR IROORZHG E\ ´DFRXVWLFDOJURXQG´ DWPRVSKHULF SUHVVXUH $WP3UHVV LV HQRXJK ,I WKH UDGLDWHG ZDYHV KDYH WR EHVLPXODWHGWKHQWKHDLUORDGPDFURLVIXUWKHUFRQQHFWHGWRDUDGLDWLRQPDFURDQGWKLVUDGLDWLRQPDFURXVHVWKHUHVXOWDQWYROXPHYHORFLW\RIWKHUDGLDWRUDVLWVLQSXWLQRUGHUWREHDEOHWRGHWHUPLQHWKHUDGLDWLRQ7KHFKRVHQDSSURDFKPHDQVWKDWWKHDLUORDGPDFURVDFFRXQWIRUDOOWKHORDGDQGWKHUDGLDWLRQPDFURVGRQRWORDGWKHFLUFXLWEXWPRGHOWKHUDGLDWHGZDYHVRQO\
7KHVSHFLILFDFRXVWLFLPSHGDQFHRIWKHZDYHVLVPRGHOOHGDVDQLQWHUQDOLPSHGDQFH7ZRH[WUDRXWSXWVDUHSURYLGHG2QHRIWKHVH´FRSLHV´WKHLQSXWYROXPHYHORFLW\WRDOORZLWWREHXVHGDVLQSXWWRDQRWKHUUDGLDWLRQPDFUR7KLVSURYLGHVDFRQYHQLHQWZD\RIVLPXODWLQJ SUHVVXUHV DW VHYHUDO GLVWDQFHV IURP RQH VLQJOH UDGLDWRU 7KHPHDQLQJ RI WKH RWKHURXWSXWZLOOEHGLVFXVVHGEHORZ
5DGLDWLRQPDFURVQHHGWKHGLVWDQFHWRWKHREVHUYDWLRQSRLQWDVDSDUDPHWHU)XUWKHUPRUH WKHVSDFHWKDWSURSDJDWHVWKHUDGLDWLRQPXVWEHGHVFULEHGUHVXOWDQWVRXQGSUHVVXUHZLOOGHSHQGRQWKHVROLGDQJOHRIUDGLDWLRQ6SK:DYHDQG6SK:DYH%QHHGWKHVROLGDQJOHJLYHQDVDFRHIILFLHQWDVLQWKH$LU/&LUDQG$LU/5FWPDFURV3OQ:DYHQHHGVWKHDUHDRIWKHZDYH IURQW DV D SDUDPHWHU LQ RUGHU WR EH DEOH WR FDOFXODWH WKH UHVXOWDQW VSHFLILF DFRXVWLFLPSHGDQFH6SK:DYH%VLPXODWHVWKHHIIHFWRIDILQLWHEDIIOHDURXQGWKHUDGLDWRUDQGWKXV
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
WKH EDIIOH SHULPHWHU LV DOVR JLYHQ DV D SDUDPHWHU 3DUDOOHO DUUD\V RI DOO WKHVHPDFURV DUHPDGHSRVVLEOHE\KDYLQJD´QXPEHU´SDUDPHWHU
7KHLQSXWRIWKHUDGLDWLRQPDFURVEHORQJVWRWKHDFRXVWLFDOGRPDLQEXWWKHRXWSXWLVHVVHQWLDOO\ ´UDGLDWLRQ GRPDLQ´ LH LQSXW FXUUHQW LV DQDORJRXV WR YROXPH YHORFLW\ ZKLOHRXWSXWFXUUHQWLVDQDORJRXVWRSDUWLFOHYHORFLW\+HQFHWKH´5→$´LQWKHVKDSHVWRVKRZWKDWDOOWKHVHUDGLDWLRQPDFURVDUHLQIDFWDOVRGRPDLQLQWHUIDFHVDWWKHVDPHWLPH7KHDUURZ HPSKDVL]HV WKDW WKHPDFURV DUH QRQUHFLSURFDO LH WKH\ FDQQRW IRU H[DPSOHPRGHOZKDWKDSSHQVZKHQZDYHVUHIOHFWEDFNDQGLQWHUDFWZLWKWKHUDGLDWRU8VXDOO\WKLVLQWHUDFWLRQLVQHJOLJLEOHLQIUHHDLUDQ\ZD\H[FHSWIRUYHU\FORVHGLVWDQFHV
5DGLDWLRQDFRXVWLFDOGRPDLQLQWHUIDFHV
$QRWKHULQWHUIDFHIURPWKHUDGLDWLRQGRPDLQWRWKHFRPPRQDFRXVWLFDOGRPDLQVKRXOGEHSURYLGHGLQRUGHUWRDOORZVLPXODWLRQRIFRPSOHWHIHHGEDFNV\VWHPV6XFKDQLQWHUIDFHKDVWR FRQYHUW RQFRPLQJ UDGLDWLRQ GHVFULEHG DV SUHVVXUH DQG SDUWLFOH YHORFLW\ EDFN WR WKHSUHVVXUH DQG YROXPH YHORFLW\ GRPDLQ$W ILUVW WKLVZRXOG VHHPPRGHOODEOH E\ D VLPSOHWUDQVIRUPLQJWZRSRUWWKDWPXOWLSOLHVWKHYHORFLW\FXUUHQWE\WKHDUHDRIWKHVXUIDFHVXEMHFWWRUDGLDWLRQZKLOHQRWFKDQJLQJWKHPDJQLWXGHRIWKHSUHVVXUHYROWDJH
+RZHYHUGLIILFXOWLHVDULVHVLQFHLWPXVWDOVREHNQRZQZKHWKHUWKHVXUIDFHVXEMHFWWRUDGLDWLRQLVVLWXDWHGLQIUHHVSDFHRUVXUURXQGHGE\VRPHUHIOHFWLQJEDIIOH$EDIIOHGRXEOHVWKH SUHVVXUH GXH WR UHIOHFWLRQV 7KLV LVZK\ UDGLDWLRQPDFURV DUH LPSOHPHQWHGZLWK WZRSUHVVXUHRXWSXWVRQHIRUIUHHILHOGUDGLDWLRQDQGDQRWKHUWKDWFDQEHIXUWKHUFRQQHFWHGWRDFRXVWLF FLUFXLWV ZKLFKPXVWEHGRQH WKURXJK WKH UDGLDWLRQDFRXVWLFDO GRPDLQ LQWHUIDFHV5$,QWRU5$,QW%7KH´ORDG´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
2WKHUUDGLDWLRQPDFURV
,W VHHPV XQQHFHVVDU\ WR KDYH D GHGLFDWHG VRXQG SUHVVXUHPDFURZKHQ DQ LGHDO SUHVVXUHVRXUFHFRXOGGRWKHMREDQGWKLVLVDOVRWUXHDVORQJDVWKHLQKHUHQWFKDUDFWHULVWLFLPSHGDQFHRIDLUGRHVQRWDIIHFWWKHUHVXOWV+RZHYHUWKHUHPD\DSSHDUVLWXDWLRQVZKHQWKHSDUWLFOH YHORFLW\ LV D TXDQWLW\ RI LQWHUHVW HJ ZKHQ GHDOLQJ ZLWK PLFURSKRQHV DQG ZLQGVKLHOGV)RUWKHVHFDVHVDVSHFLDOVRXQGSUHVVXUHPDFURYROWDJHFRQWUROOHGMXVWDVWKHRWKHULGHDOVRXUFHVZDVFUHDWHG0RUHRYHULWKDVWKHDGGHGEHQHILWRIGRXEOHRXWSXWVIRUERWKIUHHILHOGDQGORDGVDVWKHUDGLDWLRQPDFURV
7UDQVGXFHUV
7KHPRVWFRPPRQO\PRGHOOHGHOHFWURDFRXVWLF WUDQVGXFHUVDUH WKHG\QDPLF ORXGVSHDNHUV7KH\ KDYH PHFKDQLFDO DQG HOHFWULFDO SURSHUWLHV WKDW DUH UHODWLYHO\ HDV\ WR PHDVXUH DQGVSHFLI\$V D UHVXOW RI WKH FRPPRQPRGHOOLQJ RI WKHVH WUDQVGXFHUVPDQ\PDQXIDFWXUHUVKDYH DOVR EHFRPH TXLWH JRRG DW VXSSO\LQJ QHFHVVDU\ LQIRUPDWLRQ LQ WKHLU SURGXFW GDWDVKHHWV 8QIRUWXQDWHO\ WKH VLWXDWLRQ LV QRW DV JRRG IRU HOHFWURPDJQHWLF RU SLH]RHOHFWULFORXGVSHDNHUV 0LFURSKRQHV DUH XVXDOO\ PXFK PRUH LGHDO LQ WKHLU EHKDYLRXU WKDQ ORXG
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
VSHDNHUVZKLFKLVSDUWO\EHFDXVHRIWKHLUVPDOOHUVL]H'\QDPLFPLFURSKRQHVDUHDQH[FHSWLRQWRWKLVUXOHEXWVXFKPLFURSKRQHVDUHQRWXVHGLQPRELOHSKRQHVDQGDFFHVVRULHVDQ\ZD\DQGWKH\ZLOOQRWEHFRQVLGHUHGKHUH$VDFRQVHTXHQFHRIDOOWKLVLWVHHPVWKDWRQHFDQPDQDJHZHOOHQRXJKPRGHOOLQJMXVW WZRWUDQVGXFHU W\SHVG\QDPLF ORXGVSHDNHUVDQGHOHFWUHWPLFURSKRQHV$VPHQWLRQHGEHIRUH EX]]HUV DUH YHU\QRQOLQHDU LQ EHKDYLRXUDQGWU\LQJWRDSSUR[LPDWH WKHLUEHKDYLRXUXVLQJD OLQHDUFLUFXLWVLPXODWRU LVSUREDEO\QRWZRUWKWKHHIIRUW
'\Q6SNU '\Q6SNU (OFW0LF (OFW0LF
)LJXUH '\QDPLF ORXGVSHDNHUV HOHFWUHW PLFURSKRQHV RPQLGLUHFWLRQDO DQG SUHVVXUHJUDGLHQWW\SH
'\QDPLFORXGVSHDNHUV
7KHSURYLGHGG\QDPLFORXGVSHDNHUPDFURV'\Q6SNUDQG'\Q6SNUDUHQHDUO\HTXLYDOHQWH[FHSWIRUWKHRPLVVLRQRIYRLFHFRLOLQGXFWDQFHLQ'\Q6SNUDQGWKHGLIIHUHQWVHWRISDUDPHWHUV7KHIRUPHUPDFURDFFHSWVGLUHFWO\WKHHOHFWULFDOPHFKDQLFDODQGDFRXVWLFDOSURSHUWLHVRIWKHORXGVSHDNHUZKLOHWKHODWWHUPDFURXVHV7KLHOH6PDOOSDUDPHWHUVDVGHVFULEHGLQ>@7KLHOH6PDOOSDUDPHWHUVDUHWKHRQHVXVXDOO\VXSSOLHGE\PDQXIDFWXUHUV*LYLQJDOOWKHQHHGHGHOHFWULFDOPHFKDQLFDODQGDFRXVWLFDOFRPSRQHQWYDOXHVGLUHFWO\PLJKWEHPRUHXVHIXOLIVLPXODWLRQLVWREHUXQDWDORZHUPRUHPDQXIDFWXUHURULHQWHGOHYHO7KLVFRXOGEH WKH FDVH LI D FXVWRPFRPSRQHQW LVXQGHUGHYHORSPHQW DQG D FKDQJH LQ VRPH LVRODWHGSURSHUW\HJPHPEUDQHVWLIIQHVVLVWREHVLPXODWHG
%RWKORXGVSHDNHUPDFURVPRGHOORXGVSHDNHUVXVLQJRQHVLQJOHUHVRQDQWFLUFXLWLQWKHPHFKDQLFDO GRPDLQ 7KLV PD\ QRW EH DFFXUDWH HQRXJK DW KLJK IUHTXHQFLHV RU ZKHQ DJUHDWHU SDUW RI WKH ORXGVSHDNHU PHPEUDQH LV QRQULJLG ZKLFK LV XVXDOO\ WKH FDVH LQ WKHVPDOOHVWG\QDPLF ORXGVSHDNHUV$QH[DPSOH LV WKHPPHDUSLHFHFDSVXOH WKDWSOD\VDOHDGLQJUROHLQWKHFDVHVWXG\ODWHULQWKLVWKHVLV7KHHPSOR\HGPRGHORIWKLVFRPSRQHQWDGDSWHGIURPDQHTXLYDOHQWFLUFXLWVXSSOLHGE\WKHPDQXIDFWXUHU3KLOLSV6SHDNHU6\VWHPV/WG$XVWULDFDQEHIRXQGLQDSSHQGL[9
(OHFWUHWPLFURSKRQHV
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
7KH WZRPDFURV GLIIHU LQ WKH QXPEHU RI FRQQHFWLRQV WR WKHPHPEUDQH$ FRQYHQWLRQDOSUHVVXUHPLFURSKRQHUHSUHVHQWHGE\(OFW0LFKDVRQHVLGHRILWVPHPEUDQHRSHQWRWKHDLUZKLOH WKHRWKHU VLGH LVHQFORVHG LQD VPDOO DLU FDYLW\$SUHVVXUHJUDGLHQWPLFURSKRQH(OFW0LFKDVERWKVLGHVRIWKHPHPEUDQHRSHQWRWKHDLU7KHODWWHUPDFURGHILQHV
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
VHQVLWLYLW\DVWKHVHQVLWLYLW\WRSUHVVXUHGLIIHUHQFHIURQWYVEDFNRIPHPEUDQH$OWKRXJKWKLVLVQRWWKHZD\WKDWSUHVVXUHJUDGLHQWPLFURSKRQHPDQXIDFWXUHUVXVXDOO\VSHFLI\VHQVLWLYLW\LWZDVFKRVHQKHUHEHFDXVHLWLVFRQYHQLHQWDQGUHTXLUHVIHZHUSDUDPHWHUV
0HDVXULQJHTXLSPHQW
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
7KHWKUHHPRGHOOHGW\SHVDUHWKHVHDOHG,7873W\SH(DUDQGW\SHORZOHDN(DU/RDQGKLJKOHDN(DU+LHDUV$VSHFLDOOHDNDGDSWHU´*HUPDQOHDNULQJ´PDQXIDFWXUHGE\6\VWHO(OHNWURQLN*HUPDQ\ZDV DOVR LQFOXGHG7KLV OHDN DGDSWHU FRQQHFWV WR WKH%UHO.M U W\SHHDU VLPXODWRUDQGDOORZVPHDVXUHPHQWRIZKDWKDSSHQVZKHQDQHDUSLHFH LVQRWZHOOVHDOHG WR WKHXVHU¶VHDU7KH W\SH ORZOHDNHDUVLPXODWRUKDVDOHDNRIURXJKO\WKHVDPHVL]HDQGNLQG7KHW\SHKLJKOHDNHDUKDVDELJOHDNDQGFRUUHVSRQGVWRFDVHVZKHQWKHKDQGVHWRUKDQGSRUWDEOHLQTXHVWLRQLVKHOGORRVHO\DJDLQVW WKH XVHU¶V HDU 5XQQLQJ WKH VDPH VLPXODWLRQ RU PHDVXUHPHQW ZLWK GLIIHUHQW HDUVLPXODWRUVDVORDGVZLOOGHPRQVWUDWHWKHOHDNWROHUDQFHRIWKHHDUSLHFH7KLVLVRQHRIWKHFHQWUDOWRSLFVLQWKLVWKHVLVDQGLWLVGHIHUUHGWRWKHODWHUFKDSWHUVGHDOLQJZLWKLW
1RQHRIWKHHDUVLPXODWRUPDFURVQHHGVDQ\SDUDPHWHUV7KHPDFURVVLPSO\DFFHSWDFRQQHFWLRQ WR WKH DFRXVWLF FLUFXLW DW WKHLU LQSXW DQG WKHLU RXWSXW JLYHV WKH SUHVVXUH WKDWZRXOG EH VHQVHG E\ WKH PLFURSKRQHV LQVLGH WKH HDU VLPXODWRUV 7KH OHDN RSHQLQJV DUHDYDLODEOHDVVHSDUDWHSLQVLQ(DU/R(DU+LDQG*HUP/NIRUVSHFLDOVLPXODWLRQFDVHV
(DU (DU/R (DU+L *HUP/N
)LJXUH,787W\SHW\SHORZOHDNW\SHKLJKOHDNHDUVLPXODWRUVOHDNDGDSWHUIRUWKHW\SHHDUVLPXODWRU
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
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
3UREHVDQGDQQRWDWRUV
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
7KUHHRIWKHSUREHDQQRWDWRUPDFURVKDYHEXLOWLQYROWDJHRUFXUUHQWVRXUFHVWRDOORZWKHPWRDFWDVVLPSOHLPSHGDQFHSUREHV&KHFNLQJDQLPSHGDQFHDWVRPHSRLQWFDQEHYHU\XVHIXOGXULQJD VLPXODWLRQ WRYHULI\ WKDW WKH HTXLYDOHQW FLUFXLWPDNHV VHQVH WRRSWLPL]HVRPH SDUW RI LW WR UHJDLQ D SLFWXUH RI WKHPDJQLWXGHV RI UHVXOWDQW DFRXVWLF LPSHGDQFHVHWF2IFRXUVHWKHSUREHPDFURVGRQRWPRGHODQ\WKLQJLQWKHVHQVHWKDWPRVWRWKHUPDFURVGR
9HO3UE )RUFH3UE 'LVS3UE0
0,PS3UE
3UHVV3UE 9RO93UE 9RO3UE$
$,PS3UE
&XUU3UE(
(,PS3UE
)LJXUH3UREHVDQQRWDWRUVIRUFXUUHQWHOHFWULFLPSHGDQFHWRSURZYHORFLW\IRUFHGLVSODFHPHQWPHFKDQLFDOLPSHGDQFHPLGGOHURZSUHVVXUHYROXPHYHORFLW\YROXPHDQGDFRXVWLFLPSHGDQFHERWWRPURZ
&RPSRXQGPDFURV
7KHJURXSRI FRPSRXQGPDFURV FRQVLVWV RI RIWHQ XVHG FRPELQDWLRQV RIPDFURV HJ WKHREYLRXVFRPELQDWLRQRIDQDLUORDGDQGDUDGLDWLRQPDFUR7KHVKDSHVRIWKHVHPDFURVDUHDOVR VLPSOH FRPELQDWLRQV RI WKH RWKHU VKDSHV DQG WKH\ VKRZ FOHDUO\ ZK\ DQG KRZ WKHPDFUR VKDSHVZHUH GHVLJQHG WR ILW WRJHWKHU 7KH RQO\ DGYDQWDJHV SURYLGHG E\ WKH FRPSRXQGPDFURVLVWKDWVRPHFRPPRQSDUDPHWHUVKDYHWREHJLYHQRQO\RQFHDQGGUDZLQJVFKHPDWLFVEHFRPHVD OLWWOHTXLFNHU7KLVJURXSFRXOGEHH[WHQGHGE\DGGLQJRWKHUFRPPRQPDFURFRPELQDWLRQV
%XLOGLQJFLUFXLWVIRUVLPXODWLRQ
&LU+ROH$ 5FW+ROH$
$ 5
5DG&LU
$ 5
5DG5FW
$ 5
5DG&LU%
$ 5
5DG5FW%
$ 5
5DG3OQ
&LU+ROH( 5FW+ROH(
(DU/R$ (DU+L$ *HUP/N$
)LJXUH+ROHVZLWKDLUORDGVDQGHQGFRUUHFWLRQVWRSURZDLUORDGVDQGUDGLDWLRQRIVRXUFHVZLWKYDULRXVVKDSHVPLGGOHDQGERWWRPURZ
2WKHUPDFURV
7KH UHVW RI WKH PDFURV WZR FRPELQHG GHULYDWRUVLQWHJUDWRUV DQG DQ ,(& FRXSOHUPRGHODUHXVHGLQWHUQDOO\E\VRPHRIWKHPDFURVYLHZHGDERYH+RZHYHUWKH'LVS9HODQG9RO9RO9PDFURVKDYHVRPHYDOXHRIWKHLURZQWRR$OWKRXJKWKHLUHTXLYDOHQWFLUFXLWVDUHLGHQWLFDO WKH\KDYHGLIIHUHQW VKDSHVDQGSDUDPHWHUQDPHV([DPSOHVRI WKHLUXVH FDQEHIRXQGLQVRPHRIWKHSUREHDQGDQQRWDWRUPDFURVVHHDSSHQGL[,9
'LVS9HO 9RO9RO9 ,(&
)LJXUH 'LVSODFHPHQWYHORFLW\ DQG YROXPH YROXPH YHORFLW\ FRQYHUWHU ,(& PRGHO
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
6SHFLDO DXGLR SUREOHPV DQGVROXWLRQV
6RPHLPSRUWDQWDQGFRPPRQSUREOHPVLQIOXHQFLQJDFRXVWLFVGHVLJQZLOOEHEULHIO\RYHUYLHZHG LQ WKLV FKDSWHU ERWK DV VXFK DQG IURP D VLPXODWLRQ YLHZSRLQW 7KHVH IDFWVPD\VRPHWLPHVHYHQEHIRUJRWWHQDQG WKHDVVRFLDWHG WURXEOHVFDXVHGE\QRW WDNLQJ WKHP LQWRDFFRXQWPD\QRWVKRZXSDWDOOLQHDUO\SURWRW\SHVDQGFRPSXWHUVLPXODWLRQ$IHZRIWKHSRLQWV PHQWLRQHG KHUH ZLOO EH H[HPSOLILHG LQ FKDSWHU ZKLFK GHVFULEHV D FRPPHUFLDO1RNLDSKRQH
0HFKDQLFVDQGPDVVSURGXFWLRQ
6DYLQJVL]H
7KHFRQVWDQWGHVLUHWRUHGXFHVL]HDSSHDUVLQPDQ\GLUHFWDQGLQGLUHFWZD\VDVDUHVWULFWLRQRQDXGLRSHUIRUPDQFHRIPRELOHSKRQHV)DFWVWKDWKDYHWREHWDNHQLQWRDFFRXQWLQFOXGH
• 5HGXFLQJ WKHHIIHFWLYHDUHDRID WUDQVGXFHU ORZHUV LWV VHQVLWLYLW\DQDORJRXVO\ LIRWKHUSURSHUWLHVDUHNHSWXQFKDQJHG
• 5HGXFHGGLPHQVLRQVXVXDOO\OHDGWRQDUURZHUWROHUDQFHOLPLWVWKDWPXVWEHWDNHQFDUHRILQVSHFLILFDWLRQVDQGLQWKHSURGXFWLRQSURFHVV
• 7UDQVGXFHUV KDYH WR EHPRXQWHG FORVHU WR HDFK RWKHU LQ D VPDOO KDQGSRUWDEOHZKLFKEULQJVWKHEX]]HUFORVHUWRWKHHDUDQGWKHHDUSLHFHFORVHUWRWKHPLFURSKRQH7KHIRUPHULVDSRWHQWLDOSURGXFWOLDELOLW\ULVNWKHODWWHUFDQOHDGWRPRUHVHYHUHHFKRLQJ
• 0DNLQJ WKHKDQGSRUWDEOH VKRUWHU EULQJV WKHPLFURSKRQH IDUWKHU DZD\ IURP WKHPRXWKXQOHVVDIOLSSLQJRUVOLGLQJFRYHULVXVHG$JDLQWKLVLVOLNHO\WRPDNHWKHHFKRUHODWLYHO\ORXGHU
$VPDOOHDUSLHFHFDSVXOHRUEX]]HUKDVDVPDOOHUPHPEUDQHDUHDWRPRYHDLUDQGWKHORVVLQDUHDPXVWEHFRPSHQVDWHGIRUE\DQLQFUHDVHLQGLVSODFHPHQWWRNHHSWKHYROXPHYHORFLW\XQFKDQJHG7KXVLIWKHVL]HRIDJLYHQHDUSLHFHFDSVXOHRUEX]]HULVWREHUHGXFHGRQHFDQQRW H[SHFW WKH RXWSXW WR EH DW WKH VDPH OHYHO XQOHVV WKH PHPEUDQH FDQ KDQGOH WKHQHHGHGLQFUHDVHLQGLVSODFHPHQW7KLVSUREOHPLVPRVWSURQRXQFHGDWORZIUHTXHQFLHVLHDURXQG+]IRUDQHDUSLHFHFDSVXOHZKHUHWKHGLVSODFHPHQWKDVDPD[LPXP
7KHFRQVHTXHQFHVRIWROHUDQFHVDQGPRUHSURQRXQFHGHFKRDUHGHDOWZLWKEHORZ7KHIRXUWK DQG ODVW VWDWHPHQW DERYH LV D QDWXUDO FRQVHTXHQFH RI WKH EHKDYLRXU RI WKH W\SLFDOSKRQHXVHUNHHSLQJWKHHDUSLHFHDJDLQVWWKHHDUSUHYHQWVWKHPLFURSKRQHIURPEHLQJFORVHWRWKHPRXWKDWWKHVDPHWLPH7KLVLVQRSUREOHPLIWKHKDQGSRUWDEOHLVH[WHQGHGGXULQJDFDOOE\IOLSSLQJXSRUVOLGLQJRXWDQH[WUDFRYHUDQGWKHPLFURSKRQHLVPRXQWHGRQWKDWFRYHU+RZHYHUORQJGLVWDQFHWRWKHPRXWKSHUKDSVFRPELQHGZLWKORZPLFURSKRQHVHQVLWLYLW\UHTXLUHVPRUHHOHFWULFJDLQLQWKHPLFURSKRQHSUHDPSOLILHU1RLVHDQGLQWHUIHUHQFHIURPWKH5)SDUWVRIWKHSKRQHDUHWKHQDOVRDPSOLILHG$ORWRIFDUHPXVWEHWDNHQLQWKHFLUFXLWGHVLJQDQGOD\RXWDVDZKROHWRSUHYHQWWKLVLQWHUIHUHQFHIURPGLVWXUELQJWKHDXGLRSHUIRUPDQFH,WDOZD\VKHOSVLIPLFURSKRQHDPSOLILHUJDLQVFDQEHNHSWDVORZDVSRVVLEOH
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
0HFKDQLFDOWROHUDQFHV
$OWKRXJKPRELOHSKRQHDQGDFFHVVRU\DXGLRVSHFLILFDWLRQ OLPLWVDUHQRWDV WLJKWDV WKRVHUHTXLUHG IRUPHDVXULQJ RU KLIL HTXLSPHQW D EDGO\ SODQQHGPHFKDQLFDO FRQVWUXFWLRQ FDQHDVLO\FDXVHVRPHRIWKHXQLWVLQDSURGXFWLRQVHULHVWREHRXWRIVSHFLILFDWLRQV7ROHUDQFHVLQWKHPRXQWLQJRISDUWVLQVLGHWKHSKRQHKRXVLQJFDQEHVXUSULVLQJO\KLJKHVSHFLDOO\LIWKHFRQVWUXFWLRQ LV VXFK WKDW VHYHUDO VHSDUDWH WROHUDQFHVDFFXPXODWHDWSRLQWV WKDW DUHFULWLFDOIURPDQDFRXVWLFVYLHZSRLQW7UDQVGXFHUWROHUDQFHVDGGWRWKHVHPHFKDQLFDOWROHUDQFHV
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
0RQWH&DUORDQDO\VLVDYDLODEOHLQDOOGHFHQWVLPXODWRUVFDQGRWKHMRE7KLVDQDO\VLVSULQFLSOHLQYROYHVUHSHDWHGVLPXODWLRQUXQVZLWKUDQGRPFKDQJHVWRDOOSDUDPHWHUVVXEMHFWWRWROHUDQFHVVSHFLILHGE\WKHXVHU0LFUR&DS9KDVEXLOWLQ0RQWH&DUORDQDO\VLVVXSSRUWIRUPDQ\FRPSRQHQWSURSHUWLHVEXWXQIRUWXQDWHO\VXFKLVQRWWKHFDVHIRUPDFURSDUDPHWHUV7KLVPDNHVSDUDPHWHUVWHSSLQJWKHPHWKRGRIFKRLFHZKHQXVLQJ0LFUR&DSPDFURV
,WKHOSVLQWKHGHVLJQDQGLPSOHPHQWDWLRQSURFHVVLIVLPXODWLRQFDQEHXVHGWRORFDWHDQGHOLPLQDWHFULWLFDOVSRWVLQWKHPHFKDQLFDODVVHPEO\RUWUDQVGXFHUVSHFLILFDWLRQV6LPXODWHGWROHUDQFHHIIHFWVDUHLPSRUWDQWLQGLFDWRUVRIVXFFHVVIXOQHVVLQWKHHYDOXDWLRQRISRVVLEOHDFRXVWLFDOVROXWLRQV7KH WROHUDQFHVVKDOORIFRXUVHEH UHODWHG WR WKH W\SHDSSURYDOOLPLWVLQRUGHUWRSUHYHQWFRVWO\FKDQJHVDWWKHODWHW\SHDSSURYDOVWDJH
,QGXVWULDOGHVLJQ
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
0DVVSURGXFWLRQ
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
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
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
$FRXVWLFVDQGWKHHQYLURQPHQW
(QYLURQPHQWDOFRQGLWLRQV
0RELOHSKRQHVDQGWKHFRPSRQHQWVFRQWDLQHGZLWKLQWKHPKDYHWRSDVVFHUWDLQHQYLURQPHQWDOWHVWVWRDVVXUHWKDWWKH\ZLWKVWDQGXVDJHLQYDULRXVVLWXDWLRQVZLWKRXWPDOIXQFWLRQLQJ ,PSRUWDQW SDUDPHWHUV LQ VXFK WHVWV DUH KXPLGLW\ WHPSHUDWXUH DQG YLEUDWLRQ +RZ DSKRQHEHKDYHVLQDKXPLGRUZHWHQYLURQPHQWLVPRUHRUOHVVLQIOXHQFHGE\WKHVL]HVDQGORFDWLRQVRIRSHQLQJVLQWKHFRYHUVHJEX]]HUDQGHDUSLHFHVRXQGRXWOHWV)URPDZDWHUUHVLVWDQFH SRLQW RI YLHZ VHYHUDO VPDOO RSHQLQJV DUH EHWWHU WKDQ RQH ELJ RSHQLQJ RI WKHVDPHWRWDODUHD7KLVLVWRSXWLWVLPSO\WKHSULQFLSOHHPSOR\HGLQSRURXVGXVWDQGZDWHUVKLHOGPHPEUDQHV$SRURXVPHPEUDQHLVLQHIIHFWDFROOHFWLRQRIDJUHDWQXPEHURIYHU\VPDOO RSHQLQJVZKLFKSUHYHQWVZDWHU HQWU\ XS WR D FHUWDLQPD[LPXPSUHVVXUH EXW OHWVVRXQGSDVVPRUHRUOHVVXQDWWHQXDWHG'XVWDQGZDWHUVKLHOGPHPEUDQHVDOZD\VKDYHVRPHVSHFLILFDFRXVWLFUHVLVWDQFHDQGWKHFKRLFHRIVKLHOGPHPEUDQHLVXVXDOO\DEHVWFRPSURPLVHEHWZHHQWKHUHVLVWDQFHDQGWKHZDWHUHQWU\SUHVVXUH
6KLHOGLQJRIWKHSKRQHEX]]HULVHVSHFLDOO\SUREOHPDWLFEHFDXVHDW\SLFDOEX]]HUUHOLHV RQ DFRXVWLF UHVRQDQFH D WXQHG +HOPKROW] UHVRQDWRU WR REWDLQ WKH KLJKHVW SRVVLEOHVRXQGSUHVVXUHOHYHO,IWKHUHVRQDQFHLVVKDUSLHKDVDKLJK4YDOXHZKLFKLVGHVLUDEOHWKHQLWLVDOVRYHU\VHQVLWLYHWRDQ\DFRXVWLFUHVLVWDQFHVVXFKDVGXVWDQGZDWHUVKLHOGPHPEUDQHV
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
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
5)VKLHOGLQJ
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
• RSHQLQJV VKRXOG EH FLUFXODU LQ VKDSH D FLUFOH KDV WKH JUHDWHVW SRVVLEOH UDWLR EHWZHHQDUHDDQGORQJHVWGLPHQVLRQDQG
• WKHLUGLDPHWHUPXVWEHNHSWEHORZVRPHPLQLPXP
,IDELJDLU IORZURXWH LVQHHGHG WKLVRSHQLQJPD\KDYH WREHVSOLWXS LQWRVHYHUDOVPDOOHJFLUFXODURUVTXDUHVKDSHGRSHQLQJVLQVWHDGRIRQHELJRSHQLQJRWKHUZLVHWKHPD[LPXPDOORZDEOHGLPHQVLRQOLPLWZRXOGEHH[FHHGHG
$IOLSSLQJRUVOLGLQJFRYHUWRSURWHFWWKHNH\SDGLVDSRWHQWLDOVRXUFHRI5)VKLHOGLQJSUREOHPVLI WKHPLFURSKRQHLVSODFHGLQ WKH IDUHQGRI WKHFRYHUDQGKDV WKXV WREHFRQQHFWHGWRWKHEDVHEDQGHOHFWURQLFVXVLQJDSDLURIORQJOHDGV7KHOHDGVDFWDVDQXQLQWHQWLRQDO DQWHQQD WKDW SLFNV XS WKH 5) ILHOG ZKLFKPD\ FDXVH KDUPIXO LQWHUIHUHQFH LQ WKHEDVHEDQGDXGLRFLUFXLWU\
%DFNJURXQGDQGKDQGOLQJQRLVH
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
$SUHVVXUHJUDGLHQWPLFURSKRQHKDV WKHJUHDW DGYDQWDJHRI EHLQJ DEOH WR DWWHQXDWHEDFNJURXQGQRLVHLQUHODWLRQWRVSHHFKHPLWWHGE\WKHXVHU¶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
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
VSKHULFDOZDYHVRXUFHVDWDJLYHQGLVWDQFHWKHQHWHIIHFWLVWKDWORZIUHTXHQFLHVZLOOEHERRVWHG LI WKH VRXUFH PRYHV FORVHU WR WKH PLFURSKRQH DQG GDPSHG LI LW PRYHV IDUWKHUDZD\7KLVLVNQRZQDVWKHSUR[LPLW\HIIHFW
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
:LQGQRLVH
1RLVH FUHDWHG E\ WXUEXOHQFH DURXQG WKH PLFURSKRQH FDQ LQWHUIHUH PRUH VHULRXVO\ ZLWKXSOLQNVSHHFK WKDQGRHV ORXGEDFNJURXQGQRLVH9RUWLFHVFUHDWHGE\ZLQG WXUEXOHQFHDUHHDVLO\ ORFDWHGFORVHU WR WKHPLFURSKRQH WKDQ WKHXVHU¶VPRXWK7KHVLWXDWLRQFDQEHHYHQZRUVHLIDSUHVVXUHJUDGLHQWPLFURSKRQHLVXVHG7KHQWKHORZIUHTXHQF\WXUEXOHQFHQRLVHSLFNXS JHWV IXUWKHU HQKDQFHG E\ WKH FORVH GLVWDQFH EHWZHHQ WKH YRUWLFHV DQG WKHPLFURSKRQH UHFDOOLQJ WKH SUR[LPLW\ HIIHFW GHVFULEHG DERYH HVSHFLDOO\ EHFDXVH RI WKH TXDGUXSROH QDWXUH RI YRUWLFHV DV VRXQG VRXUFHV 6RXQGZDYHV RULJLQDWLQJ IURP D TXDGUXSROHVRXUFH VKRZ DQ GLVWDQFH DWWHQXDWLRQ FKDUDFWHULVWLF DW VPDOO GLVWDQFHV 7KLV FDXVHV DJUHDWHUSUHVVXUHDPSOLWXGHGLIIHUHQFHEHWZHHQIURQWDQGEDFNRIDSUHVVXUHJUDGLHQWPLFURSKRQHPHPEUDQHWKDQZRXOGDSRLQWVRXUFHHPLWWLQJVSKHULFDOZDYHVZLWKDQDWWHQXDWLRQFKDUDFWHULVWLFRIGLVWDQFHDWWKHVDPHORFDWLRQ
)LOWHULQJFDQRQO\OHDGWROLPLWHGLPSURYHPHQW7KHZLQGQRLVHSLFNHGXSE\WKHPLFURSKRQHZLOOXVXDOO\KDYHTXLWHDEURDGVSHFWUXPZLWKDSHDNDWWKHORZIUHTXHQFLHVDQGH[WHQGLQJ LQWR WKH VSHHFK WUDQVPLVVLRQEDQG HJ >@:LQG VFUHHQ WHFKQLTXHVXVHG WRSURWHFWELJJHUPLFURSKRQHVUHO\RQSURYLGLQJDSDUWO\LVRODWHGVSDFHRIDLUDURXQGWKHPLFURSKRQH 6XFK VSDFH LV KDUGHU WR SURYLGH DURXQG D PRELOH SKRQH PLFURSKRQH ZLWKRXWPDNLQJWKHSKRQHELJJHU,WLVJRRGWRWU\WRILQGDORFDWLRQRQWKHSKRQHFRYHUZKHUHWKH
6SHFLDODXGLRSUREOHPVDQGVROXWLRQV
PLFURSKRQHFDQKDYHVRPHSURWHFWLRQDJDLQVWWXUEXOHQFH7KHZLQGQRLVHSUREOHPZLOOQRWEHH[DPLQHGDQ\IXUWKHULQWKLVWKHVLV
(FKR
7KH SUREOHP RI HFKRLQJ ZDV EULHIO\ LQWURGXFHG LQ VHFWLRQ (FKR FDQFHOODWLRQ LVPDLQO\DWDVNIRUWKHSKRQHVRIWZDUHEXWVRPHDFRXVWLFVJXLGHOLQHVFDQKHOSWRUHGXFHWKHORDGRQWKHHFKRFDQFHOODWLRQDOJRULWKPV7KHPDLQFRQFHUQLVWKHVRXQGFRXSOLQJIURPWKHHDUSLHFH WR WKHPLFURSKRQH7KLV VRXQG FDQ FRXSOH WKURXJK WKH DLU DQG WKURXJK WKHPHFKDQLFDO VWUXFWXUHVRI WKHSKRQH1RH[SHULPHQWDORU WKHRUHWLFDO VWXG\RI WKHPHFKDQLFDOFRXSOLQJLVNQRZQWRWKHZULWHU&RXSOLQJWKURXJKWKHDLULVPRUHVWUDLJKWIRUZDUGDQGWKLVNLQG RI FRXSOLQJ FRXOG HYHQ EH DQDO\]HG XVLQJ VLPXODWLRQ 6XFK D VLPXODWLRQZRXOG LQYROYHWKHUHFRJQL]DWLRQRIDW\SLFDOOHDNEHWZHHQWKHSKRQHFRYHUDQGWKHXVHU¶VHDUDQGVRPHDSSUR[LPDWHUHSUHVHQWDWLRQRIWKHDLUSDWKIURPWKHHDUSLHFHWRWKHPLFURSKRQH)UHHILHOGFRQGLWLRQVFRXOGSUREDEO\EHXVHGDVDURXJKILUVWDSSUR[LPDWLRQDOWKRXJKWKHSUHVHQFHRIWKHKHDGZLOOKDYHVRPHHIIHFW
(DUSLHFHSHUIRUPDQFH
2IWKHWKUHHPRELOHSKRQHDXGLRWUDQVGXFHUVWKHHDUSLHFHLVVSHFLDOLQWKDWLWKDVWRRSHUDWHLQWRDZLGHO\YDU\LQJDFRXVWLFORDG7KHPLFURSKRQHDQGWKHEX]]HUDUHSUDFWLFDOO\DOZD\VVXUURXQGHGE\IUHHDLUZKLOHWKHHDUSLHFHVHHVWKHDFRXVWLFLQSXWLPSHGDQFHRIWKHXVHU¶VHDUDVDORDG1RZKRZHYHUWKHHDULPSHGDQFHDORQHLVQRWHQRXJKWRSURYLGHDUHDOLVWLFSLFWXUHRIWKHVLWXDWLRQ7KHUHZLOODOPRVWDOZD\VEHVRPHOHDNSUHVHQWEHWZHHQWKHSKRQHFRYHUDQGWKHXVHU¶VHDUDQGWKLVOHDNDSSHDUVDVDQLPSHGDQFHLQSDUDOOHOZLWKWKHLPSHGDQFHIRUPHGE\WKHHDU6LQFHWKHHDULPSHGDQFHLVKLJKFRPSDUHGWRWKHUDGLDWLRQLPSHGDQFHLQWRIUHHDLUDYDU\LQJOHDNZLOOVKRZDVDFRQVLGHUDEOHYDULDWLRQLQWKHORDGLPSHGDQFHVHHQE\WKHHDUSLHFH
7KHOHDNEHWZHHQWKHSKRQHFRYHUDQGWKHXVHU¶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
7RFRXQWHUDFWWKHHIIHFWVRIWKHYDU\LQJDFRXVWLFORDGVRPHLPSRUWDQWIDFWVPXVWEHUHFRJQL]HG DQG DFFRUGLQJ GHVLJQ UXOHV HVWDEOLVKHG 7KLV ZD\ DQ HDUSLHFH FDQ EH PDGHPRUH OHDN WROHUDQW/HDN WROHUDQFH LV DPDMRU WRSLF LQ WKLV WKHVLV DQG WKH IROORZLQJ WZRFKDSWHUVDUHGHGLFDWHGWRWKLVSDUWLFXODUDUHDRIDFRXVWLFVGHVLJQ
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
'HVLJQ H[DPSOH OHDN WROHUDQWHDUSLHFH
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
/HDNWROHUDQFH²ZKDWDQGZK\
3HUIRUPDQFHUHTXLUHPHQWV
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² HTXDOL]LQJ WKH UHVSRQVH WR EH IODWHQRXJKZKHQDOHDNLVSUHVHQW²ZRXOGWKHQOHDGWRWRRORXGEDVVIUHTXHQFLHVLIWKHSKRQHZHUHSUHVVHGWLJKWO\DJDLQVWWKHHDU7KLVLVYHU\LPSRUWDQWIRUSURGXFWOLDELOLW\UHDVRQVWKHSKRQHXVHUPLJKWEHWHPSWHGWRSUHVVWKHSKRQHWLJKWO\DJDLQVWKLVRUKHUHDU LI WKHHQYLURQPHQWLVQRLV\EXWWKHQWKHGRZQOLQNVSHHFKPLJKWDOVRFUHDWHGDQJHURXVO\KLJKVRXQGSUHVVXUHOHYHOVLQWKHHDU$SKRQHPDQXIDFWXUHULVQRWZLOOLQJWRWDNHWKLVULVN
7HVWDQGPHDVXUHPHQWUHTXLUHPHQWV
,QRUGHUWRIRUPXODWHDQXQDPELJXRXVUHTXLUHPHQWRQVRPHDXGLRIUHTXHQF\UHVSRQVHHJUHFHLYLQJIUHTXHQF\UHVSRQVHVKRZQLQILJWKHIXOOVLJQDOSDWKKDVWREHFOHDUO\GHILQHG0DQ\W\SHDSSURYDODXGLRWHVWVLQFOXGHWKHSKRQHWUDQVGXFHUVDQGWKXVWKHVHWUDQVGXFHUVKDYHWREHFRQQHFWHGWRWKHWHVWHTXLSPHQWLQDSUHGHILQHGZD\7KLVLVGRQHXVLQJVWDQGDUGDUWLILFLDOPRXWKVDQGHDUV,QDGGLWLRQWKHPRXQWLQJRIWKHVHWRWKHSKRQHXQGHUWHVWLVDFFXUDWHO\GHILQHGLQW\SHDSSURYDOWHVWVSHFLILFDWLRQV)RUREYLRXVUHDVRQVWKHWHVWVDUHGHILQHGVRDVWREHDFFXUDWHDQGVLPSOHHQRXJKWRUXQ
,QVRPHFDVHVWHVWUHTXLUHPHQWVDQGSHUIRUPDQFHUHTXLUHPHQWVDUHFRQWUDGLFWRU\$YHU\LPSRUWDQWH[DPSOHLVWKHSKRQHHDUSLHFHSHUIRUPDQFHGHVFULEHGLQWKHDERYHVHFWLRQ7\SH DSSURYDO WHVWV XVXDOO\ VSHFLI\ IRU VLPSOLFLW\ XQDPELJXLW\ DQG REYLRXVO\ WR VRPHH[WHQWHYHQKLVWRULFDOUHDVRQVWKDWWKHHDUSLHFHEHVHDOHGWRDQDUWLILFLDOHDUGXULQJPHDV
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
XUHPHQW7KLVUHPRYHVWKHDGGLWLRQDOOHDNWKDWLVDOPRVWDOZD\VSUHVHQWLQDQRUPDOXVDJHVLWXDWLRQ,QRWKHUZRUGVWKHW\SHDSSURYDOPHDVXUHPHQWZLOOEHLQWRDQDFRXVWLFORDGWKDWGLIIHUV TXLWH D ORW IURP WKH ORDG VHHQ E\ WKH HDUSLHFH XQGHUPRVW QRUPDO FLUFXPVWDQFHV8QOHVVWKHHDUSLHFHLVPDGHOHDNWROHUDQWWKLVZLOOOHDGWRLQHYLWDEOHWUDGHRIIVLQWKHDFRXVWLFVGHVLJQVRXQGSUHVVXUH OHYHO LQWRDVHDOHGDUWLILFLDOHDUPXVWEHNHSWEHORZVSHFLILHGOLPLWVEXWWKHQWKHRXWSXWLQWRDQRUPDOOHDNLQJHDUZLOOEHWRRORZLHWKHVSHHFKZLOOVRXQGWRRZHDNDQGWKLQ
%DFNJURXQGWKHRU\
$FOHDULQVLJKWLQWRZKDWWKHFRQFHSWRIOHDNWROHUDQFHLVDERXWFDQEHJDLQHGE\FUHDWLQJDQHTXLYDOHQWFLUFXLWRIDFRQYHQWLRQDOSKRQHHDUSLHFHKHOGDJDLQVWWKHXVHU¶VHDU
)LJXUH&URVVVHFWLRQDOYLHZRI FRQYHQWLRQDOSKRQHHDUSLHFHKHOGDJDLQVW WKHXVHU¶VHDULQWHUQDOSDUWVRIWKHSKRQHRWKHUWKDQWKHHDUSLHFHFDSVXOHDUHQRWVKRZQ
7KHYLVXDOL]DWLRQRIWKHFLUFXLWEHJLQVE\UHFRJQL]LQJWKDWWKHHDUSLHFHFDQEHVLPSO\GHVFULEHGDVDSUHVVXUH VRXUFHZLWK DJLYHQ LQWHUQDO VHULHV LPSHGDQFH E\DSSO\LQJ7KHYHQLQ¶V WKHRUHP LQ WKH DFRXVWLFDO GRPDLQ MXVW DV LQ HOHFWULF FLUFXLW WKHRU\ 7KLV VRXUFH LVWKHQ FRQQHFWHG WR DQ DFRXVWLF LPSHGDQFH UHSUHVHQWLQJ WKH HDU )LQDOO\ WKH OHDNPXVW EHLQFOXGHG5HPHPEHULQJWKDWDLUIORZLVHTXLYDOHQWWRFXUUHQWLQWKHDFRXVWLFDOGRPDLQLWLVHDV\WRXQGHUVWDQGWKDWWKHOHDNPXVWEHDQDFRXVWLFLPSHGDQFHLQSDUDOOHOZLWKWKHHDUWKHFXUUHQWYROXPHYHORFLW\VXSSOLHGE\WKHHDUSLHFHLVGLYLGHGEHWZHHQWKHHDUDQGWKHOHDN7KHUHVXOWLV
SH
=DH
=DO =DX
TO
TH
SX
3KRQH ([WHULRU
)LJXUH6LPSOHHTXLYDOHQWFLUFXLWRIHDUSLHFHKHOGDJDLQVWHDU
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
,QWKHDERYHSLFWXUHDQGIURPQRZRQWKHIROORZLQJVXEVFULSWVDUHXVHGH HDUSLHFHO OHDNX XVHU¶VHDU7KHSUHVVXUHLQWRWKHXVHU¶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
$VVXPLQJDFRQVWDQWHOHFWULFLQSXWVLJQDOWRWKHHDUSLHFHFDSVXOHWKHVRXUFHSUHVVXUHSH ZLOODOVREHFRQVWDQW+RZHYHU WKHUHVXOWDQWYROXPHYHORFLW\ TH ZLOOYDU\GXH WR WKHSUHVHQFHRIWKHYDU\LQJOHDN$VDUHVXOWWKHUHZLOOEHDYDU\LQJSUHVVXUHGURSDFURVV =DH ZKLFKZLOOLQWXUQOHDGWRDYDU\LQJ SX GHOLYHUHGWRWKHXVHU¶VHDU([SUHVVHGPDWKHPDWLFDOO\WKHYDULDWLRQRI SX LV
( )∆ ∆S T =X H DH=
,WLVVHHQQRZWKDWWRPLQLPL]HWKLVYDULDWLRQZKLFKLVHTXLYDOHQWWRPDNLQJWKHHDUSLHFHOHDNWROHUDQWRQHKDVWR
• PLQLPL]HWKHLQWHUQDOLPSHGDQFH=DH DQGRU• VWDELOL]HWKHRXWSXWYROXPHYHORFLW\TH
$FFRUGLQJ WR WKLV LW LVSRVVLEOH WR VWDWH DPRUH VWULQJHQWGHILQLWLRQRI OHDN WROHUDQFH WKHOHDNWROHUDQFHRIDQHDUSLHFHLVWKHUHODWLYHVHQVLWLYLW\RIWKHVRXQGSUHVVXUHGHOLYHUHGWRWKHXVHU¶V HDU WR FKDQJHV LQ WKH WRWDO ORDG LPSHGDQFH IRUPHGE\ WKHXVHU¶V HDUDQGDQ\OHDNVEHWZHHQWKHXVHU¶VHDUDQGWKHHDUSLHFH
,WLVDOVRLPSRUWDQWWRQRWHWKDWEHLQJDPRUHRUOHVVQDUURZFRQVWULFWLRQ =DO KDVWKHQDWXUHRID5/VHULHVLPSHGDQFH7KXVWKHOHDNZLOOEHPRUHRSHQDWORZIUHTXHQFLHVDQGORZIUHTXHQFLHVFDQEHH[SHFWHGWRGURSPRUHWKDQKLJKIUHTXHQFLHVZKHQWKHOHDNLVSUHVHQW DVZDVEULHIO\VWDWHG LQVHF7KHUHIRUH LW LVXVXDOO\JRRG WR IRFXVRQ WKH ORZIUHTXHQF\EHKDYLRXUZKHQGHVLJQLQJDQHDUSLHFHIRUJRRGOHDNWROHUDQFH
3UDFWLFDOLPSOHPHQWDWLRQ
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
6WDELOL]LQJWKHYROXPHYHORFLW\ TH FRXOGPHDQHLWKHUPDNLQJ =DH YHU\ODUJHZKLFKZRXOGFRQWUDGLFWWKHDERYHDQGZDVWHPRVWRIWKHHDUSLHFHRXWSXWSUHVVXUHDQGLVWKHUHIRUHZRUWKOHVVDVDGHVLJQPHWKRGRUVWDELOL]LQJ WKH OHDN LPSHGDQFH =DO 7KHVLPSOHVW DQGXVXDOO\PRVWHOHJDQWZD\WRDFFRPSOLVKWKLVLVWRDGGDGHOLEHUDWHSDUDOOHOOHDNWKDWFDQQRWEHEORFNHGE\WKHXVHU¶VHDU,QRWKHUZRUGVWKLVDGGHGSDUDOOHOOHDNLVWREHLPSOHPHQWHG
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
DVWRSRORJLFDOO\HTXLYDOHQWWR =DO EXWDSDUWRIWKHHDUSLHFHLWVHOI²QRWEHORQJLQJWRWKHH[WHULRURIWKHSKRQHDV=DO GRHV
=D[ =DO
TO
=DO
)LJXUH$GGLQJDGHOLEHUDWHOHDN
7KHDGGHGOHDN =D[ PXVWEHFKRVHQVPDOOHQRXJKLQFRPSDULVRQZLWK =DX IRUJRRGVWDELOL]DWLRQ,QVWHDGRIYDU\LQJEHWZHHQYHU\VPDOODQGYHU\ODUJHWKHRUHWLFDOO\LQILQLWHYDOXHVWKHWRWDOOHDNLPSHGDQFH =DO ZLOOQRZKDYHDQXSSHUERXQGHTXDOWR =D[ =D[ PXVWQRWEHFKRVHQWRRVPDOOKRZHYHUEHFDXVHWKDWFRXOGPDNHWKH OHDNGUDZWRRPXFKYROXPHYHORFLW\DQGDVDUHVXOWWKHSUHVVXUHGURSDFURVV=DH ZRXOGEHH[FHVVLYH
,QWKHRU\DVFDQEHVHHQIURPHTJRRGSHUIRUPDQFHFRXOGEHDFKLHYHGDOVRE\PDNLQJ TH DVVPDOODVSRVVLEOHZKLFKZRXOGPHDQHOLPLQDWLQJDOOOHDNV7KLVVROXWLRQLVQRWUHOHYDQWKHUHRIFRXUVHEHFDXVHWKHYHU\LGHDRIOHDNWROHUDQFHLVDERXWDOORZLQJDYDU\LQJDPRXQWRI YROXPHYHORFLW\ WR HVFDSH WKURXJK WKH OHDNEHWZHHQ WKHSKRQH FRYHUDQGWKHXVHU¶VHDU(YHQLI WKLV OHDNZHUHHOLPLQDWHG WKHHDU LWVHOIZRXOGVWLOOGUDZVRPHYROXPHYHORFLW\VLQFHWKHDFRXVWLFLQSXWLPSHGDQFHRIDKXPDQHDULVILQLWHVHHILJIRUDQDSSUR[LPDWLRQE\WKH,7873W\SHHDUVLPXODWLRQPRGHO7KXVRQHKDVWREHVDWLVILHGZLWKPHUHO\VWDELOL]LQJQRWHOLPLQDWLQJTH
7KHWUDQVGXFHUFRPSRQHQW
'\QDPLFHDUSLHFHFDSVXOHLQWKUHHGRPDLQV
7KHW\SLFDOHDUSLHFHFDSVXOHLVDVPDOOG\QDPLFWUDQVGXFHU(YHQLQHJDQHOHFWURPDJQHWLFWUDQVGXFHU WKHPHFKDQLFDOFRQVWUXFWLRQUHPDLQV WKHVDPH LQSULQFLSOH WKHUH LVDPRYDEOHPHPEUDQHDFWLQJDV D VRXQG VRXUFH7KLVPHPEUDQHDOZD\VKDV DJLYHQPHFKDQLFDO LPSHGDQFHRUDFRXVWLFLPSHGDQFHLIUDWKHUYLHZHGLQWKHDFRXVWLFDOGRPDLQ,QLWVVLPSOHVWIRUP WKHPHFKDQLFDO LPSHGDQFHRI WKHPHPEUDQHFDQEH UHSUHVHQWHGE\DSDUDOOHO5/&FLUFXLW7KHLQGXFWDQFHDQGFDSDFLWDQFHDUHWKHFRPSOLDQFH&PP DQGPRYLQJPDVV /PP RIWKHPHPEUDQH UHVSHFWLYHO\ DQG WKH UHVLVWDQFH LV WKH UHFLSURFDO YDOXH RI WKHPHFKDQLFDOUHVLVWDQFH 5PP 7KLV UHSUHVHQWDWLRQ RI WKHPHPEUDQH LV XQGHUVWRRGE\ UHFDOOLQJ WKDW WKHLQYHUVH DGPLWWDQFHDQDORJ\ LVXVHG LQ WKHPHFKDQLFDOGRPDLQ2WKHUQHFHVVDU\FRPSRQHQWVLQWKHHTXLYDOHQWFLUFXLWDUHWKHYRLFHFRLOUHVLVWDQFHDQGWKHLQWHUGRPDLQWUDQVIRUPHUVDQGJ\UDWRUV7KHHIIHFWLYHDUHDRIWKHPHPEUDQH $P DSSHDUVDVWKHWUDQVFRQGXFWDQFHRIWKHJ\UDWRUDQGWKHUHFLSURFDORIWKHIRUFHIDFWRU%ODSSHDUVDVWKHWUDQVIRUPDWLRQUDWLRRI WKH WUDQVIRUPHU ,W LV DVVXPHG IURP QRZ RQ WKDW WKH YRLFH FRLO LQGXFWDQFH LV VPDOOHQRXJKWREHVDIHO\GLVUHJDUGHG
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
5F
%O $P5PP &PP/PP
9RLFH 7UDQVGXFWLRQ 0HPEUDQHYRLFHFRLOFRLO
(DUSLHFHFDSVXOH
0HPEUDQHDUHD
(OHFWULFLQSXW
$FRXVWLFORDG
)LJXUH(TXLYDOHQWFLUFXLWRI WKHWUDQVGXFWLRQPHFKDQLVPDQGPHPEUDQHRID W\SLFDOG\QDPLFHDUSLHFHFDSVXOH7KHWUDQVIRUPHUDQGWKHJ\UDWRUDUHLGHDO
7KHH[WHQWRIWKHHDUSLHFHFDSVXOHLVPDUNHGLQWKHSLFWXUH,WVKRXOGEHQRWHGWKDWWKHUHLVDOZD\VVRPHNLQGRIDFRXVWLFORDGWKDWORDGVWKHPRYLQJPHPEUDQH7KHPRVWLPSRUWDQWRIWKHVHLVWKHKRXVLQJRIWKHHDUSLHFHFDSVXOHLWVHOI,QRWKHUZRUGVDFRPSOHWHPRGHORIDQHDUSLHFHFDSVXOHZLOOQHHGWRLQFOXGHDIHZFRPSRQHQWVUHSUHVHQWLQJWKHKRXVLQJLQDGGLWLRQWRWKHHOHFWULFDODQGPHFKDQLFDOGRPDLQFRPSRQHQWVVKRZQDERYH6XEVFULSWVXVHGLQDGGLWLRQWRWKHRQHVDOUHDG\LQWURGXFHGDUHF YRLFHFRLOP PRYLQJSDUWVPHPEUDQHDQGYRLFHFRLOWRJHWKHU
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
=
/DK5DK
&DK
)LJXUH$FRXVWLF LPSHGDQFHRID W\SLFDO HDUSLHFH FDSVXOHKRXVLQJ WKHPHPEUDQH LVOHIWRXWLQWKHSLFWXUH
1RZWKHIXOOHTXLYDOHQWFLUFXLWFDQEHFUHDWHG
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
9RLFH 7UDQV 0HPEUDQHYRLFHFRLO
DFRXVWLFORDG
FRLO GXFWLRQ+RXVLQJ
(OHFWULFLQSXW
)URQW
DFRXVWLFORDG
%DFN
0HPEUDQHDUHD
)LJXUH)XOOWKUHHGRPDLQHTXLYDOHQWFLUFXLWRIDW\SLFDOHDUSLHFHFDSVXOH
$JHQHUDOG\QDPLFHDUSLHFHFDSVXOHPRGHOKDVIRXUWHUPLQDOVWZRHOHFWULFLQSXWWHUPLQDOVDVZHOO DV IURQWDQGEDFNDFRXVWLF WHUPLQDOV2I FRXUVH LI WKHEDFNRI WKHPHPEUDQH LVFRPSOHWHO\FORVHGDLUWLJKWWKHQLQHIIHFWWKHDFRXVWLFUHVLVWDQFHLQWKH´KRXVLQJ´SDUWRIWKHFLUFXLWLVLQILQLWHDQGWKHUHLVRQO\DIURQWDFRXVWLFWHUPLQDO
'\QDPLFHDUSLHFHFDSVXOHLQWKHDFRXVWLFDOGRPDLQ
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
7KHVDPHSURFHGXUHFDQ WKHQEHDSSOLHG WR UHGXFH WKH WRWDOPHFKDQLFDO LPSHGDQFHLQFOXGLQJHOHFWURPDJQHWLFGDPSLQJWRWKHDFRXVWLFDOGRPDLQ7KLVZLOOUHVXOW LQDVHULHV5/&FLUFXLW7RVXPLWXSWKHZKROHHTXLYDOHQWFLUFXLWWRWKHOHIWRIWKHKRXVLQJLQILJLQFOXGLQJWKHDPSOLILHUQRWVKRZQLQWKHSLFWXUHFDQEHUHSUHVHQWHGVLPSO\E\DSUHVVXUHVRXUFHDQGDQDFRXVWLFLPSHGDQFHVHULHV5/&FLUFXLWDFFRUGLQJWR7KHYHQLQ¶VWKHRUHP
/DK 5DK
&DKSH
&DP/DP5DP
0HPEUDQHYRLFHFRLODQGDPSOLILHU+RXVLQJ
%DFN )URQW
)LJXUH$FRXVWLFDO GRPDLQ HTXLYDOHQW FLUFXLW RI G\QDPLF HDUSLHFH FDSVXOH IHGE\DQDPSOLILHU
8VLQJILJVDQGEDVLFHOHFWULFFLUFXLWWKHRUHPVLWFDQEHVKRZQWKDW
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
S%O
5 $XH
F PLQ=
( )5
5
$
%O
5 $DPPP
P F P
= +
//$DPPP
P
=
& & $DP PP P=
ZKHUH XLQ LVWKHLQSXWYROWDJHEURXJKWWRWKHHOHFWULFFRQQHFWRUVE\WKHDPSOLILHU7KHVHFRQGWHUPLQHTUHSUHVHQWVWKHHOHFWURPDJQHWLFGDPSLQJDQGWKLVWHUPJRHVWR]HURLIWKHDPSOLILHULVGLVFRQQHFWHGEHFDXVHWKHWRWDOUHVLVWDQFHLQWKHDPSOLILHUYRLFHFRLOORRSQRUPDOO\HTXDOWR 5F ZLOOWKHQEHLQILQLWH
,W LV LPSRUWDQW WRQRWH WKDW WKHFLUFXLWVDERYHDVVXPHWKDW WKHPHPEUDQHLVDLUWLJKWDQGWKDWQRDLUFDQIORZSDVW WKHPHPEUDQH LQVLGH WKHHDUSLHFHFDSVXOH ,I WKLV LVQRW WKHFDVHWKHQDQH[WUD5/VHULHVFLUFXLWUHSUHVHQWLQJWKHIORZSDWKZLOODSSHDULQSDUDOOHOZLWKWKHPHPEUDQH5/&LPSHGDQFHEUDQFK7KHUHH[LVWVXFKHDUSLHFHFDSVXOHVKDYLQJSRURXVPHPEUDQHV RU GHOLEHUDWH OHDNV LQ SDUDOOHOZLWK WKHPHPEUDQH 7KH H[WUD5/ EUDQFK KDVIUHTXHQF\GHSHQGHQWFRPSRQHQWYDOXHVLQWKLVVLPSOLILHGFLUFXLWLIWKHPHPEUDQHLVSRURXV>@
0XOWLSOHPDVVHTXLYDOHQWFLUFXLW
7KH FLUFXLWV FUHDWHG DERYH DUH XVXDOO\ JRRG HVWLPDWHV DW ORZ DQGPLGUDQJH IUHTXHQFLHVEHFDXVHDWWKRVHIUHTXHQFLHVLWLVMXVWLILHGWRWUHDWWKHHQWLUHPRYLQJPHPEUDQHDVRQHVLQJOHHQWLW\+RZHYHUW\SLFDOVPDOOG\QDPLFORXGVSHDNHUVKDYHDPHPEUDQHWKDWFRQVLVWVRIWZRVHSDUDWHSDUWVDFLUFXODUFHQWHUSDUWLQVLGHWKHSHULPHWHURIWKHYRLFHFRLODQGDQDQQXODUVXVSHQVLRQRXWVLGHWKHSHULPHWHURIWKHYRLFHFRLO
)LJXUH$W\SLFDOHDUSLHFHFDSVXOHPHPEUDQHGLYLGHGE\WKHYRLFHFRLOLQWRDFLUFXODUGRPHVKDSHGFHQWHUSDUWDQGDQDQQXODUVXVSHQVLRQ
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
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
FRXSOHGPDVVHV LQ WKHPRGHORI WKHYRLFH FRLO DQGPHPEUDQHDVVHPEO\$OVR DV FDQEHVHHQLQWKHDERYHSLFWXUHWKHUHDUHWZRVHSDUDWHFDYLWLHVXQGHUWKHGRPHDQGWKHULQJDQGWKHVHFDYLWLHVDUHFRXSOHGWRHDFKRWKHUDQGWRWKHEDFNRIWKHHDUSLHFHFDSVXOHE\QDUURZDLUIORZSDWKV$QDFFXUDWHPRGHOIRUDZLGHIUHTXHQF\UDQJHPD\QHHG WR LQFOXGH WKHVHVHSDUDWH DFRXVWLF LPSHGDQFHV LQVWHDG RI RQH VLQJOH 5/& FLUFXLW PRGHOOLQJ WKH KRXVLQJ>@
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
0HFKDQLFDOFRQILJXUDWLRQV
%DVLFPHWKRGVRIDFKLHYLQJOHDNWROHUDQFHDUHRYHUYLHZHGQH[W7KHUHLVDJUHDWQXPEHURISRVVLEOHPHFKDQLFDO VROXWLRQV HVSHFLDOO\ VLQFH WKHUH DUH VLJQLILFDQW GLIIHUHQFHV EHWZHHQYDULRXVEUDQGVDQGW\SHVRIHDUSLHFHFDSVXOHV+RZHYHUDOOWKHVROXWLRQVZRUNLQZD\VWKDWUHGXFHWKHYDOXHVRIFHUWDLQLPSHGDQFHVLQWKHHTXLYDOHQWFLUFXLWRIILJVDQG7KHVROXWLRQVFDQEHUHGXFHGWRDIHZEDVLFFDVHV
/RZHULQJWKHRXWSXWLPSHGDQFH
)LUVWWKHDWWHQWLRQLVIRFXVHGRQWKHDFRXVWLFRXWSXW LPSHGDQFH =DH RI WKHHDUSLHFH8QWLOQRZDWWHQWLRQKDVEHHQSDLGRQO\WRWKHLPSHGDQFHVRIWKHHDUSLHFHFDSVXOHLWVHOI$VGHILQHGHDUOLHULQWKLVWKHVLVWKHZRUG´HDUSLHFH´PHDQVQRWRQO\WKHHDUSLHFHFDSVXOHFRPSRQHQWEXWWKHZKROHSDUWRIWKHSKRQHIHHGLQJVSHHFKLQWRWKHXVHU¶VHDUVHHILJ,QRWKHUZRUGVWKHHDUSLHFHLQFOXGHVWKHZKROHDFRXVWLFFLUFXLWIRUPHGE\WKHHDUSLHFHFDSVXOHDQGWKHPHFKDQLFVVXUURXQGLQJLWLQVLGHWKHSKRQH)URPWKLVGHILQLWLRQLWLVFOHDUWKDWWKHUHH[LVWDGGLWLRQDODFRXVWLFLPSHGDQFHVFRQQHFWHGWRWKH´IURQW´DQG´EDFN´WHUPLQDOVRIWKHHTXLYDOHQWFLUFXLWVKRZQLQILJ7KHIURQWLPSHGDQFHLVGXHWRWKHVRXQGRXWOHWVDQGWKHVPDOODLUFDYLW\EHWZHHQWKHSKRQHFRYHUDQGWKHVRXQGRXWOHWVILJ2IFRXUVHWKHPHFKDQLFDOVWUXFWXUHDWWKHIURQWRIWKHHDUSLHFHFDSVXOHPD\YDU\EXWWKHVHULHVFRQQHFWLRQRIDFDYLW\DQGDIHZKROHVLQWKHFRYHULVE\IDUWKHPRVWFRPPRQFRQVWUXFWLRQ
7KHEDFNRI WKHHDUSLHFHFDSVXOHPD\EHFORVHG DQG LI WKLV LV WKH FDVH LW GRHVQRWPDWWHUZKDWLVEHKLQGWKHFDSVXOHLQVLGHWKHSKRQH2IFRXUVHLIWKHEDFNRIWKHFDSVXOHLVLQVWHDGRSHQRURQO\SDUWO\ FORVHG DQ\WKLQJEHKLQG WKH FDSVXOHZLOO EH VHHQDV DQDGGLWLRQDODFRXVWLF LPSHGDQFH LQDQHTXLYDOHQWFLUFXLWRI WKHHDUSLHFH7KHPHFKDQLFVEHKLQGWKH HDUSLHFH FDSVXOHPD\ YDU\ TXLWH D ORW EHWZHHQ SKRQH EUDQGV DQG W\SHV8VXDOO\ WKHEDFNSUHVVXUHMXVWSURSDJDWHVDORQJVRPHURXWHLQWRWKHLUUHJXODUVSDFHEHWZHHQWKHSKRQH
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
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
/DI5DI
&DI=DE
)URQWFDYLW\DQGKROHV
(DUSLHFHFDSVXOH
([WHULRU
6WUXFWXUHVEHKLQGFDSVXOH
)LJXUH(TXLYDOHQWFLUFXLWRIW\SLFDOPHFKDQLFDOVWUXFWXUHVLQIURQWRIDQGEHKLQGWKHHDUSLHFHFDSVXOH
7KHEDFNLPSHGDQFH =DE WKHIURQWLPSHGDQFHIRUPHGE\ 5DI /DI DQG&DI WRJHWKHUZLWKWKHHTXLYDOHQWFLUFXLWRIWKHHDUSLHFHFDSVXOHLQILJIRUPWKHHTXLYDOHQWFLUFXLWRIWKHZKROHHDUSLHFH7KLVLVDOVRWKHFLUFXLWVKRZQDW WKH OHIW LQILJDVDVLPSOH7KHYHQLQVRXUFH
,IWKHHDUSLHFHLVYLHZHGDVVXFKDSUHVVXUHVRXUFHZLWKDJLYHQLQWHUQDOVHULHVLPSHGDQFH =DH WKHQLWLVFOHDUWKDWWKHLGHDOVROXWLRQZRXOGEHWRHOLPLQDWHWKHLQWHUQDOLPSHGDQFHFRPSOHWHO\RUDOPRVWFRPSOHWHO\7KLVZD\WKHVRXUFHHDUSLHFHZRXOGEHFDSDEOHRIGHOLYHULQJLWVSUHVVXUHWRDQ\ORDGZLWKRXWDSSUHFLDEOHORVVHV6XFKDVROXWLRQLVLPSRVVLEOHIRUDQXPEHURIUHDVRQV
• WKHPHPEUDQHZLOODOZD\VKDYHDQRQ]HURPHFKDQLFDODQGDFRXVWLFLPSHGDQFH• WKHYRLFHFRLOXVXDOO\DORWKHDYLHUWKDQWKHPHPEUDQHFDQQRWEHHOLPLQDWHG• WKHRSHQLQJV LQ WKHSKRQHFRYHUSURWHFWLQJ WKHHDUSLHFHFDSVXOH ILJZLOO DOZD\V
KDYHDQRQ]HURDFRXVWLFLPSHGDQFH• WKHDLUJDSEHWZHHQWKHPDJQHWDQGWKHYRLFHFRLOPXVWEHNHSWQDUURZWRPDLQWDLQHIIL
FLHQF\ZKLFKUDLVHVWKHDFRXVWLFLPSHGDQFHRIWKHDLUIORZSDWKWKURXJKWKHDLUJDSXQOHVVDVHSDUDWHIORZURXWHLVSURYLGHG
• WKHVWUXFWXUHVEHKLQGWKHPHPEUDQHHJWKHPDJQHWFDQQRWEHHOLPLQDWHG• WKHDUHDRI WKHPHPEUDQHPXVWEHNHSWVPDOOHQRXJKWRNHHSHDUSLHFHFDSVXOHGLPHQ
VLRQVZLWKLQDFFHSWDEOHOLPLWVIRUXVHLQVPDOOPRELOHSKRQHV
7KH DFRXVWLF RXWSXW LPSHGDQFH RI WKH HDUSLHFH FDQQRW EH HOLPLQDWHG EXW ZD\V FDQ EHIRXQGWRPLQLPL]HLW
,QWHUQDOVWUXFWXUHRIWKHHDUSLHFHFDSVXOH
,WLVHDV\WRVWDUWE\FRQVLGHULQJWKHKRXVLQJEHKLQGWKHPHPEUDQH,QWKHH[WUHPHFDVHRIDIXOO\VHDOHGDLUWLJKWEDFNRQO\&DK H[LVWVDQGWKH 5DK /DK EUDQFKVHHILJLVUHPRYHG&DK LVVHHQLQVHULHVZLWKWKHPHPEUDQHLPSHGDQFH,I&DK LVVPDOOLHWKHFDYLW\
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
XQGHUWKHPHPEUDQHLVVPDOO WKHQWKHLPSHGDQFHGXHWRWKHKRXVLQJZLOOEHKLJKHVSHFLDOO\DWORZIUHTXHQFLHV7KLVLVQRWGHVLUDEOH6RLWLVFOHDUWKDWWKHDLUFDYLW\PXVWEHHLWKHUELJDQGRURSHQHGXSWRWKHVXUURXQGLQJDLUE\LQFOXGLQJWKH 5DK /DK IORZSDWKLQRUGHU WRPDNH WKH GHVLUHG DFRXVWLF RXWSXW LPSHGDQFH UHGXFWLRQ SRVVLEOH 6LQFH VL]H LV DSULPDU\FRQFHUQLQPRELOHSKRQHVWKHODWWHUZD\LVEHWWHU$VLPSOLILHGHTXLYDOHQWFLUFXLWRIVXFKDKRXVLQJYDOLGDWDOOEXWWKHKLJKHVWIUHTXHQFLHVFDQEHIRUPHGE\UHPRYLQJWKH&DK EUDQFK
$W\SLFDOHDUSLHFHFDSVXOHPD\KDYHDUHVRQDQFHIUHTXHQF\LQIUHHDLUKHUHDIWHUGHQRWHGE\ I U RIURXJKO\+]7KLVLVDGLUHFWFRQVHTXHQFHRIWKHUHVRQDQFHRIWKHVHULHVFRQQHFWLRQRIWKHILYHDFRXVWLFFRPSRQHQWV 5DK /DK 5DP /DP DQG&DP &DK FDQEHVHHQDV DQ RSHQ FLUFXLW DW ORZ IUHTXHQFLHV$IWHUPLQLPL]LQJ WKH LPSHGDQFH RI WKH ILUVW WZRFRPSRQHQWVKRXVLQJIXUWKHULPSURYHPHQWLVSRVVLEOHE\ORZHULQJWKHPHPEUDQHLPSHGDQFH7KHWRWDOHDUSLHFHFDSVXOHLPSHGDQFHGHQRWHGKHUHE\WKHVXEVFULSWVZLOOEH
=M &
= 5
= M /
DVDV
DV DV
DV DV
U
U
U
ω ω
ω ω
ω ω
ω
ω
<<
=
>>
=
=
=
ZKHUH
5 5 5
/ / /
& &
DV DP DK
DV DP DK
DV DP
= +
= +
=
LHRQO\RQHRIWKUHHWHUPVSUHGRPLQDWHVDWWKHUHVRQDQFHIUHTXHQF\DQGDWIUHTXHQFLHVIDUDERYHRUEHORZ,IDOOWKUHHWHUPVDUHPLQLPL]HGWKHQ =DV ZLOODOVREHPLQLPL]HGRYHUDZLGH IUHTXHQF\ UDQJH0LQLPL]LQJDOO WKUHH WHUPVPHDQV LPSOHPHQWLQJ WKHHDUSLHFHFDSVXOHZLWKPLQLPL]HG DFRXVWLF UHVLVWDQFHPLQLPL]HG DFRXVWLF LQGXFWDQFH DQGPD[LPL]HGDFRXVWLFFDSDFLWDQFH
SH
=DV
%DFN )URQW =SH
&DV/DV5DV
%DFN )URQW
)LJXUH6LPSOLILHGHTXLYDOHQWFLUFXLWRIHDUSLHFHFDSVXOHIHGE\DQDPSOLILHU
,WFDQEHVHHQIURPHTWKDWLQFUHDVLQJPHPEUDQHDUHDZLOOUHGXFHWKHDFRXVWLFLPSHGDQFHSURSRUWLRQDOO\WRWKHVTXDUHRIWKHDUHDLQFUHDVHLIWKHPHFKDQLFDOLPSHGDQFHLVNHSWFRQVWDQW ,QFUHDVLQJ WKHDUHD LVXVXDOO\QRW IHDVLEOH LQPRELOHSKRQHVKRZHYHUEHFDXVHFRPSRQHQWVL]HWHQGVWREHWKHPRVWLPSRUWDQWFULWHULRQRIDOODVIDUDVPRXQWLQJLQVLGHWKHSKRQHLVFRQFHUQHG
7KHYRLFHFRLOLVUHVSRQVLEOHIRUPRVWRIWKHPRYLQJPDVVEXWPDNLQJWKHYRLFHFRLOOLJKWHU PHDQV UHGXFLQJ HLWKHU WKH OHQJWK RU WKH GLDPHWHU RI WKH FRLO ZLUH 7KH IRUPHUPHWKRGOHDGVWRORZHUHIILFLHQF\WKHIRUFHIDFWRU%OLVUHGXFHGXQOHVVWKHPDJQHWLFILHOGLVVWUHQJWKHQHG7KHODWWHUPHWKRGLQFUHDVHVWKHYRLFHFRLOUHVLVWDQFHZKLFKOHDGVWRORZHUGDPSLQJDQGHIILFLHQF\PRUHSRZHULVORVWLQWKHYRLFHFRLO,QFUHDVLQJWKHFRPSOLDQFHRIWKHPHPEUDQHHJE\PDNLQJLWWKLQQHURUXVLQJDPRUHFRPSOLDQWPDWHULDOGRHVQRWKDUP
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
WKHSHUIRUPDQFHRIWKHFDSVXOHLWVHOIEXWWKHPHPEUDQHPD\ORVHPHFKDQLFDOVWUHQJWKDQGEHPRUHVHQVLWLYHWRYDULRXVHQYLURQPHQWDOFRQGLWLRQVWKDWPRELOHSKRQHFRPSRQHQWVKDYHWRZLWKVWDQG7RVXPPDUL]HWKHHIIHFWVRQHIILFLHQF\ZKHQYDULRXVSDUDPHWHUVDUHFKDQJHG
( )ηI I
P
F PPU
%O $
5 />> ∝
DVFDQEHUHDGLO\VHHQIURPHTRI>@VXEVWLWXWLQJHT7KHKRXVLQJLVQRWLQFOXGHGLQHT EXW LW LVHDVLO\DFFRPPRGDWHGE\XVLQJ LQVWHDGRI /PP WKHFRPELQHGPHFKDQLFDOLQGXFWDQFH / / /PV PP PK= + PHPEUDQHDQGKRXVLQJWRJHWKHU7KHIDFWWKDWFRVWDQGHIILFLHQF\ LQDGGLWLRQ WRVL]HDUHSULPDU\FRQFHUQV IRU WKHSKRQHDQGHDUSLHFHPDQXIDFWXUHUFRQWUDGLFWVPDQ\RIWKHGHVLJQUHTXLUHPHQWVWRDFKLHYHDORZDFRXVWLFRXWSXWLPSHGDQFH
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
0HFKDQLFDOVWUXFWXUHVEHKLQGWKHHDUSLHFHFDSVXOH
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
,WLVHDV\WRRXWOLQHVRPHJHQHUDOGHVLJQUXOHV$QDLUWLJKWFDYLW\EHKLQGWKHFDSVXOHZRXOGVKRZDVDQDFRXVWLFFDSDFLWDQFH&DE SURSRUWLRQDOWRWKHYROXPHRIWKHFDYLW\6RLQRUGHUWRDLPDWDORZWRWDOLPSHGDQFH
= = = =DH DE DV DI= + +
WKHFDYLW\YROXPHVKRXOGEHPDGHELJHQRXJKLH&DE VKRXOGEHJUHDWHUWKDQ&DV 7KLVLVQRW DXQLYHUVDO WUXWKKRZHYHU HYHQD VPDOO FDYLW\PD\EH´FDQFHOOHG´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
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
UHDOLW\OLHVVRPHZKHUHEHWZHHQWKHVHWZRFDVHVDQGDOOWKUHHFRPSRQHQWV5/DQG&DUHIRXQGLQ=DE
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
)URQWFDYLW\DQGKROHV
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
&DI=DESH
5DI /DI=DV
([WHULRU
)LJXUH 6LPSOLILHG HTXLYDOHQW FLUFXLW RI IURQW FDYLW\ DQG KROHV WRJHWKHU ZLWK RWKHUSDUWVRIWKHHDUSLHFH
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
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
/HDNVLQVLGHWKHSKRQH
7KHDERYHDQDO\VLVKDVFRQFHQWUDWHGRQWKHSDWKIURPWKHEDFNRIWKHHDUSLHFHFDSVXOHWRWKHIURQWKROHV$WORZIUHTXHQFLHVWKLVSDWKLVDVLPSOHVHULHVFRQQHFWLRQRILPSHGDQFHVDQGWKHWRWDOLPSHGDQFHFDQEHQRORZHUWKDQWKHKLJKHVWLPSHGDQFHDORQJWKHSDWK
,W LVKRZHYHUSRVVLEOH WRRSHQXS´SDUDOOHO´DLU IORZSDWKV LQDYDULHW\RIZD\VE\KDYLQJFRQWUROOHGOHDNVDWFHUWDLQ ORFDWLRQV2QHREYLRXV ORFDWLRQ LV WKHIURQWFDYLW\ ,IDOHDNLVLQWURGXFHGLQWKHIURQWFDYLW\DQGWKLVOHDNLVOHIWRSHQHJWRWKHDLUEHWZHHQWKHSKRQHFRYHUVWKHQWKHHTXLYDOHQWFLUFXLWZLOOKDYHDQH[WUDEUDQFKLQSDUDOOHOZLWK&DI DQGWKH=DE =DV EUDQFK
)LJXUH$GGLQJDQH[WUDOHDNWRWKHIURQWFDYLW\RWKHUSDUWVLQVLGHWKHSKRQHDSDUWIURPWKHHDUSLHFHDUHQRWVKRZQLQWKHSLFWXUH
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
/DI5DI
&DI
SH=DV
([WHULRU
,QWHUQDOOHDN
)LJXUH7KHDGGHGLQWHUQDO OHDNDSSHDUVDVDSDUDOOHOEUDQFKLQ WKHHTXLYDOHQWFLUFXLW
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
6WDELOL]LQJWKHRXWSXWYROXPHYHORFLW\
,WZDVDOUHDG\VWDWHGWKDWWKHOHDNEHWZHHQWKHSKRQHFRYHUDQGWKHXVHU¶VHDULVEHVWVWDELOL]HGE\DGGLQJDQRWKHUFRQVWDQWSDUDOOHOOHDNDVLQILJ'LPHQVLRQLQJRIWKLVOHDNLVDFRPSURPLVHEHWZHHQOHDNWROHUDQFHPD[LPXPVRXQGSUHVVXUHLQWRWKHHDUDQGPHFKDQLFDOUHDOL]DELOLW\$YHU\ELJOHDN\LHOGVDYHU\JRRGOHDNWROHUDQFHEXWWKHPD[LPXPDYDLODEOHVRXQGSUHVVXUHOHYHOPD\EHWRRORZUHPHPEHULQJWKDWWKHHDUSLHFHFDSVXOHDQGRUGULYLQJFLUFXLWVZLOOKDYHVRPHOLPLWDERYHZKLFKWKH\ZLOOGLVWRUWWKHVSHHFK
$ OHDN URXWH JRLQJ IURP WKH HDUSLHFH DUHD WR WKH RXWVLGH DLUPXVW RI FRXUVH VWDUWFORVHHQRXJKWRWKHVRXQGRXWSXWKROHV7KLVLVDOVRWRJXDUDQWHHWKDWWKHHDUSLHFHZLOOEHPHDVXUHGFRUUHFWO\XVLQJVRPHVWDQGDUGDUWLILFLDOHDUHJWKH,787W\SHVHDOHGFRXSOHUZLWKDFLUFXODUDUHDRIPPGLDPHWHUWRFRQQHFWWRWKHHDUSLHFHWKDWLVWREHPHDVXUHG$OVRWKHOHDNPXVWEHURXWHGVRPHZD\SDVWWKHHDUDQGDORQJWKHSKRQHFRYHUZKLFKPD\UHTXLUHDIORZSDWKWKDW LVTXLWHORQJLQWKHDLUIORZGLUHFWLRQ$ORQJIORZSDWKPHDQVDKLJKHUUHVLVWDQFHDQGLQGXFWDQFHLHDOHVVHIILFLHQWOHDNZKLFKPD\KDYHWREHFRXQWHUDFWHGE\XVLQJDODUJHFURVVVHFWLRQDODUHDLQVWHDG
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
)LJXUH$GGLQJDQH[WHUQDOOHDNWRWKHHDUSLHFH
$QREYLRXVGLVDGYDQWDJHRI WKLV VROXWLRQ LV WKDW LWPD\ UHTXLUHTXLWHD ORWRIH[WUDVSDFHXQOHVV VRPH VXLWDEOHPHFKDQLFDO VWUXFWXUH LV DOUHDG\ DYDLODEOH LQ WKH SKRQH FRYHU7KHHTXLYDOHQWFLUFXLWLVREYLRXVIURPILJ
&DI=DE
SH
5DI /DI=DV
([WHULRU
([WHUQDOOHDN
)LJXUH$QH[WHUQDOOHDNWRWKHRXWVLGHDLUWKHUDGLDWLRQLPSHGDQFHRIWKHOHDNLVQRWH[SOLFLWO\VKRZQEXWLWLVUHODWLYHO\VPDOODQGLWKDVWKHVDPH5/QDWXUH
,WKDVEHHQSRLQWHGRXWDOUHDG\WKDWWKHUHLVDOHDNLQJDLUVSDFHEHWZHHQWKHSKRQHFRYHUVDQGWKHHOHFWURQLFVSDUWV7KLVSURYLGHVDQLQWHUHVWLQJVROXWLRQLQZKLFKWKHH[WHUQDOOHDNLVURXWHGWKURXJKWKHSKRQHFRYHULQVWHDGRIEHWZHHQWKHFRYHUDQGWKHXVHU¶VHDUERWKWKLVNLQGRIOHDNDQGWKHRQHGHSLFWHGLQILJZLOOEHFDOOHGH[WHUQDOOHDNVEHFDXVHWKH\DUHURXWHGIURPRXWVLGHWKHIURQWFDYLW\
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
)LJXUH $ OHDN WKURXJK WKH SKRQH FRYHU IURP WKH RXWVLGH DLU WR WKH LQVLGH RI WKHSKRQH
7KHHTXLYDOHQWFLUFXLWZLOOKDYHDQ5/VHULHVLPSHGDQFHEUDQFKLQSDUDOOHOZLWKWKHIURQWKROHVDQGWKHHDUSLHFHFDSVXOH
&DI
SH
5DI /DI=DV
([WHULRU
([WHUQDOOHDN
)LJXUH7KHHTXLYDOHQWFLUFXLWRIILJ
'DVKHGOLQHVDUHXVHGDJDLQLQWKHDERYHFLUFXLWWKRVKRZWKDWWKHH[WHUQDOOHDNURXWHPD\HQGLQYDULRXVZD\V7KHPRVWW\SLFDOFDVHRIFRXUVHZRXOGEHVLPSO\DJURXQGHGFDSDFLWRULQSDUDOOHOZLWKDQ5/VHULHVLPSHGDQFHUHSUHVHQWLQJWKHVSDFHDQGOHDNVEHWZHHQWKHSKRQHFRYHUVDQGHOHFWURQLFV,WLVLPSRUWDQWWRQRWHWKHVLPLODULW\RIWKHHTXLYDOHQWFLUFXLWVLQILJVDQG7KLVPHDQVWKDWDOHDNWKURXJKWKHSKRQHFRYHUFDQZRUNPXFKWKHVDPHZD\DVDOHDNWRWKHRXWVLGHDLUSURYLGHGWKDWWKHLPSHGDQFHIURPWKHOHDNKROHVWRJURXQGLVQRWWRRELJ$QH[FHOOHQWH[DPSOHRIWKLVZLOOEHYLHZHGLQWKHQH[WFKDSWHU
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
'HVLJQH[DPSOHOHDNWROHUDQWHDUSLHFH
&RPELQDWLRQPHWKRGVDQGPRGLILFDWLRQV
7KHEDVLFFRQILJXUDWLRQVYLHZHGDERYHDUH LQQRZD\ WKHRQO\ZRUNLQJRQHVEXWSUDFWLFDOO\DQ\NLQGRIPHFKDQLFDOFRQVWUXFWLRQFDQEHUHGXFHGWRDFRPELQDWLRQRIRQHRSWLRQIURPHDFKRIWKHIROORZLQJWKUHHJURXSV
%DFNRIHDUSLHFHFDSVXOH• FORVHGD• HQFORVHGLQDFDYLW\E• RSHQWRDLULQVLGHSKRQHFRU• RSHQWRRXWVLGHDLUG
)URQWRIHDUSLHFHFDSVXOH• VHDOHGWRSKRQHFRYHUD• OHDNLQJWRDLULQVLGHSKRQHERU• OHDNLQJWRRXWVLGHDLUF
5HJLRQDURXQGIURQWKROHV• VHDOHGD• OHDNLQJWRRXWVLGHDLUERU• OHDNLQJWRDLULQVLGHSKRQHF
7KXVDFRQYHQWLRQDOHDUSLHFHZRXOGFRUUHVSRQGWRDRUFWRJHWKHUZLWKDDQGD$QHDUSLHFHZLWKDJRRGOHDNWROHUDQFHFRXOGKDYHHJGDDQGFRUFEDQGD2IWKHDERYHFGERUFDOOLPSOHPHQWWKHILUVWRSWLRQGHVFULEHGLQVHFUHGXFLQJ =DH ZKLOHERUFLPSOHPHQWWKHVHFRQGRSWLRQVWDELOL]LQJ TH ,QIDFWEDQGFFRXOGDOVREHVHHQDVLPSOHPHQWDWLRQVRIWKHILUVWRSWLRQLWLVVLPSO\DTXHVWLRQRIZKHWKHU WKH OHDN URXWHVDUHYLHZHGDVSDUWVRI =DH RUQRW$V VWDWHG LQ VHF ERWK RSWLRQV GR QRW QHFHVVDULO\ KDYH WR EH LPSOHPHQWHG EXW RQH RI WKHPPD\ EHHQRXJK)RUH[DPSOHDFDSVXOHZLWKDKLJKLQWHUQDODFRXVWLFLPSHGDQFHFDQVWLOOSHUIRUPYHU\ZHOOLIERUFLVXVHG$OVRLWVKRXOGEHQRWHGWKDWPRUHFRPSOLFDWHGVWUXFWXUHVDUHSRVVLEOHLQVLGHWKHSKRQHIRUH[DPSOHDQLQWHUQDOOHDNIURPWKHIURQWFDYLW\FRXOGEHFRQQHFWHGWRDQRWKHUFDYLW\ZKLFKLVIXUWKHUFRQQHFWHGWRDFDYLW\EHKLQGWKHFDSVXOH2QHVXFKFRQVWUXFWLRQZLOOEHH[HPSOLILHGLQWKHIROORZLQJFKDSWHU
7KHSUHVHQFHRIOHDNVHLWKHUZDQWHGRUXQZDQWHGLQFDYLWLHVRUEHWZHHQWKHSKRQHFRYHUVFDQEHVHHQDVDGGLWLRQDOLPSRUWDQWFKDUDFWHULVWLFVRIWKHDERYHRSWLRQV)RUH[DPSOHDWOHDVWLQDOLPLWHGIUHTXHQF\UDQJHEZLOODSSURDFKFLIWKHUHDUHELJOHDNVLQWKHFDYLW\DQGFZLOODSSURDFKGLIWKHUHDUHELJOHDNVLQRUEHWZHHQWKHSKRQHFRYHUV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
&DVH VWXG\ OHDN WROHUDQW HDUSLHFH
7KLVFKDSWHU LVD VWXG\RI WKHGHVLJQDQG LPSOHPHQWDWLRQRID OHDN WROHUDQWHDUSLHFH LQD1RNLD *60PRELOH SKRQH NQRZQ RIILFLDOO\ DV WKH 1RNLD 7KH KLVWRU\ EHKLQG WKHFKRLFHRIWKHILQDODFRXVWLFDOVROXWLRQIRUWKHHDUSLHFHLVLPSRUWDQWDQGLWFRQWDLQVVHYHUDOJRRGH[DPSOHVRISUREOHPV WREHVROYHG0HFKDQLFDOGHVLJQ LQGXVWULDOGHVLJQPHDVXUHPHQWDQGSURGXFWLRQUHTXLUHPHQWVDUHGHVFULEHGWRWKHH[WHQWWKDWWKHFRPSURPLVHVPDGHFDQEHXQGHUVWRRG
%RWKVLPXODWLRQDQGPHDVXUHPHQWUHVXOWVDUHXVHGLQWKLVFKDSWHU$OVRWKHUHVLVWRULQGXFWRUFDSDFLWRUYROWDJHVRXUFHFXUUHQWVRXUFHWUDQVIRUPHUDQGJ\UDWRUUHSUHVHQWDWLRQXVHGLQWKHSUHYLRXVFKDSWHULVVXEVWLWXWHGE\DFWXDO0LFUR&DSFLUFXLWVFRQWDLQLQJPDFURVGHILQHGLQDSSHQGL[,97KLVLVGRQHWRGLVSOD\WKHSURSHUWLHVDQGSRZHURIWKHGHYHORSHGVLPXODWLRQV\VWHP2IFRXUVHWKHFRQVWUXFWLRQRIWKHFLUFXLWVLQWHUPVRIEDVLFFRPSRQHQWVUHVLVWRUV LQGXFWRUV FDSDFLWRUV HWF FDQ DOZD\V EH UHFDOOHG E\ UHIHUULQJ WR WKH PDFURGHILQLWLRQVLQDSSHQGL[,9
7KHVWDUWLQJSRLQW
/HDNWROHUDQFHDQGSUHYLRXVHDUSLHFHV
1RFRQFHQWUDWHGHIIRUWVZHUHPDGHLQ1RNLD0RELOH3KRQHVEHIRUHWKHWRDVVXUHWKDWWKH HDUSLHFHV XVHG LQ FRPPHUFLDO SURGXFWVZHUH OHDN WROHUDQW ,QVWHDGPHFKDQLFDO VROXWLRQVZHUHGHYHORSHG WRJHWKHUZLWK WKHHDUSLHFHFDSVXOHPDQXIDFWXUHUZKRXVXDOO\KDGDVLPSOHVHWRIGHVLJQUXOHVIRUWKHIURQWFDYLW\DQGIURQWKROHV1HLWKHUWKHHDUSLHFHFDSVXOHVQRUWKHPHFKDQLFVDURXQGWKHPZHUHGHVLJQHGHVSHFLDOO\IRUOHDNWROHUDQFHEXWRIFRXUVHVRPHDPRXQWRIOHDNWROHUDQFHZDVVWLOODFKLHYDEOHGHSHQGLQJRQWKHSURSHUWLHVRIWKHHDUSLHFHFDSVXOHVWKHPVHOYHV
7KHHDUSLHFHXVHGLQ WKH1RNLDDQRWKHUYHU\VXFFHVVIXO1RNLDSKRQHFDQEHXVHGDVDQH[DPSOHRIDQHDUSLHFHQRWGHVLJQHGIRUOHDNWROHUDQFH,QRUGHUWRVHHWKLQJVLQWKHLU ULJKWSURSRUWLRQVPHDVXUHPHQW UHVXOWVRI WKHVKRXOGEHFRPSDUHG WR UHVXOWVSUHVHQWHGODWHU
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH0HDVXUHGIUHTXHQF\UHVSRQVHRI3KLOLSV6SHDNHU6\VWHPV:'HDUSLHFHFDSVXOHLQ1RNLDPHFKDQLFVXVLQJ,7873W\SHFRXSOHUERWKVHDOHGDQGZLWKOHDNULQJ´*HUPDQOHDN´VHHVHF
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH6LPXODWHGDFRXVWLF LPSHGDQFH WRSPDJQLWXGHERWWRPDUJXPHQWRI W\SHFRXSOHUZLWKDQGZLWKRXW*HUPDQOHDNULQJ
6($/(' *(50$1/($.
(DU SRXW
6HDO*HUPQ
$
=DX
)LJXUH $Q DFRXVWLF LPSHGDQFH SUREH LV XVHG WR REWDLQ WKH UHVXOWV RI ILJ 7KH6HDO*HUPPDFURWRWKHULJKWZDVFUHDWHGWRVLPSOLI\OHDNWROHUDQFHDQDO\VLVVHHWKHHQGRIDSSHQGL[,9
,WLVYHU\LQIRUPDWLYHWRQRWHWKDWWKHW\SHFRXSOHUZKLFKVKRXOGUHVHPEOHDW\SLFDOKXPDQHDUZLWKJRRGHQRXJKDFFXUDF\KDVDKLJKFDSDFLWLYHLPSHGDQFHEHORZ+]ZKHQVHDOHG EXW WKLV LPSHGDQFH GURSV GUDPDWLFDOO\ DQG EHFRPHV LQGXFWLYHZKHQ WKH*HUPDQOHDNULQJLVDGGHG7KHGLIIHUHQFHDERYH+]LVQRWYHU\VLJQLILFDQW6LQFHWKH*HUPDQOHDNULQJLVLQWHQGHGWRFRUUHVSRQGWRDW\SLFDOVPDOOLVKOHDNEHWZHHQWKHSKRQHFRYHUDQGWKHXVHU¶VHDULWLVHDV\WRXQGHUVWDQGWKHVWDWHPHQWPDGHHDUOLHUWKDWWKHEDVVIUHTXHQFLHVDUHWKHRQHVVXIIHULQJPRVWZKHQWKHHDUSLHFHOHDNV7KHUHDUHRWKHUFRXSOHUW\SHVHJWKHW\SHKLJKOHDNFRXSOHUPRGHOOLQJW\SLFDOELJOHDNVEXWWKHVHZLOOQRWEHXVHGLQWKLVWKHVLV7KHW\SHFRXSOHUVLPXODWLRQPRGHOKDVDQLPSHGDQFHWKDWGHYLDWHVG%DWPRVWIURPWKHPHDVXUHGUHVXOWLQWKHIUHTXHQF\UDQJHXVHGIRUVSHHFKWUDQVPLVVLRQDFFRUGLQJWRJUDSKVLQ>@7KHDFFXUDF\RIWKH*HUPDQOHDNPRGHOLVQRWNQRZQWRWKHZULWHU
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
7KHQHZWUDQVGXFHU
7KHHDUSLHFHFDSVXOHWHQGVWREHRQHRIWKHELJJHVWFRPSRQHQWVLQDPRELOHSKRQHVRTXLWHDORWRIVSDFHFRXOGEHVDYHGE\WU\LQJWRPLQLDWXUL]HLW7KLVZDVGRQHLQWKHSKRQHZKLFKZDVWRXVHDQHZPPGLDPHWHUHDUSLHFHFDSVXOHIURP3KLOLSV6SHDNHU6\VWHPV366VKRZQEHORZDSKRWRJUDSKFDQEHIRXQG LQFKDSWHU ILJ7KHFDSVXOHZDVFRGHYHORSHG E\ 366 DQG1RNLD0RELOH 3KRQHV 103 IRU DQ LQWHQGHG QHZ DFRXVWLFDOVROXWLRQWKDWLVYLHZHGLQPRUHGHWDLOEHORZ
7KHPPFDSVXOHLQDGGLWLRQWREHLQJVPDOOZDVDOVRWRKDYHDORZHUDFRXVWLFLPSHGDQFH WKDQ W\SLFDOFRPSHWLWRUV LHD ORZ =DV 7KLVZDVDFKLHYHGE\PDNLQJ WKHPHFKDQLFDOFRQVWUXFWLRQRIWKHFDSVXOHYHU\RSHQWRWKHDLUIORZ
)LJXUH%RWWRPYLHZOHIWDQGVLGHYLHZFURVVVHFWLRQDOYLHZULJKWRIQHZ366PPOHDNWROHUDQWHDUSLHFHFDSVXOHW\SH:'IURP>@
7KHRSHQQHVVRIWKHFDSVXOHLVQRWVHHQLQWKHFURVVVHFWLRQDOGUDZLQJ+RZHYHUWKHUHDUHIRXUTXLWHELJRSHQLQJVKHUHDIWHUFDOOHGWKHFRUHSODWHKROHVWKDWFDQEHVHHQLQWKHERWWRPYLHZGUDZLQJ7KHVHRSHQLQJVDUHGLUHFWO\ FRQQHFWHG WR WKH VPDOO DLU FDYLW\ IRUPHGXQGHUWKHFHQWHU´GRPH´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
7KHWKUHHFDSVXOHPRGHOVRIYDU\LQJFRPSOH[LW\DQGDFFXUDF\VKRZQLQDSSHQGL[9VKRXOGEHXQGHUVWDQGDEOHE\UHIHUULQJWRILJDQGFKDSWHU+HUHDIWHURQO\RQHVLQJOHVKDSHZLOO EH VHHQ LQ VLPXODWLRQ VFKHPDWLFV WKRXJK EHFDXVH WKH FDSVXOHPRGHOZLOO EHKLGGHQEHQHDWKDPDFURXQOHVVPHQWLRQHGRWKHUZLVHWKHPRVWDFFXUDWHWKUHHPDVVPRGHOLVWKHRQHXVHGDQGWKHPDFURFRQWDLQLQJWKLVPRGHOLVFDOOHG366B
,PSRUWDQWGDWDGHVFULELQJWKHHDUSLHFHFDSVXOHDUH
• QRPLQDOLPSHGDQFHΩ• YRLFHFRLOUHVLVWDQFH 5F Ω±• VHQVLWLYLW\±G%P:N+]W\SHFRXSOHU• PD[LPXPOLQHDUGLVSODFHPHQW [PPD[ ±PP• HIIHFWLYHDUHD $P FP
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
,WLVXVHIXOWRILQGRXWWKHYDOXHVRIWKHFRPSRQHQWVVKRZQLQILJ$FRXSOHRIWKHVHDUHVHHQ GLUHFWO\ LQ WKH FDSVXOHPRGHOV2WKHU YDOXHV DUH HDVLO\ FDOFXODWHG IURP WKHPRGHOVXVLQJHTVDQGWKHIRUPXODIRUWKHDFRXVWLFFDSDFLWDQFHRIDFDYLW\IRXQGLQWKHGHILQLWLRQRIWKH&DYLW\PDFUR7KHUHVXOWVDUHIRUWKHPHPEUDQH
5
/
&
DP
DP
DP
=
=
=
0
N+
S)
Ω
DQGIRUWKHRXWSXWRSHQFLUFXLWSUHVVXUH
S XH LQ=
DQGILQDOO\IRUWKHKRXVLQJ
5
/
&
DK
DK
DK
=
=
=
N
+
I)
Ω
8VLQJWKH /DK DQG&DK YDOXHVQRZREWDLQHGLWFDQEHFDOFXODWHGWKDWWKHKRXVLQJZLOOEHFRPHFDSDFLWLYHDWDIUHTXHQF\DVKLJKDVN+]IDUDERYHWKHVSHHFKWUDQVPLVVLRQIUHTXHQF\UDQJH7KXVEHORZN+]WKHKRXVLQJFDQEHVHHQDVDSXUH5/VHULHVFLUFXLW7RSXW LW DQRWKHUZD\ WKHKRXVLQJ UHPDLQV DFRXVWLFDOO\ ´RSHQ´ WR WKHRXWVLGH DLU DW DOO IUHTXHQFLHVRILQWHUHVWDQGWKHFDSDFLWDQFHRIWKHKRXVLQJFDQEHOHIWRXWDVDOUHDG\DVVXPHGLQ FKDSWHU 1RZ LI WKHRWKHU FRPSRQHQWV DUH DGGHG LQ VHULHV WKHYDOXHV IRU WKHZKROHFDSVXOHDUHREWDLQHG
5
/
&
DV
DV
DV
=
=
=
0
N+
S)
Ω
6RPH YHU\ LPSRUWDQW WKLQJV FDQ EH VHHQ /DP LV FRQVLGHUDEO\ ELJJHU WKDQ /DK LH WKHPRYLQJPDVVPHPEUDQHDQGYRLFHFRLOIRUPVWKHPDMRUSDUWRIWKHWRWDODFRXVWLFLQGXFWDQFH /DV DQGLWZRXOGQRWKHOSPXFKWRRSHQXSWKHFRUHSODWHKROHVPRUHWRUHGXFH /DK 7KH W\SLFDOPDLQ UHVRQDQFH IUHTXHQF\ +]RI WKH FDSVXOH FDQEH UHDGLO\ FDOFXODWHGIURP /DV DQG&DV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH6LPXODWHGDFRXVWLFLPSHGDQFH =DV ZLWKWKHDPSOLILHUFRQQHFWHGRIWKHWKUHHHDUSLHFHFDSVXOHPRGHOVWRSPDJQLWXGHERWWRPDUJXPHQW
$
&DYLW\Q
$
&DYLW\Q
366B
366B
$
&DYLW\Q
366B
$
5D0HJ
/DN
&DS
QPPYROXPHDGGHGWRFDQFHOWKHQIURQWYROXPHXVHGLQWKHPRGHOVLH
UHIHUHQFHSODQHKHUH PHPEUDQHVXUIDFHQRWSODQHLQIURQWRIFDSVXOH
0RGHO0RGHO
0RGHO 5/&
)LJXUH6FKHPDWLFWRREWDLQWKHVLPXODWLRQUHVXOWVRIILJ7KHYRLFHFRLO LVVKRUWFLUFXLWHG WRVLPXODWH WKHVLWXDWLRQZLWKD]HURLPSHGDQFHDPSOLILHUFRQQHFWHG WR WKHHDUSLHFHFDSVXOH$FRXVWLFLPSHGDQFHSUREHVDUHXVHGWRSUREHWKHLPSHGDQFHV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH 6LPXODWHG RSHQFLUFXLW SUHVVXUH OHYHO WRS DQG SKDVH ERWWRP RI WKH WKUHHHDUSLHFHFDSVXOHPRGHOV
&DYLW\Q &DYLW\Q
366B
366B
&DYLW\Q
366B
$&
$&
$&
%N )U
%N )U
%N )U
)LJXUH6FKHPDWLFWRREWDLQWKHVLPXODWLRQUHVXOWVRIILJ
7KHPDLQUHVRQDQFHLVDOVRVHHQDV]HURDFRXVWLFUHDFWDQFHLQILJULJKW0RGHOVDQGKDYHLUUHJXODULWLHVDWKLJKIUHTXHQFLHVEHFDXVHWKH\VLPXODWHWKHHIIHFWVRIGRPHGHFRXSOLQJ
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
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
7KHQHZSKRQH
$OOWKHLQWHQGHGIHDWXUHVRIWKHQHZSKRQHZLOOQRWEHGHVFULEHGKHUHEXWLWVKRXOGEHVHOIHYLGHQWE\QRZWKDWJRRGDXGLRSHUIRUPDQFHRIWKHHDUSLHFHZDVRQHRIWKHLPSRUWDQWWDUJHWV7KHUHDVRQVIRUDLPLQJDWDJRRGOHDNWROHUDQFHKDYHDOUHDG\EHHQPHQWLRQHG
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²RQ WKH FRQWUDU\ WKH KROHVZRXOG KDYH D EHQHILFLDO GDPSLQJ HIIHFW RQ WKHPDLQUHVRQDQFHDVZLOOEHVHHQODWHU,WZDVHVWLPDWHGWKDW WKHWKURXJKKROHGLDPHWHUZRXOGEHPPDQGWKHWRWDOQXPEHURIKROHVZRXOGEHDURXQG)RUVLPSOLFLW\LWLVDVVXPHGLQWKHIROORZLQJVLPXODWLRQVWKDWDOOWKHWKURXJKKROHVDUHFRQQHFWHGWRIUHHDLUDOWKRXJKWKLVZDVQRWJRLQJWREHWKHFDVHLQWKHUHDOSKRQHPHFKDQLFVILQDOL]HGODWHU
,QWHUPVRIWKHFODVVHVRIWRSRORJLHVGHILQHGDWWKHHQGRIWKHSUHYLRXVFKDSWHUWKLVVROXWLRQZRXOGFRUUHVSRQGWREDEZLWKDOHDNLQWKHEDFNFDYLW\
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH([SORGHGYLHZRIWKH1RNLDSKRQH$FRYHUIURQWFRYHUVHDOLQJJDVNHWIRUHDUSLHFHFDSVXOHHDUSLHFHFDSVXOH08,PRGXOHIUDPH05)EDVHEDQG (QJLQH PRGXOH %FRYHU EDFN FRYHU 2WKHU SDUWV GLVSOD\ OHQV NH\SDGGLVSOD\UXEEHUERRWFRQWDLQLQJPLFURSKRQHDQWHQQD
)LJXUH6RPHLPSRUWDQWDFRXVWLFDOSDUWVIURQWKROHVIURQWFDYLW\ERXQGHGE\$FRYHU JDVNHW DQG FDSVXOH KROHV LQ8,3&% EHKLQG FDSVXOH EDFN FDYLW\ERXQGHGE\8,PRGXOHIUDPHDQG5)EDVHEDQGPRGXOH5)EDVHEDQG(QJLQH3&%ZLWKWKURXJKKROHV
7KHUH DUH D IHZPRUH LPSRUWDQW SDUWV QRWPHQWLRQHG LQ ILJV EXW WKHVHZLOO EHWUHDWHGODWHUWRJHWKHUZLWKWKHDFRXVWLFDOVROXWLRQVPDNLQJXVHRIWKHP
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
'HVLJQDQGSURGXFWLRQUHTXLUHPHQWV
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
6LQFHWKHIURQWFRYHUVZHUHWREHFDVWLQPRXOGVLWZDVGHFLGHGDWDQHDUO\VWDJHQRWWRXVHIURQWKROHVZLWKFURVVVHFWLRQDOGLPHQVLRQVVPDOOHUWKDQPPLQWKHSKRQHIRUUHDVRQVPHQWLRQHGLQVHF0D[LPXPKROHVL]HVDUHUHVWULFWHGE\GXVWDQGZDWHUVKLHOGLQJUHTXLUHPHQWV'XVWDQGZDWHUVKLHOGPHPEUDQHZDVQRWLQWHQGHGWREHDSDUWRIWKH SKRQH VR VXIILFLHQWZDWHU UHVLVWDQFH RI DFRXVWLFDO RSHQLQJVZDV WR EH YHULILHGVHSDUDWHO\
$OWKRXJK WKH EDFN FDYLW\ZDV VSHFLILHG WR KDYH D JUHDW QXPEHU RI VPDOO RSHQLQJVWKURXJKKROHV LQ LW LWZDVNQRZQDOVR WKDW WKH3&%PDQXIDFWXULQJSURFHVVFRXOGEORFNWKHWKURXJKKROHVE\VROGHUUHVLVWVRRQHFRXOGQRWUHO\RQWKHKROHVEHLQJRSHQLQHDFKSKRQHXQLW7KLVKDGWREHWDNHQLQWRDFFRXQWLQWKHDFRXVWLFVGHVLJQ&KHFNLQJWKHHIIHFWRIEORFNHGKROHV LVYHU\HDV\ LQD VLPXODWLRQEXWPRUHGLIILFXOW LQDPHDVXUHPHQWPDGHZLWKUHDOSKRQHSDUWV
6ROXWLRQVWDUWLQJSRLQWOHDNLQPHDVXUHPHQW
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¶VHDU%\XVLQJWKHDGGLWLRQDOSXUSRVHEXLOW OHDN WKHPHDVXUHPHQWZRXOG WDNHDFFRXQWRI WKH OHDNV LQQRUPDOXVHDQG OHVVGDPSLQJ RI EDVV IUHTXHQFLHVZRXOG EH QHHGHG WR SDVV W\SH DSSURYDO OLPLWV 7KLVZRXOGDSSHDU WR WKH XVHU DV D IXOOHU DQG PRUH SOHDVDQW VRXQG FRPSDUHG WR FRQYHQWLRQDO HDUSLHFHVEHFDXVHRIWKHJRRGEDVVUHSURGXFWLRQ
'HVLJQUXOHV
7KHEHVW SRVVLEOHPHDVXUHPHQW OHDNZRXOG QDWXUDOO\ EH GLPHQVLRQHG DFFRUGLQJ WR 366GHVLJQ UXOHV IRU WKH FDSVXOH 7KLV ZRXOG PHDQ SURYLGLQJ D IODW $FRYHU VXUIDFH ZLWK DEURDGDQGVKDOORZJURRYHLQLW:KHQSUHVVHGDJDLQVWHJWKH%UHO.M UFRXSOHUVHH
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
DSSHQGL[9,KDYLQJLWVVHDODQGFROODUULQJUHPRYHGWKLVZRXOGIRUPDQDUURZVOLWVKDSHGOHDN ERXQGHG E\ WKH JURRYH DQG WKH HGJH DURXQG WKH PLFURSKRQH LQ WKH PLGGOH RI WKHDFRXVWLFFRXSOHUDVLQGLFDWHGLQWKHIROORZLQJGUDZLQJRIWKHPHDVXUHPHQWVHWXSXVHGE\366
)LJXUH366GHVLJQUXOHV WRJHWDJRRG IUHTXHQF\ UHVSRQVHZKHQPHDVXULQJ WKHPP HDUSLHFH FDSVXOH IURP >@ 7KH SDUWV EHORZ WKH FDSVXOH FRUUHVSRQG WR LQWHQGHGSKRQHPHFKDQLFV
7KHIROORZLQJOHDNGLPHQVLRQVZRXOGJLYHJRRGUHVXOWVDFFRUGLQJWRPHDVXUHPHQWV
• HIIHFWLYHZLGWKPPWKHZLGWKRIWKHJURRYHLVPPEXWWKHFRXSOHUKDVDFLUFXODUHGJHVRWKHHIIHFWLYHZLGWKLVJUHDWHU
• KHLJKWPP GHSWKRIJURRYH• OHQJWKDSSUR[PPWKHDLULVVLPSO\IORZLQJSDVWWKHHGJHRIWKHFRXSOHUWKHOHQJWK
LQWKHDLUIORZGLUHFWLRQLVWKXVQRWFOHDUO\GHILQHG
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH6LPXODWHGDFRXVWLFLPSHGDQFHRIWKHOHDNIRUPHGE\WKHJURRYHDQGWKHW\SHFRXSOHU
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
3HUIRUPDQFH
)LJXUH6LPXODWHGVRXQGSUHVVXUHOHYHOLQWRW\SHFRXSOHUVHDOHGDQGZLWK*HUPDQOHDNULQJRIVROXWLRQ7KHLQSXWYROWDJHDPSOLWXGHLVP9SHDN
&DYLW\%N&DY
&LU+R$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+R$)U+RV
6($/(' *(50$1/($.
6DUQ
&LU+R$%N+RV
5FW+R$0DV/N
'(),1()U+RV
'(),1()U&DY
'(),1(9LQ
'(),1(%N&DY
'(),1(%N&DY/N
'(),1(Q
'(),1(%N+RV
S
'(),1(0DV/N
)LJXUH6FKHPDWLFWRREWDLQWKHUHVXOWVKRZQLQILJ%N+ROHVDUHWKHVL[KROHVLQWKH8,3&%XQGHUWKHFDSVXOH7KHVL[IURQWKROHVKDYHDGLDPHWHURIPPFRYHUWKLFNQHVVPP KROHOHQJWK
)LJXUH&RPSDULVRQRIPHDVXUHGWKLFNFXUYHDQGVLPXODWHGWKLQFXUYHIUHTXHQF\UHVSRQVHRIVROXWLRQW\SHFRXSOHUZLWKRXW*HUPDQ OHDN LH LGHQWLFDO WR´VHDOHG´ LQILJ7KHPHDVXUHPHQWUHVXOWZDVREWDLQHGIURP366
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
7KHVLPXODWHGIUHTXHQF\UHVSRQVHRIVROXWLRQLVZHOOEHKDYHGLWZRXOGHYHQSDVV*60W\SHDSSURYDOZLWKQRHTXDOL]DWLRQDWDOO7KHOHDNWROHUDQFHLVDOVRJRRG*HUPDQOHDNULQJYVQR*HUPDQOHDNULQJ7KLVLVWKHFDVHWKDQNVWRWKHDGGLWLRQDOVWDELOL]LQJOHDNIRUPHGE\WKHJURRYH7KHVLJQLILFDQWGLIIHUHQFHDSSHDULQJLIWKHJURRYHLVUHPRYHGFDQEHVHHQLIWKH VDPH VLPXODWLRQ LV UXQZLWKRXW WKH EUDQFK FRQWDLQLQJ WKH5FW+ROH$0HDV/NPDFURDQGWKHJURRYHLVEORFNHGE\VHDOLQJPDWHULDOLQWKHPHDVXUHPHQW
)LJXUH6LPXODWLRQVWKLQFXUYHVDQGPHDVXUHPHQWVWKLFNFXUYHVRIVROXWLRQZLWKRXWWKHVWDELOL]LQJOHDNW\SHFRXSOHUVHDOHGDQGZLWK*HUPDQOHDN7KHLQSXWYROWDJHLVWKHVDPHDVDERYH
7KHGUDPDWLFLPSURYHPHQWLVREYLRXVLQILJVDQG7KHOHYHOGLIIHUHQFHEHWZHHQORZDQGKLJK IUHTXHQFLHV LVDWPRVWFORVH WRG%ZLWKRXW WKHJURRYH OHDNZKLOH LW LVRQO\DIHZG%ZLWKLWWKHWZRFXUYHVPDUNHG´VHDOHG´VKRXOGEHFRPSDUHG7KHOHDNWROHUDQFHVHDOHGFRXSOHUYV*HUPDQOHDNLPSURYHVIURPG%ZLWKRXWWKHJURRYHWROHVVWKDQG%ZLWKLW7KLVLVEHFDXVHWKHSDUDOOHOLPSHGDQFHLQWURGXFHGE\WKHJURRYHOHDNLVFOHDUO\ VPDOOHU WKDQ WKH LPSHGDQFHRI WKHPHDVXUHPHQW FRXSOHUZLWKRUZLWKRXW*HUPDQOHDNH[FHSWDWDURXQGN+]DQGDERYHDVVHHQE\FRPSDULQJILJVDQGVRWKHVWDELOL]LQJHIIHFWPHQWLRQHGLQVHFLVYHU\HIILFLHQW
8QIRUWXQDWHO\ LQVSLWHRI LWVDGYDQWDJHV WKLVVWUDLJKWIRUZDUGVROXWLRQEDVHGRQRSWLPL]HGGHVLJQUXOHVLVQRWDJRRGFKRLFHLQDFRPPHUFLDOSKRQHIRUWKHIROORZLQJUHDVRQV
• 7\SHDSSURYDOUHTXLUHPHQWVYDU\EHWZHHQV\VWHPV*60$0363'&HWF ,QVRPHFDVHV W\SH DSSURYDOPHDVXUHPHQW VSHFLILFDWLRQV H[SOLFLWO\ UHTXLUH WKDW WKH FRXSOHU EHVHDOHGQRH[WUDOHDNJURRYHRUDGDSWHUHWFDOORZHG
• ,WPD\QRW EH SRVVLEOH WR VKDSH WKH SKRQH IURQW FRYHU WR REWDLQ WKH GHVLUHG OHDN LQ DPHDVXUHPHQW
• 7KHUHZRXOGEHDSRVVLELOLW\RIWRRKLJKVRXQGOHYHOVJHWWLQJLQWRWKHXVHU¶VHDUDSURGXFWOLDELOLW\ULVN²WKHSLQQDLVTXLWHVRIWDQGVRLWFRXOGEORFNDJURRYHLQWKHSKRQHFRYHU
6LPXODWLRQVYVPHDVXUHPHQWV
7KHPHDVXUHPHQWVPDWFKWKHVLPXODWLRQVTXLWHZHOOH[FHSWIRUWKHGLIIHUHQFHVDWWKHKLJKHVWIUHTXHQFLHVWKHSHDNLVGXHWRWKH+HOPKROW]UHVRQDQFHRIWKHIURQWFDYLW\$SUREDEOHUHDVRQIRUWKLV LV WKHJHRPHWU\RI WKHSURWRW\SHDIURQWFDYLW\RIRQO\FPPHDQVDGLVWDQFHRIRQO\DERXWPPIURPWKHHDUSLHFHFDSVXOHPHPEUDQHWRWKH$FRYHU7KLV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
FKDQJHV WKH IORZRIDLUFORVH WR WKH IURQWKROHV VR WKH0LFUR&DSKROHPRGHOVEDVHGRQVLPSOHLGHDOJHRPHWULHVPD\QRWEHDFFXUDWHHQRXJK$OVRWKHUHDUHVRPHWROHUDQFHVLQWKHHDUSLHFHFDSVXOHLWVHOIWKDWDIIHFWWKHVHKLJKIUHTXHQFLHV
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µLQ0LFUR&DSDQGDOHQJWKLQPPZLOOKDYHWKHSRVWIL[P
7KHYDOXHVJLYHQ ERWKDERYHDQG LQPRVWRI WKH UHPDLQLQJ VLPXODWLRQV WR FHUWDLQDGYDQFHGSDUDPHWHUVVXFKDVVSDFHFRHIILFLHQWVUHTXLUHGE\WKHKROHDQGDLUORDGPDFURVDUHMXVWURXJKHVWLPDWHVEDVHGRQWKHPHFKDQLFDOFRQVWUXFWLRQPXWXDOFRXSOLQJLVVLPSO\LJQRUHGE\VHWWLQJ WKHPXWXDOFRXSOLQJFRHIILFLHQWV WR ]HUR7KH UHDOLW\ LVPRUH FRPSOLFDWHG WKDQ WKHPRGHOVDQGDFRXVWLF LPSHGDQFHPHDVXUHPHQWVZRXOGKDYH WREHPDGH WRILQGRXWWKHPRVWUHDOLVWLFSDUDPHWHUYDOXHV6XFKDQDO\VLVKDVQRWEHHQFDUULHGRXWLQWKLVWKHVLV
6ROXWLRQDOWHUQDWLYHV
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
1RIURQWOHDNVROXWLRQ
2QHVWUDLJKWIRUZDUGZD\RIVROYLQJWKHIURQWOHDNJURRYHRUDGDSWHUSUREOHPLVWRVLPSO\OHDYHLWRXWDQGGHVLJQWKHHTXDOL]LQJILOWHUVDFFRUGLQJWRWKH´VHDOHG´UHVSRQVHVKRZQLQILJ7KHOHDNWROHUDQFHLVQRWJRRGDWWKHORZIUHTXHQFLHVEXWRQWKHRWKHUKDQGWKHVROXWLRQ KDV WKH DGYDQWDJH RI EHLQJPHFKDQLFDOO\ VLPSOH$OWKRXJK WLOWHG WKH IUHTXHQF\UHVSRQVHFXUYHLVTXLWHVPRRWKDQGVKRXOGEHHDVLO\HTXDOL]DEOHH[FHSWIRUWKHSHDNDW+]
%HIRUHJRLQJRQWRRWKHUSRVVLEOHVROXWLRQVLWLVLQIRUPDWLYHWRFKHFNWKHPDJQLWXGHVRIYDULRXVLPSHGDQFHVDORQJWKHSDWKIURPWKHIURQWKROHVWRWKHEDFNFDYLW\DQGFRPSDUHWKHVHZLWKWKHLPSHGDQFHVRIWKHIURQWOHDNDQGWKHHDU
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH 6LPXODWHG DFRXVWLF LPSHGDQFH PDJQLWXGH DQG DUJXPHQW RI FDSVXOH RQO\=D8,3&%KROHVDGGHG=D IURQWFDYLW\DQG IURQWKROHVDGGHG =DFORVHGEDFNFDYLW\DGGHG=DWKURXJKKROHVDGGHGWREDFNFDYLW\=DIURQWOHDNDGGHG=D
,WLVVHHQDJDLQLQILJWKDW WKHLPSHGDQFHRIWKHIURQW OHDNLVPXFKVPDOOHU WKDQWKHLPSHGDQFHRIWKHFDSVXOHDQGWKHVWUXFWXUHVFRQQHFWHGLQVHULHVZLWKLW&RQVHTXHQWO\WKHIURQWOHDNZKLFKDSSHDUVLQSDUDOOHOZLWKWKHRWKHULPSHGDQFHVSOD\VDNH\UROHLQPLQLPL]LQJWKHWRWDOLPSHGDQFHRIWKHZKROHHDUSLHFHDQGLWZRXOGEHDSLW\WRKDYHWRJHWULGRILWFRPSOHWHO\2WKHULPSRUWDQWFRQFOXVLRQVIURPILJDUH
• 7KHKROHVEHKLQGWKHFDSVXOHLQWKH8,3&%ORZHUWKHPDLQUHVRQDQFHVOLJKWO\• 7KHKROHVEHKLQGWKHFDSVXOHGRQRWUDLVHWKHWRWDOLPSHGDQFHDSSUHFLDEO\LHWKH\DUH
RSHQHQRXJK• 7KHEDFNFDYLW\OHDNKROHVWKURXJK3&%KDYHDVLJQLILFDQWHIIHFW²ZLWKRXWWKHPWKH
PDLQ UHVRQDQFH LV VKLIWHG XS WR +] DQG ZLWK WKHP WKH UHVRQDQFH UHPDLQV XQFKDQJHGLQIUHTXHQF\EXWKDVDORZHU4YDOXHZKLFKLVJRRGIRUHTXDOL]DWLRQ
• 7KHIURQWKROHVDQGIURQWFDYLW\GRQRWUDLVHWKHWRWDOLPSHGDQFHYHU\PXFKDWORZDQGPLGUDQJHIUHTXHQFLHVWKHUHLVDUHVRQDQFHDWWKHKLJKHVWIUHTXHQFLHV
7KH RQHPDVV PRGHO366B ZDV XVHG LQ WKLV VLPXODWLRQ WR GLVUHJDUG WKH HIIHFWV RIGRPHGHFRXSOLQJIRUWKHVDNHRIFODULW\6ROXWLRQFRXOGEHGHVFULEHGDVEDDXVLQJWKHRSWLRQVGHILQHGDWWKHHQGRIWKHSUHYLRXVFKDSWHU
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
,QWHUQDOOHDNLQWRSDUDOOHOFDYLW\VROXWLRQ
7KLVVROXWLRQLVDJRRGH[DPSOHRIDVROXWLRQWKDWORRNVTXLWHJRRGLQVLPXODWLRQVEXWGRHVQRWZRUNLQUHDOLW\XQOHVVGLPHQVLRQVRIFDYLWLHVDQGOHDNVFDQEHUHDOL]HGDVWKH\ZHUHLQWKHVLPXODWLRQ,QRWKHUZRUGVWKHVROXWLRQLVVHQVLWLYHWRFHUWDLQFKDQJHVLQWKHPHFKDQLFV
6ROXWLRQ GLIIHUV IURP WKH DERYH VROXWLRQV LQ WKDW D WKLUG FDYLW\ KHUHDIWHU FDOOHGSDUDOOHOFDYLW\EHFDXVHLWLVWRSRORJLFDOO\LQSDUDOOHOZLWKWKHFDSVXOHLVDGGHGDQGFRQQHFWHGEHWZHHQWKHEDFNFDYLW\DQGWKHIURQWFDYLW\7KHYROXPHDYDLODEOHIRUWKLVSDUDOOHOFDYLW\ZDVHVWLPDWHG WREHFP DQGQR OHDNVZHUHDVVXPHG5HDOL]DEOHRSHQLQJVFRQQHFWLQJWKHSDUDOOHOFDYLW\WRWKHEDFNFDYLW\DQGIURQWFDYLW\ZHUHGLPHQVLRQHGPDQXDOO\XVLQJVLPXODWLRQXQWLODQDFFHSWDEOHIUHTXHQF\UHVSRQVHZDVIRXQG7KHUHVXOWVDUH
• VOLWKHUHDIWHUFDOOHGWKHLQWHUQDOOHDNRIZLGWKPPKHLJKWPPDQGOHQJWKPPLQIORZGLUHFWLRQIURQWFDYLW\WRSDUDOOHOFDYLW\DQG
• KROHVRIGLDPHWHUPPSDUDOOHOFDYLW\WREDFNFDYLW\
7KHVOLWZRXOGEHIRUPHGE\RSHQLQJXSWKHF\OLQGULFDOIODQJHRQWKHLQQHUVLGHRIWKH$FRYHUSODQQHGWRVHDOWKHFDSVXOHWRWKH$FRYHUVHHDOVRILJEHORZ7KHKROHVZRXOG EH HDVLO\ UHDOL]DEOH LQ WKH8, 3&% SURYLGHG RI FRXUVH WKDW WKH 3&% LV QRW IXOO\FURZGHGZLWKFRPSRQHQWV+HQFHWKHQDPH8,3&%KROHVXVHGIRUWKHVHKROHVIURPQRZRQWKHKROHVEHKLQGWKHFDSVXOHZLOOEHFDOOHGEDFNKROHVDOWKRXJKWKH\DOVRUHVLGHLQWKHVDPH3&%7KH8,3&%KROHVFDQDOVREH VHHQDVQR LQ ILJ7KHQXPEHURIKROHVVKRZQLQWKLVSLFWXUHLVOHVVWKDQEHFDXVHWKHILQDOVROXWLRQGLGQRWQHHGDOOKROHVWREHWKHUH
6RPH DVVXPHG GLPHQVLRQV DQG OHDNV ZHUH DOVR XSGDWHG ZKLOH WKLV VROXWLRQ ZDVVRXJKWEHFDXVHWKH$FRYHUVKDSHKDGEHHQGHYHORSHGIXUWKHUDQGPRUHLQIRUPDWLRQZDVDYDLODEOH
• IURQWFDYLW\FPQRWFPFPDVDERYH• H[WUDFDYLW\IRUPHGEHWZHHQ%FRYHUDQG(QJLQH3&%YROXPHFP• VOLWVKDSHGOHDNEHWZHHQ%FRYHUDQGSKRQHEDWWHU\ZLGWKPPKHLJKWPPDQG
OHQJWKLQIORZGLUHFWLRQPP
,WZDVDVVXPHG ILUVW IRU VLPSOLFLW\ WKDW DOO WKH WKURXJKKROHV LQ WKH(QJLQH3&%ZRXOGOHDGWRWKHFDYLW\LQWKH%FRYHUKHUHDIWHUFDOOHG%FRYHUFDYLW\7KHOHDNURXWHEHWZHHQWKH%FRYHUDQGWKHEDWWHU\ZDVWKRXJKWWREHWKHPRVWVLJQLILFDQWOHDNRXWRIWKH%FRYHUFDYLW\LQVSLWHRIRWKHUVPDOOHUOHDNVWKDWPD\EHSUHVHQWDQGWKXVLWZDVXVHGWRUHSUHVHQWWKHWRWDOOHDNLQWKHVLPXODWLRQV$VDILQDOFKDQJHWKHIURQWKROHVZHUHVKRUWHQHGIURPPPWRPPZKLFKLPSURYHGKLJKIUHTXHQF\UHVSRQVHDELW7KHVFKHPDWLFWRVLPXODWHWKLVVROXWLRQLVDVIROORZV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\3DU&DY
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
'(),1()U+ROHVPP
'(),1()U&DYX
'(),1(9LQP
'(),1(%N&DYX
'(),1(%N&DY/NPP
'(),1(Q
'(),1(%N+ROHVPP
SX
'(),1(,QW/NPPP '(),1(8,+ROHVPP
'(),1(3DU&DYX '(),1(%&RY&DYX
'(),1(%DWW/NPPP
)LJXUH6FKHPDWLFWRVLPXODWHVROXWLRQ
)LJXUH6LPXODWHGIUHTXHQF\UHVSRQVHDQGOHDNWROHUDQFHRIVROXWLRQ
7KHOHDNWROHUDQFHRIVROXWLRQ LVZHOOEHKDYHG WKHGLIIHUHQFHEHWZHHQVHDOHGDQG*HUPDQ OHDN FXUYHV GHFUHDVHV VPRRWKO\ IURP ORZ WR KLJK IUHTXHQFLHV (YHQ WKH IUHTXHQF\UHVSRQVHLWVHOILVJRRGSURYLGHGWKDWWKHTXLWHVWURQJEDVVUHVRQDQFHGRHVQRWVKLIWDORQJWKHIUHTXHQF\D[LVGXHWRWROHUDQFHV
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH)UHTXHQF\UHVSRQVHVWRSVHDOHGERWWRP*HUPDQOHDNRIFDSVXOHZLWKEDFNKROHVEDFNFDYLW\ WKURXJKKROHV IURQW FDYLW\ DQG IURQW KROHV SX%FRYHU FDYLW\ DQGEDWWHU\ OHDNDGGHGSX LQWHUQDO OHDNDGGHGSX8,3&%KROHVDGGHGSX LQWHUQDOOHDNDQG8,3&%KROHVFRQQHFWHGWRJHWKHUSXSDUDOOHOFDYLW\FRQQHFWHGWRLQWHUQDOOHDNRQO\SXSDUDOOHOFDYLW\FRQQHFWHGWR8,3&%KROHVRQO\SXSDUDOOHOFDYLW\FRQQHFWHGEHWZHHQ8,3&%KROHVDQGLQWHUQDOOHDNSX
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
5FW+ROH$,QW/N
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\3DU&DY
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\3DU&DY
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
&DYLW\%N&DY
&LU+ROH$%N&DY/N
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV
6($/(' *(50$1/($.
6HDO*HUPQ
&LU+ROH$%N+ROHV
&LU+ROH$8,+ROHV 5FW+ROH$,QW/N
&DYLW\3DU&DY
&DYLW\%&RY&DY
5FW+ROH$%DWW/N
'(),1()U+ROHVPP'(),1()U&DYX'(),1(9LQP
'(),1(%N&DYX'(),1(%N&DY/NPP
'(),1(Q
'(),1(%N+ROHVPP
'(),1(,QW/NPPP '(),1(8,+ROHVPP'(),1(3DU&DYX '(),1(%&RY&DYX
'(),1(%DWW/NPPP
SX
SX
SX
SX
SX
SX
SX
SX
)LJXUH6FKHPDWLFWRREWDLQWKHUHVXOWVLQILJ
&RPSDULVRQRIWKHILUVWWZRSDUWLDOUHVXOWVSXSXLQGLFDWHVWKDWDGGLWLRQRIWKH%FRYHUFDYLW\DQGEDWWHU\OHDNLQVHULHVZLWKWKHEDFNFDYLW\DQGWKURXJKKROHVGRHVQRWLPSURYHWKHIUHTXHQF\UHVSRQVH LQDQ\ZD\$GGLQJDQ LQWHUQDO IURQW OHDN WR IUHHDLU SXKRZHYHUFKDQJHVWKHEHKDYLRXUGUDPDWLFDOO\DQGWKHWRWDOHDUSLHFHRXWSXWLPSHGDQFHLVFRQVLGHUDEO\UHGXFHGMXVWDVLQVROXWLRQ:KHQWKH8,3&%KROHVDUHDOVRRSHQHGWRIUHHDLUSXWKHFDSVXOHPHPEUDQHFDQPRYHPRUHIUHHO\DWORZIUHTXHQFLHV,WVPRYHPHQWLVQRWRSSRVHGE\DQ\DFRXVWLFFRPSOLDQFH´DLUVSULQJ´QHLWKHUWKDWRIWKHEDFNFDYLW\QRUWKDWRIWKHIDLUO\WLJKWYROXPHIRUPHGEHWZHHQWKHSKRQHFRYHUDQGWKHW\SHFRXSOHU7KLVLVDJHQHUDOIDFWLIWKHHDUSLHFHFDSVXOHKDVWREHHQFORVHGLQDFDYLW\VPDOOHUWKDQDJLYHQOLPLWURXJKO\FPIRUWKHFDSVXOHLQTXHVWLRQWKHQWKHPDLQUHVRQDQFHVHHQDW+]LQIUHHDLUZLOOULVH$ZD\WRFRXQWHUDFWWKLVLVWRRSHQXSDELJHQRXJKOHDNLQWKHFDYLW\²WKLVE\SDVVHVWKHFRPSOLDQFHRIWKHHQFORVHGDLUDQGOHWVWKHPHPEUDQHPRYHPRUHIUHHO\7KHEHVWH[DPSOHVRIDULVWKHOHDNIRUPHGE\WKHWKURXJKKROHVLQWKHEDFNFDYLW\DVVHHQLQILJ=DYV=D
1RZFRQQHFWLQJWKH8,3&%KROHVWRWKHLQWHUQDOOHDNSXSXFKDQJHVWKHWRSRORJ\RIWKHVROXWLRQWRDNLQGRIE\SDVVRUVKRUWFLUFXLWVROXWLRQWKHIURQWDQGWKHEDFNRIWKHVSHDNHUDUHFRQQHFWHGWRJHWKHUWKURXJKDFRXSOHRIFDYLWLHVDQGKROHV6WULFWO\VSHDNLQJWKH´SX´VLPXODWLRQLVQRWUHDOLVWLFWKH8,3&%KROHVDQGWKHLQWHUQDOOHDNVOLWPXVWQHFHVVDULO\KDYHVRPHDLUVSDFHEHWZHHQWKHPEHFDXVHWKH\DUHVHSDUDWHGE\VHYHUDOPLOOLPHWUHVLQVLGHWKHSKRQH7KHUHVXOWLVVWLOO LQIRUPDWLYHDQGWKHUHIRUHLQFOXGHGKHUH7KLVLOOXVWUDWHVDQRWKHUVWUHQJWKRIVLPXODWLRQLWLVSRVVLEOHWRWU\RXWVROXWLRQVWKDWKDYHDWKHRUHWLFDODQDO\WLFDOLQWHUHVWDOWKRXJKWKH\PD\QRWEHSK\VLFDOO\UHDOL]DEOHLQWKHSKRQHPHFKDQLFVLQTXHVWLRQ$OVRLQWHUHVWLQJLVWKH´SX´FDVHZKLFKLVLGHQWLFDOWRWKHFRPSOHWHVROXWLRQ DSDUW IURP WKH GLVFRQQHFWLRQ RI WKH SDUDOOHO FDYLW\ IURP WKH EDFN FDYLW\ 7KLVIRUPVD+HOPKROW]UHVRQDWRUSDUDOOHOFDYLW\LQWHUQDOOHDNWKDWDEVRUEVPRVWRIWKHVRXQGDWN+]ZKLFKLVVHHQDVDVKDUSGLSLQILJ
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
$VD UHVXOWRIFORVLQJ WKHSDWK WKURXJK WKHSDUDOOHOFDYLW\ WKHKLJK IUHTXHQFLHVDUHERRVWHGZKLFKLVJRRGEHFDXVHWKH\ZHUHXQQHFHVVDULO\ZHDNLQVLPXODWLRQVSXDQGSX7KHUHDVRQREYLRXVO\LVWKDWWKHLPSHGDQFHVHHQORRNLQJIURPLQVLGHWKHIURQWFDYLW\LQWRWKHLQWHUQDOOHDNURXWHDURXQGWKHFDSVXOHKDVULVHQDWWKRVHIUHTXHQFLHV
)XUWKHUDQDO\VLVRIWKLVVROXWLRQVKRZVWKDWWKHDPRXQWRIOHDNIURPWKHSDUDOOHOFDYLW\WRWKHEDFNFDYLW\ LVDQ LPSRUWDQWDQGFULWLFDOSDUDPHWHU2PLWWLQJ WKLV OHDNSXGHVWUR\VWKHKLJKIUHTXHQF\UHVSRQVHDVZDVDOUHDG\SRLQWHGRXW,IWKH8,3&%LVFURZGHGDQGVD\RQO\KDOIWKHVSDFHLVDYDLODEOHIRUOHDNKROHVLHKROHVLQVWHDGRIWKHLQWHQGHGWKHKLJKIUHTXHQFLHVZLOOGURSYHU\TXLFNO\DERYHN+]7KLVLVLOOXVWUDWHGEHORZ
)LJXUH6LPXODWLRQRIVROXWLRQDVLQILJEXWZLWKRQO\LQVWHDGRIKROHVLQWKH8,3&%
$UHVSRQVHOLNHWKLVZRXOGEHQH[WWRLPSRVVLEOHWRHTXDOL]HWRILWZLWKLQWKH*60VSHFLILFDWLRQV IRU UHFHLYLQJ IUHTXHQF\ UHVSRQVH LQ D UHOLDEOH ZD\ UHPHPEHULQJ WKH LQHYLWDEOHWROHUDQFHV
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH0HDVXUHPHQWVRQDPHFKDQLFDOSURWRW\SHVKRZLQJLGHDOVLWXDWLRQWRSDQGZKDWKDSSHQVZKHQWKHSDUDOOHOFDYLW\LVHQODUJHGWRFPDQGDELJOHDNLVDGGHGWRLWERWWRP
)LJVVKRZWKDWWKHVROXWLRQLVDEOHWRZRUNZHOOLIWKHSDUDOOHOFDYLW\LVUHDOL]HGDVLQWKHVLPXODWLRQVEXWHQODUJLQJLWDQGLQWURGXFLQJDELJOHDNUHGXFHVWKHFXWRIIIUHTXHQF\WROHVV WKDQ N+] )RU WKLV UHDVRQ D VLPSOHU DQG OHVV FULWLFDO VROXWLRQ WKDQ VROXWLRQ ZDVVRXJKWHVSHFLDOO\EHFDXVHLWFRXOGQRWEHNQRZQDWWKHWLPHH[DFWO\KRZELJWKHFDYLWLHVDQGOHDNVZHUHJRLQJWREHLQWKHILQDOSURGXFW
,QWHUQDOOHDNLQWRVLGHFDYLW\VROXWLRQ
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
UDWLRRIUHVLVWDQFHWRLQGXFWDQFHLVFOHDUO\KLJKHUWKDQWKDWRIFLUFXODUKROHVVRWKH+HOPKROW]UHVRQDQFHZRXOGEHZHOOGDPSHGDQ\ZD\DQGPRVWOLNHO\QRWFDXVHSUREOHPV0RUHJHQHUDOO\WKHUDWLRRIUHVLVWDQFHWRLQGXFWDQFHRIDFRQVWULFWLRQHJDOHDNKROHGHSHQGVRQWKHUDWLRRISHULPHWHUWRFURVVVHFWLRQDODUHD,IWKHSHULPHWHUDUHDUDWLRLVELJWKHQWKHUHVLVWDQFH LVELJFRPSDUHG WR WKH LQGXFWDQFHDQGYLFHYHUVD7KH WZRH[WUHPHVDUHDVOLWZLWKDYHU\KLJKZLGWKKHLJKWUDWLRKLJK5/DQGDFLUFXODUKROHORZ5/7KLVFDQDOVREH YHULILHG XVLQJ WKH IRUPXODH IRXQG LQ WKHPDFURV IRU UHFWDQJXODU DQG FLUFXODU KROHV LQDSSHQGL[,9
7KHVSDFHRIDLUEHWZHHQ WKHFRYHUVDQG WKH3&%VZLOOKHUHDIWHUEHFDOOHG WKHVLGHFDYLW\EHFDXVH LW IRUPHGDURXQGQRW LQ IURQWRIRUEHKLQG WKHFDSVXOH$FFRUGLQJ WR WKHDERYHDVVXPSWLRQVWKHVLGHFDYLW\KDVDIDLUO\ORZLPSHGDQFHFRPSDUHGWRRWKHUDFRXVWLFLPSHGDQFHV DURXQG WKH HDUSLHFH FDSVXOH VR LW VHHPV WKDW LW FRXOG EH XVHG DV D NLQG RIVXEVWLWXWHIRUIUHHDLU
$OO WKLV VXJJHVWV D VLPSOH VROXWLRQZLWK MXVW DQ LQWHUQDO OHDN EHWZHHQ WKH HDUSLHFHFDSVXOHDQGWKH$FRYHUZLWKWKHEDFNFDYLW\EHKLQGWKHFDSVXOHDVGHVFULEHGDERYH$QLOOXVWUDWLRQRIZKDWKDSSHQVLIWKHVDPHLQWHUQDOOHDNDVLQVROXWLRQLVXVHGFDQEHIRXQGLQ ILJ VLPXODWLRQ ´SX´ 7KH OHDN WROHUDQFH LV JRRG EXW WKH KLJK IUHTXHQFLHV DUHPRUHGDPSHGWKDQLQVROXWLRQ ,I WKH LQWHUQDO OHDNVOLW LVQDUURZHGEHORZPP WKHQORZ IUHTXHQFLHV DUH ERRVWHG DQG WKH OHDN WROHUDQFH LV UHGXFHG +RZHYHU WKH IUHTXHQF\UHVSRQVHFDQEHPDGHWRIDOOTXLWHVPRRWKO\DWDUDWHFORVHHQRXJKWR±G%RFWDYHVRDILUVWRUGHUHTXDOL]LQJILOWHUGDPSLQJEDVVIUHTXHQFLHVDQGERRVWLQJKLJKIUHTXHQFLHVFRXOGDFWXDOO\PDNHWKHUHVSRQVHORRNYHU\JRRG,IRQWKHFRQWUDU\DELJJHUVOLW LVXVHG WKHQWKHOHDNWROHUDQFHLVLPSURYHGEXWWKHRYHUDOORXWSXWOHYHOLVUHGXFHGEHFDXVHPRVWRIWKHVRXQGSUHVVXUHLVZDVWHGWKURXJKWKHLQWHUQDOOHDN5HGXFLQJWKHRYHUDOOOHYHOLVXQGHVLUDEOHWKHHDUSLHFHFDSVXOHPHPEUDQHKDVWRPRYHPRUHWRJHQHUDWHDJLYHQSUHVVXUHLQVLGHWKHXVHU¶VHDUDQGPRUHGLVWRUWLRQZLOODSSHDUDVDUHVXOW
6RPHXSGDWHVWRWKHPHFKDQLFVZHUHHYLGHQWDIWHUWKHDEDQGRQLQJRIVROXWLRQ7KH1RNLDEDFNFDYLW\YROXPHZDV WREHFRPHELJJHU WKDQ H[SHFWHG DERXW FP LQVWHDGRIFPWKHH[DFWVSDFHWDNHQXSE\HOHFWURQLFFRPSRQHQWVFRXOGQRWEHNQRZQLQDGYDQFHKROHVZHUHFUHDWHGLQWKH8,3&%DOWKRXJKWKH\DUHQRWQHHGHGDVPXFKDVLQVROXWLRQ+RZHYHU KDYLQJ WKHVHKROHV LV D XVHIXOZD\RI DVVXULQJ WKDW WKHUHZLOO EH DVWDEOHOHDNLQWKHEDFNFDYLW\7KLVZD\WROHUDQFHHIIHFWVFDQEHUHGXFHG
)LJXUH6LPXODWLRQRIVROXWLRQZLWKDQDUURZLQWHUQDOOHDN±G%RFWDYHVORSHLQFOXGHGIRUFRPSDULVRQ
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
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
7KHVLGHFDYLW\ZDVRPLWWHGDQG UHSODFHGE\JURXQG IUHHDLU LQ WKH VLPXODWLRQRIVROXWLRQ7KLVURXJKDSSUR[LPDWLRQZLOOEHDQDO\]HGLQPRUHGHWDLO ODWHU$FFXUDWHSUHSURGXFWLRQ VLPXODWLRQVRI WKLV VROXWLRQ RUDQ\RWKHU VROXWLRQHPSOR\LQJ WKH VLGH FDYLW\DUHPDGHGLIILFXOWE\WKHIDFWWKDWWKHHIIHFWLYHVL]HRIDOOWKHOHDNVWRRXWVLGHDLUSUHVHQWLQILQDOPDVVSURGXFWLRQPHFKDQLFVDUHQRWNQRZQLQDGYDQFH,WZRXOGRIFRXUVHEHSRVVLEOHWRFUHDWHGHGLFDWHGOHDNVEHWZHHQWKHFRYHUVIRUDFRXVWLFDOSXUSRVHVDQGWKHQRQHZRXOGNQRZWKDWWKHILQDO OHDNZLOOEHJUHDWHU WKDQRUHTXDO WRWKHWRWDOGHGLFDWHGOHDN:LWKRXWVXFKDGHGLFDWHGOHDNWKHVLPSOHVWFRPSURPLVHLQVLPXODWLRQVLVWRUHSODFHWKHVLGHFDYLW\ZLWKHLWKHUIUHHDLURUDIXOO\VHDOHGFDYLW\RIWKHDVVXPHGVL]H7KHQVRPHVOLWFRXOGEHDGGHGWRWKHFLUFXLWDQGLWVGLPHQVLRQVVWHSSHGEHWZHHQSUREDEOHYDOXHV
([WHUQDOOHDNLQWRVLGHFDYLW\VROXWLRQ
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH &URVVVHFWLRQ IURP D &$' ILOH WKURXJK WKH HDUSLHFH RI WKH 1RNLD VKRZLQJWKHILQDOPHFKDQLFDOFRQVWUXFWLRQ7KHEDFNKROHVDQG8,3&%KROHVDUHQRWYLVLEOHLQWKLVGUDZLQJ
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
6ROXWLRQ²WKHILQDOFKRLFH
$PHDVXUHPHQWRIWKHIUHTXHQF\UHVSRQVHDQGOHDNWROHUDQFHRIWKHILQDOL]HGSKRQHLVJLYHQILUVWIRUODWHUUHIHUHQFH
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH )UHTXHQF\ UHVSRQVHV XQHTXDOL]HG LH QR '63 FRUUHFWLRQ RI ILQDO SKRQHWKLQFXUYHVVLPXODWHGWKLFNFXUYHVPHDVXUHG
'LPHQVLRQLQJ
)URQWKROHV
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
,QGXVWULDO GHVLJQ SURYLGHG WKUHH IURQW KROHV DQG DV D UHVXOW RI WXQLQJ XVLQJ ERWKPHDVXUHPHQWV DQG VLPXODWLRQ HDFK KROH ZDV FKRVHQ WR KDYH DQ DUHD RI PP 7KHOHQJWKRIHDFKKROH LQ WKH IORZGLUHFWLRQZDVPP7KLVFKRLFHSODFHG WKH+HOPKROW]UHVRQDQFHDWN+]DFFRUGLQJWRYHULILFDWLRQPHDVXUHPHQWVILJ$OWKRXJKWKHIURQWKROHVDUHQRWFLUFXODUEXWHOOLSWLFLQWKHVLPXODWLRQVVWLOOVKRZTXLWHJRRGFRUUHVSRQGHQFHZLWKWKHPHDVXUHPHQWV
([WHUQDOOHDNKROHV
7KHILQDOLQGXVWULDOGHVLJQFKRLFHDOORFDWHGKROHVIRUH[WHUQDOOHDNWKURXJKWKH$FRYHU+DYLQJRQHZLGHVOLWDVLQVROXWLRQZDVQRWGHVLUDEOHIRUPHFKDQLFDODQGLQGXVWULDOGHVLJQ
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
UHDVRQVDVVWDWHGDERYH6RWKHJRDOZDVWRILQGRXWDVXIILFLHQWKROHDUHDWRIXOILOFRQIOLFWLQJUHTXLUHPHQWV7KHILQDOGHFLVLRQWRJRIRUDQDUHDRIPPSHUKROHPPDOOLQDOOZDVEDVHGRQUHVXOWVIURPPHDVXUHPHQWVRQSURWRW\SHVWKDWZHUHDYDLODEOH5HGXFLQJWKHOHQJWKRIWKHOHDNKROHVIURPPPWKLFNQHVVRI$FRYHUZKHUH WKH OHDNKROHVDUHWROHVVWKDQPPZRXOGLPSURYHWKHSHUIRUPDQFHEXWDWWKHH[SHQVHRIUHGXFHGZDWHUUHVLVWDQFH&RQVHTXHQWO\WKHOHDNKROHVZHUHQRWVKRUWHQHG
)LJXUH7KH1RNLDHDUSLHFHYLHZHGIURPWKHRXWVLGHVHHQDOVRLQILJ
7KHGLVDGYDQWDJHRIKDYLQJDVPDOOHUOHDNDUHDDQGKROHVWKDWDUHTXLWHORQJLQWKHIORZGLUHFWLRQLVWKDWWKHOHDNWROHUDQFHLVZRUVHWKDQWKDWREWDLQHGLQWKHLGHDOL]HGVROXWLRQ7KHDGYDQWDJHLVWKDWWKHVHQVLWLYLW\RIWKHHDUSLHFHDVDZKROHLVKLJKHUWKDQLQVROXWLRQLHOHVVSRZHULVUHTXLUHGWRUHDFKDJLYHQVRXQGSUHVVXUHOHYHOLQWKHXVHU¶VHDU)XUWKHUDQDO\VLVRIVROXWLRQVKRZVWKDWORZIUHTXHQF\RXWSXWLVKLJKHUEHFDXVHRIWKHKLJKHULPSHGDQFH LQ WKH OHDN ZKLOH KLJK IUHTXHQF\ RXWSXW LV KLJKHU EHFDXVH RI WKH IURQW FDYLW\+HOPKROW]UHVRQDQFH7KHN+]UHJLRQLVWKHRQO\UHJLRQKDYLQJDOPRVWDVORZRXWSXWDVVROXWLRQ
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
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
)LJXUH6RXQGRXWSXWWKURXJKOHDNKROHVRQO\XVLQJDW\SHFRXSOHUZLWKRXWD*HUPDQ OHDN ULQJ7KH WKLFN FXUYH LV WKHPHDVXUHPHQW UHVXOW WRZKLFK WKH VLPXODWHG UHVXOWWKLQFXUYHZDVPDWFKHG
366B
&DYLW\)U&DY
$&9LQ
&LU+ROH$)U+ROHV&LU+ROH$%N+ROHV
&LU+ROH$([W/N
&DYLW\%N&DY
&LU+ROH$8,+ROHV&DYLW\6G&DY
5DN
/D
5D0HJ
(DU
'(),1(9LQP
SX
'(),1(%N+ROHVPP
'(),1(%N&DYX
'(),1(8,+ROHVPP
'(),1(6G&DYX
'(),1()U&DYX
'(),1(([W/NPP
'(),1()U+ROHVPP
)LJXUH7KHVFKHPDWLFXVHGLQWKHVLPXODWLRQRIILJ
$VVHHQLQILJWKHVLGHFDYLW\ZDVIRXQGWREHKDYHDVLILWKDGDVKXQWDFRXVWLF5/LPSHGDQFHFRUUHVSRQGLQJ DSSUR[LPDWHO\ WR D UHVLVWDQFHRI NΩ DQG DQ LQGXFWDQFHRI+7KLV LPSHGDQFHFRXOGEH WUDQVODWHG WRDFRUUHVSRQGLQJPHFKDQLFDO OHDNRSHQLQJIRUH[DPSOHD VOLWRIZLGWKPPKHLJKWPPDQG OHQJWKPPZRXOGKDYH WKHVDPH LPSHGDQFH DW ORZ IUHTXHQFLHV 7KLV LV YHU\ UHDVRQDEOH DQG FORVH WR WKH OHDN RQHZRXOGH[SHFWEHWZHHQWKHSKRQHFRYHUV2QHPRUHSXUHDFRXVWLFUHVLVWDQFHLVVHHQLQWKHVFKHPDWLFD´JURXQGHG´UHVLVWDQFHRI0ΩHIIHFWLYHO\VKXQWLQJWKHEDFNFDYLW\FDSDFLWDQFH7KLVUHVLVWDQFHZDVDGGHGWRWDNHDFFRXQWRI ORVVHVWKDW WXUQHGRXW WREHKLJKHU LQUHDOLW\WKDQLQWKHVLPXODWHGEDFNFDYLW\7KLVLVQRWVXUSULVLQJVLQFHWKHEDFNFDYLW\ZDOOVDUH QRW SHUIHFWO\ ULJLG DV DVVXPHG LQ WKH&DYLW\ PDFUR 7KH 0Ω UHVLVWDQFH ZDV QRWIRXQGDVDUHVXOWRIFDUHIXOPHDVXUHPHQWVEXWLWLVMXVWDURXJKHVWLPDWHWKDWLPSURYHGWKHFRUUHVSRQGHQFH EHWZHHQ FHUWDLQPHDVXUHPHQWV DQG VLPXODWLRQVZLWK EORFNHG 3&% KROHVUHVXOWV RI WKHVH ZLOO QRW EH DQDO\]HG KHUH 7KH VSDFH FRHIILFLHQWV SDVVHG WR WKH&LU+ROH$)U+ROHV IURQW KROHV DQG &LU+ROH$([W/N H[WHUQDO OHDN PDFURV DUH TXLWHVPDOOWKLVLVWRWDNHDFFRXQWRIWKHIDFWWKDWWKHKROHVDUHTXLWHFORVHWRHDFKRWKHUDQGWKH
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
VROLGDQJOHVKRXOGEHGLYLGHGEHWZHHQWKHKROHV6RPHILQHWXQLQJRIWKHVSDFHFRHIILFLHQWVZDVGRQHDOVRWRJHWDEHWWHUFRUUHVSRQGHQFHEHWZHHQPHDVXUHGDQGVLPXODWHGUHVXOWV
1RZWKHDVVXPSWLRQWKDWWKHEDFNFDYLW\LPSHGDQFHLVORZHQRXJKWRZRUNDVDJRRGWHUPLQDWLRQRIWKHH[WHUQDOOHDNFDQEHYHULILHG
)LJXUH6LPXODWHGDFRXVWLFLPSHGDQFHVPDJQLWXGHRIHDUSLHFHZLWKRXWWKHH[WHUQDOOHDN=DH[WHUQDOOHDNKROHVRQO\=DVLGHFDYLW\RQO\=DH[WHUQDOOHDNFRQQHFWHGWRVLGHFDYLW\=DHDUSLHFHZLWKWKHH[WHUQDOOHDN=D
$
&LU+ROH$([W/N
&DYLW\6G&DY
5DN
/D
$$$
&DYLW\6G&DY
5DN
/D
&LU+ROH$([W/N
366B
&DYLW\)U&DY
&LU+ROH$)U+ROHV&LU+ROH$%N+ROHV
&DYLW\%N&DY
&LU+ROH$8,+ROHV
5D0HJ
$
366B
&DYLW\)U&DY
&LU+ROH$)U+ROHV&LU+ROH$%N+ROHV
&DYLW\%N&DY
&LU+ROH$8,+ROHV
5D0HJ
&LU+ROH$([W/N
&DYLW\6G&DY
5DN
/D
=D
'(),1(%N+ROHVPP
'(),1(%N&DYX
'(),1(8,+ROHVPP
'(),1(6G&DYX
=D=D=D
=D
'(),1()U&DYX
'(),1(([W/NPP
'(),1()U+ROHVPP
)LJXUH6FKHPDWLFXVHGLQWKHDERYHVLPXODWLRQ
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
$V VHHQ LQ WKH DERYH VLPXODWLRQ UHVXOW WKH VLGH FDYLW\ LPSHGDQFH =D UHPDLQV FOHDUO\ORZHUWKDQWKHLPSHGDQFHRIWKHOHDNKROHV=DDWDOOIUHTXHQFLHVRILQWHUHVWVRDFFRUGLQJWRWKHVLPXODWLRQVWKHOHDNEHKDYHVPXFKWKHVDPHZD\DVLWZRXOGGRLIURXWHGWRIUHHDLU7KHEDFNFDYLW\KDVVRPHHIIHFWKRZHYHUVRLWLVYLHZHGQH[W
/HDNVLQWKHEDFNFDYLW\
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
7KHEDFNFDYLW\KDVURXJKO\WKHIROORZLQJGLPHQVLRQVZLGWKPPKHLJKWPPDQG GHSWK PP2QHPLJKW H[SHFW WKDW LI WKH EDFN FDYLW\ ZHUH DFFLGHQWDOO\ YHU\ZHOOVHDOHGLQWKH´ORZHU´HQGQRWKURXJKKROHVRSHQWKHQWKHUHPLJKWSHUKDSVDSSHDULUUHJXODULWLHVLQWKHIUHTXHQF\UHVSRQVHEHFDXVHRIVWDQGLQJZDYHVLQVLGHWKHEDFNFDYLW\7ZRRIWKHGLPHQVLRQVMXVWPHQWLRQHGDUHQRORQJHUYHU\VPDOOFRPSDUHGWRWKHZDYHOHQJWKDWWKHKLJKHVW VSHHFK WUDQVPLVVLRQ IUHTXHQFLHV VR WKH EDFN FDYLW\ FRXOG DFFLGHQWDOO\ DFW DV DTXDUWHUZDYHUHVRQDWRUDWWKRVHIUHTXHQFLHV6WDQGLQJZDYHVZHUHIRXQGRXWWRFDXVHYLVLEOHFKDQJHVLQWKHIUHTXHQF\UHVSRQVHLQDQHDUO\SURWRW\SHZKLFKKDGDKDUGHUIUDPHDQGZKRVHEDFNFDYLW\ZDVXQUHDOLVWLFDOO\ZHOOVHDOHGLQWKH´ORZHU´HQG+RZHYHUWKLVSUREOHPKDVQHYHUUHDSSHDUHGLQODWHUSURWRW\SHVRUPDVVSURGXFHGXQLWVLQGLFDWLQJWKDWWKHUHDUHKLJKHQRXJK ORVVHV LQ WKHEDFNFDYLW\ WRSUHYHQWVWDQGLQJZDYHVIURPGHVWUR\LQJ WKHSHUIRUPDQFH
)LQDOVLPXODWLRQPRGHO
7KHILQDOVLPXODWLRQPRGHORIWKH1RNLDHDUSLHFHLVVHHQLQILJWKHORZHVWFLUFXLW WRZKLFKWKH´=D´SUREHLVFRQQHFWHG7KHPDQ\VPDOO3&%WKURXJKKROHVDUHOHIWRXWEHFDXVHWKH\WHQGWREHEORFNHGLQPRVWXQLWVDVZDVDOUHDG\PHQWLRQHG
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
7KHILQDOHDUSLHFH
7KH UHFHLYLQJ IUHTXHQF\ UHVSRQVHRI WKH ILQDO HDUSLHFHZDV WXQHG WR VSHFLILFDWLRQVXVLQJVHSDUDWH'63 HTXDOL]DWLRQ HPSKDVL]LQJ WKH N+] UHJLRQ DQG VOLJKWO\ GDPSLQJ WKH EDVV
&DVHVWXG\OHDNWROHUDQWHDUSLHFH
UHJLRQ$PHDVXUHPHQWRI WKH UHVSRQVHGRQH WKURXJK WKHZKROH WUDQVPLVVLRQSDWKXVLQJDUWLILFLDOVSHHFKLVVKRZQEHORZ,WVKRXOGEHQRWHGWKDWWKLVPHDVXUHPHQWGRHVQRWFRUUHVSRQGWRW\SHDSSURYDOVSHFLILFDWLRQV LQZKLFKD'$, GLJLWDODXGLRLQWHUIDFH LVXVHGWRE\SDVV WKHVSHHFKFRGLQJ7KH UHVSRQVH WKXVPHDVXUHGZRXOGEHYHU\VLPLODU WR WKHRQHVKRZQKHUHKRZHYHU
)LJXUH5HFHLYLQJIUHTXHQF\UHVSRQVHRID1RNLDSKRQHPHDVXUHGXVLQJDUWLILFLDOVSHHFKWKURXJKWKHHQWLUH WUDQVPLVVLRQSDWK QRW WKURXJKD'$,DV LQ W\SHDSSURYDOPHDVXUHPHQWV
$V VHHQ DERYH LWZDV QR SUREOHP WR JHW D JRRGORRNLQJ IUHTXHQF\ UHVSRQVH XVLQJ'63HTXDOL]DWLRQ7KHSKRQHSDVVHGW\SHDSSURYDODVLQWHQGHG
1RZDWWKHHQGRIWKLVDQDO\VLVWKHSHUIRUPDQFHRIWKHHDUSLHFHFDQEHFRPSDUHGWRWKDWRIWKH1RNLDHDUSLHFHZKRVHUHVSRQVHDQGOHDNWROHUDQFHZDVVKRZQDWWKHEHJLQQLQJRIWKLVFKDSWHU7KLVSURYLGHVDSLFWXUHRIWKHLPSURYHPHQW&RPSDULQJILJV DQG DW HJ +] RQH FDQ VHH WKDW WKH GLIIHUHQFH EHWZHHQ VHDOHG DQG OHDNLQJ*HUPDQOHDNFRQGLWLRQVDSSHDUVDVDG%GURSLQWKHZKLOHWKHGURSLQWKHLVMXVWG%7KHQHWUHVXOWLVD − = G%ORXGHURXWSXWRIWKLVIUHTXHQF\FRPSDUHGWRKLJKIUHTXHQFLHVZKLFKDUHQRWVHQVLWLYHWROHDNVRIWKLVVL]HDFFRUGLQJWRWKHVDPHPHDVXUHPHQWUHVXOWVLHDVLJQLILFDQWLPSURYHPHQWLQWKHEDVVUHVSRQVHDVH[SHULHQFHGE\WKHSKRQHXVHU,WVKRXOGEHUHPHPEHUHGDJDLQWKDWWKHVKDSHVRIWKH´VHDOHG´UHVSRQVHVGRQRWPDWWHU LQ WKLV OHDN WROHUDQFH FRPSDULVRQ EHFDXVH WKH\ DUH IODWWHQHG DQ\ZD\ XVLQJ '63HTXDOL]DWLRQ LW LVRQO\ WKH UHODWLYHGLIIHUHQFHEHWZHHQVHDOHGDQG OHDNLQJFRQGLWLRQV WKDWPDWWHUV
6RPHILQHWXQLQJRIWKH'63HTXDOL]DWLRQZDVGRQHWRJHWDJRRGVRXQGLQJUHVSRQVHZLWKLQWKHW\SHDSSURYDOOLPLWV$OOLQDOOWKHHDUSLHFHKDVSURYHQWREHDVXFFHVVIXOGHVLJQDFFRUGLQJWRRSLQLRQVVWDWHGE\HQGXVHUVDQGWHVWHUVLQPDJD]LQHUHYLHZV7KHVDPHEDVLFVROXWLRQ KDV EHHQ XVHG LQ 1RNLD VXFFHVVRUV EHORQJLQJ WR WKH VDPH JHQHUDWLRQ RISURGXFWVHJ1RNLD
&RQFOXVLRQV
&RQFOXVLRQV
7KLVWKHVLVKDVGHVFULEHGWKHGHYHORSPHQWRIDQHZDFRXVWLFDOVROXWLRQIRUDOHDNWROHUDQWHDUSLHFHLQD1RNLDPRELOHSKRQHDVDQH[DPSOHRIDQLQWHUHVWLQJDQGFKDOOHQJLQJGHVLJQWDVN$XVHIXOVHWRIVLPXODWLRQPRGHOVZDVGHYHORSHGWRDLGLQWKLVZRUN5HOHYDQWEDFNJURXQG WKHRU\ KDV EHHQ LQWURGXFHG DQG GRFXPHQWDWLRQ SURYLGHG WR PDNH LW SRVVLEOH WRXQGHUVWDQG WKH XVDJH DQG OLPLWDWLRQV RI WKH VLPXODWLRQPRGHOV$ IHZ LPSRUWDQWPRGHOVZHUHGHULYHGIURPUHVXOWVLQWKHOLWHUDWXUHWKDWKDYHQRW\HWEHHQSUHVHQWHGLQDPRUHJHQHUDOZD\²QDPHO\ WKH LPSHGDQFHVRIYHU\VPDOOFLUFXODUDQGUHFWDQJXODURSHQLQJVDQGUDGLDWRUV DQGHVSHFLDOO\ WKH IUHTXHQF\GHSHQGHQFHRI WKHVH$FRXSOHRI VSHFLDO FKRLFHVZHUHPDGHWRPDNHWKHVLPXODWLRQWRROVPRUHIOH[LEOHHJWKHLQFOXVLRQRIDIRXUWKGRPDLQLQDGGLWLRQWRWKHXVXDO WKUHHDQGWKHFKRLFHWRXVHGLIIHUHQWDQDORJLHVLQWKHPHFKDQLFDOGRPDLQ WKDQ LQ WKH RWKHU WKUHH GRPDLQV 7KH FRPSOHWHPRGHO FROOHFWLRQ KDV FDSDELOLWLHVWKDWDFWXDOO\JRTXLWHIDUEH\RQGZKDWZDVQHHGHGLQWKHGHVLJQGHVFULEHGLQWKLVWKHVLV
7KHSUDFWLFDODVSHFWVRIPRELOHSKRQHDXGLRDFRXVWLFVGHVLJQKDYHEHHQRYHUYLHZHGWR SURYLGH D SLFWXUH RI WKH DGYDQWDJHV DQG GLVDGYDQWDJHV RI VLPXODWLRQZKHQ DSSOLHG WRVXFKGHVLJQDQGWRH[SODLQFKRLFHVPDGHLQWKH1RNLDSURGXFWZKRVHHDUSLHFHVROXWLRQKDVEHHQDQDO\]HG6LPXODWLRQSURYHGWREHSRZHUIXOLQWKHGHVLJQSURFHVVDQGWKHGHVLJQHGHDUSLHFHLWVHOISURYHGWREHDFOHDULPSURYHPHQWFRPSDUHGWRWKRVHXVHGLQHDUOLHUSKRQHJHQHUDWLRQV
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
5HIHUHQFHV
5HIHUHQFHV
7XWWOHEHH:+:&RUGOHVV WHOHFRPPXQLFDWLRQV LQ(XURSH/RQGRQ8.6SULQJHU9HUODJ
&KDUL1&+HUPDQ*'DQKDXHU-/3HUFHSWLRQRIRQHWKLUGRFWDYHEDQGILOWHUHGVSHHFK-$FRXVW6RF$PYRO5HILQ>@
'LJLWDO FHOOXODU WHOHFRPPXQLFDWLRQV V\VWHP SKDVH PRELOH VWDWLRQ 06 FRQIRUPDQFHVSHFLILFDWLRQ*60YHUVLRQFKDSWHU5HFHLYLQJVHQVLWLYLW\IUHTXHQF\UHVSRQVH(76,
&URFNHU0- HGLWRU(QF\FORSHGLDRIDFRXVWLFVYRO1HZ<RUN86$-RKQ:LOH\6RQV,QF
%HQVRQ.%HGLWRU$XGLRHQJLQHHULQJKDQGERRN86$0F*UDZ+LOO
%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOO
$SODFXVHU¶VPDQXDO.DULVWR2\
%DXHU%%(TXLYDOHQW FLUFXLW DQDO\VLV RIPHFKDQRDFRXVWLF VWUXFWXUHV -$XGLR(QJ6RFYROQR
0LFUR&DS9XVHU¶VJXLGH6SHFWUXP6RIWZDUH
0LFUR&DS9UHIHUHQFHPDQXDO6SHFWUXP6RIWZDUH
%DFNPDQ-'LVWRUWLRQIURPERXQGDU\OD\HUVGUDIW
3URGXFWGDWDHDUVLPXODWRUIRUWHOHSKRQRPHWU\W\SH%UHO.M U1 UXP'HQPDUN
3URGXFW GDWD ZLGHEDQG HDU VLPXODWRU IRU WHOHSKRQRPHWU\ W\SH %UHO .M U1 UXP'HQPDUN
2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QF
1ROOH$:6PDOOVLJQDOLPSHGDQFHRIVKRUW WXEHV-$FRXVW6RF$PYROQR
%RUZLFN - HGLWRU/RXGVSHDNHU DQG KHDGSKRQH KDQGERRN QG HGLWLRQ2[IRUG8.)RFDO3UHVV
,QJDUG.82QWKHWKHRU\DQGGHVLJQRIDFRXVWLFUHVRQDWRUV-$FRXVW6RF$PYROQR
.LQVOHU/()UH\$5)XQGDPHQWDOVRIDFRXVWLFV0RQWHUH\&DOLI86$-RKQ:LOH\6RQV,QF
5HIHUHQFHV
6PDOO5+'LUHFWUDGLDWRU ORXGVSHDNHUV\VWHPDQDO\VLV-$XGLR(QJ6RFYROQR
:WWNH-0LFURSKRQHVDQGZLQG-$XGLR(QJ6RFYROQR
3ROG\ & $ (OHFWULFDO DQDORJV IRU PHPEUDQHV ZLWK DSSOLFDWLRQ WR HDUSKRQHV -$XGLR(QJ6RFYROQR
'DWDVKHHWQRIRUHDUSLHFHFDSVXOHW\SH:'3KLOLSV6SHDNHU6\VWHPV9LHQQD$XVWULD
'DWD VKHHWQR IRU HDUSLHFH FDSVXOH W\SH:'3KLOLSV6SHDNHU6\VWHPV9LHQQD$XVWULD
6WLQVRQ056KDZ($*$FRXVWLFLPSHGDQFHRIVPDOOFLUFXODURULILFHVLQWKLQSODWHV-$FRXVW6RF$PYROQR
&UDQGDOO,%7KHRU\RIYLEUDWLQJV\VWHPVDQGVRXQG1HZ<RUN86$9DQ1RVWUDQG5HILQ>@
,QJDUG .81RWHV RQ VRXQG DEVRUSWLRQ WHFKQRORJ\86$ 1RLVH &RQWURO)RXQGDWLRQ
3ULWFKDUG5 /0XWXDO DFRXVWLF LPSHGDQFH EHWZHHQ UDGLDWRUV LQ DQ LQILQLWH ULJLGSODQH-$FRXVW6RF$PYRO5HILQ>@
-DFREVHQ26RPHDVSHFWVRIWKHVHOIDQGPXWXDOUDGLDWLRQLPSHGDQFHFRQFHSWZLWKUHVSHFWWRORXGVSHDNHUV-$XGLR(QJ6RFYROQR
0RUVH 30 ,QJDUG . 8 7KHRUHWLFDO DFRXVWLFV 3ULQFHWRQ 1HZ -HUVH\ 86$3ULQFHWRQ8QLYHUVLW\3UHVV
%DQN*:ULJKW-55DGLDWLRQLPSHGDQFHFDOFXODWLRQVIRUDUHFWDQJXODUSLVWRQ-$XGLR(QJ6RFYROQR
.UH\V]LJ($GYDQFHGHQJLQHHULQJPDWKHPDWLFV-RKQ:LOH\6RQV,QF
/HDFK:0-U2QWKHHOHFWURDFRXVWLFDQDORJRXVFLUFXLWIRUDSODQHZDYHLQFLGHQWRQWKHGLDSKUDJPRIDIUHHILHOGSUHVVXUHPLFURSKRQH-$XGLR(QJ6RFYROQR
%UDGEXU\/-67KHXVHRIILEURXVPDWHULDOVLQORXGVSHDNHUHQFORVXUHV-$XGLR(QJ6RFYROQR
/HDFK : 0 (OHFWURDFRXVWLFDQDORJRXV FLUFXLW PRGHOV IRU ILOOHG HQFORVXUHV -$XGLR(QJ6RFYROQR
0RUVH309LEUDWLRQDQGVRXQGQGHGLWLRQ1HZ<RUN86$0F*UDZ+LOO5HILQ>@
6X]XNL+0XWXDOUDGLDWLRQLPSHGDQFHRIDGRXEOHGLVNVRXUFHDQGLWVHIIHFWRQWKHUDGLDWHGSRZHU-$XGLR(QJ6RFYROQR
7RLYDQHQ-7HNQLOOLQHQDNXVWLLNND(VSRR)LQODQG2WDWLHWR2\
5HIHUHQFHV
7KXUVWRQ * % 0DUWLQ & ( 3HULRGLF IOXLG IORZ WKURXJK FLUFXODU RULILFHV -$FRXVW6RF$PYRO
7KXUVWRQ*%3HULRGLFIOXLGIORZWKURXJKFLUFXODUWXEHV-$FRXVW6RF$PYRO5HILQ>@
5RVVLQJ7'7KHVFLHQFHRIVRXQGQGHGLWLRQ86$$GGLVRQ:HVOH\
$SSHQGL[,:DYHOHQJWKVDQGGLPHQVLRQV,
$SSHQGL[, :DYHOHQJWKV DQGGLPHQVLRQV
7DEOH , $SSUR[LPDWH SK\VLFDO GLPHQVLRQ FRUUHVSRQGLQJ WR D SKDVH VKLIW RI π DV DIXQFWLRQRIVRXQGIUHTXHQF\IRUVRXQGZDYHVLQDLUDWURRPWHPSHUDWXUH7KLVLVDNLQGRIURXJKHVWLPDWHRIWKHJUHDWHVWGLPHQVLRQDOORZHGLQOXPSHGPRGHOOLQJLIDFFXUDWHUHVXOWVDUHZDQWHG
)UHTXHQF\ 'LPHQVLRQDSSUR[+] FP+] FP+] FP+] FP+] FPN+] FPN+] FPN+] FPN+] PP
7DEOH,$SSUR[LPDWHIUHTXHQF\FRUUHVSRQGLQJWRDZDYHOHQJWKRIKDOIWKHSHULPHWHURIDUDGLDWRUDVDIXQFWLRQRIWKHSHULPHWHU7KLVLVDURXJKHVWLPDWHRI WKHKLJKHVW IUHTXHQF\EHORZZKLFKDUDGLDWRUFDQEHFRQVLGHUHGRPQLGLUHFWLRQDO
3HULPHWHU )UHTXHQF\DSSUR[FP N+]FP N+]FP N+]FP N+]FP N+]FP N+]
$SSHQGL[,,$QDORJRXVTXDQWLWLHV,,
$SSHQGL[,, $QDORJRXV TXDQWLWLHV
4XDQWLWLHVDQGXQLWV
7DEOH,,6XPPDU\RIDQDORJRXVTXDQWLWLHVDQGXQLWVLQWKH6,DQGFJVV\VWHPV6RPHOHVVFRPPRQDQGRUXQQDPHGTXDQWLWLHVDUHOHIWRXW
(OHFWULFDO 0HFKDQLFDOGRPDLQ $FRXVWLFDOGRPDLQ 5DGLDWLRQGRPDLQ6,XQLWV &JVXQLWV 6,XQLWV &JVXQLWV 6,XQLWV &JVXQLWV
9ROWDJHX 9HORFLW\Y 3UHVVXUHS 3UHVVXUHSYROW9 PV FPV SDVFDO3D PLFUREDU
µEDUSDVFDO3D PLFUREDU
µEDU&XUUHQWL )RUFH) 9ROXPHYHORFLW\T 3DUWLFOHYHORFLW\YDPSHUH$ QHZWRQ
1G\QHG\Q PV FPV PV FPV
&KDUJHT ,PSXOVH, 9ROXPH9 3DUWLFOHGLVSODFHPHQW[FRXORPE& 1V G\QV P FP P FP0DJQHWLFIOX[
Φ'LVSODFHPHQW[
ZHEHU:E PHWHUP FHQWLPHWHUFP
,PSHGDQFH= 0HFKDQLFDODGPLWWDQFH<P
$FRXVWLFLPSHGDQFH=D
6SHFLILFDFRXVWLFLPSHGDQFH=DV
RKPΩ P1V FPG\QV 3DVP µEDUVFP 3DVP µEDUVFP$GPLWWDQFH< 0HFKDQLFDOLPSHGDQFH
=P
$FRXVWLFDGPLWWDQFH=D
PKR 1VP G\QVFP P3DV FPµEDUV5HVLVWDQFH5 0HFKDQLFDOFRQGXF
WDQFHUHVSRQVLYHQHVV*P
$FRXVWLFUHVLVWDQFH 5D
RKPΩ P1V FPG\QV 3DVP µEDUVFP
&RQGXFWDQFH* 0HFKDQLFDOUHVLVWDQFH5P
$FRXVWLFFRQGXFWDQFH*D
PKR 1VP G\QVFP P3DV FPµEDUV,QGXFWDQFH/ 0HFKDQLFDOFDSDFL
WDQFHFRPSOLDQFH&P
$FRXVWLFLQGXFWDQFHLQHUWDQFH /D
KHQU\+ P1 FPG\Q NJP JFP
&DSDFLWDQFH& 0HFKDQLFDOLQGXFWDQFH/P PDVVP
$FRXVWLFFDSDFLWDQFH&D
IDUDG) NLORJUDP JUDPJ P3D FPµEDU
$SSHQGL[,,$QDORJRXVTXDQWLWLHV,,
NJ(QHUJ\( (QHUJ\( (QHUJ\(MRXOH- MRXOH- HUJHUJ MRXOH- HUJHUJ3RZHU3 3RZHU3 3RZHU3 ,QWHQVLW\,ZDWW: ZDWW: HUJV ZDWW: HUJV :P HUJPV
&RQYHUVLRQIDFWRUV
7DEOH ,,&RQYHUVLRQ IDFWRUV IRU6,DQGFJVXQLWVDQGYDULRXVTXDQWLWLHV7RFRQYHUW DYDOXHLQRQHV\VWHPWRWKHRWKHUWKHYDOXHKDVWREHVFDOHGE\WKHIDFWRULQWKHFRUUHVSRQGLQJFROXPQ
4XDQWLW\ 6,→FJV &JV→6,
)RUFH
9HORFLW\ 'LVSODFHPHQW ,PSXOVH
0HFKDQLFDOLPSHGDQFH
0HFKDQLFDODGPLWWDQFH
0HFKDQLFDOUHVLVWDQFH
0HFKDQLFDOFRQGXFWDQFHUHVSRQVLYHQHVV
0HFKDQLFDOLQGXFWDQFHPDVV
0HFKDQLFDOFDSDFLWDQFHFRPSOLDQFH
3UHVVXUH 9ROXPHYHORFLW\
9ROXPH
$FRXVWLFLPSHGDQFH
$FRXVWLFUHVLVWDQFH
$FRXVWLFLQGXFWDQFHLQHUWDQFH
$FRXVWLFFDSDFLWDQFH
3RZHU
(QHUJ\
$SSHQGL[,,,'HULYDWLRQV,,,
$SSHQGL[,,, 'HULYDWLRQV
+ROHV
&LUFXODUKROH
7KHUHOHYDQWSDUDPHWHUVRIRQHKROHDUHGGLDPHWHUDQGOSK\VLFDOOHQJWKLQIORZGLUHFWLRQ%\DVVXPSWLRQG O << λ )URP>@WKHDFRXVWLFLPSHGDQFHFDQEHZULWWHQDV
( )( )= M
- N G
- N G
O
GDF
F
= − ⋅
ρ ωπ
,,,
ZLWKWKHFRHIILFLHQW
NM
WFY
= −,,,
ZKHUH WY LVWKHYLVFRXVERXQGDU\OD\HUWKLFNQHVV
WIY = µ
ρ π,,,
DQG - DQG - DUHWKH%HVVHOIXQFWLRQVRIWKHILUVWNLQGRIRUGHUDQG$VWKH0LFUR&DSVLPXODWRUFDQQRWKDQGOH%HVVHO IXQFWLRQV WKH ILUVW IDFWRU LQHT ,,,PXVWEHH[SUHVVHGXVLQJRWKHUPDWKHPDWLFDO IXQFWLRQVDYDLODEOH LQ WKHVLPXODWRU7KHDFRXVWLF LPSHGDQFH LVFRPSOH[ ZLWK D SRVLWLYH LPDJLQDU\ SDUW LH LW FRUUHVSRQGV WR DQ 5/ VHULHV LPSHGDQFH7KHUHDUHOLPLWLQJYDOXHVIRUERWKWKHUHVLVWDQFHDQGWKHLQGXFWDQFHLQWKHH[WUHPHORZDQGKLJKIUHTXHQF\UHJLRQVDQGEHWZHHQWKHVHWKHUHDUHWUDQVLWLRQUHJLRQV
5O
G
5O
GI
D I
D I
→
→∞
=
=
µπ
πµρ π
,,,
DQG
/O
G
/O
G
D I
D I
→
→∞
=
=
ρπ
ρπ
,,,
,W FDQ DOVR EH REVHUYHG WKDW LQ PDQ\ FDVHV WKH WUDQVLWLRQ UHJLRQ LQ ZKLFK WKH YLVFRXVERXQGDU\OD\HUWKLFNQHVVDQGWKHKROHGLDPHWHUDUHFRPSDUDEOHZLOO WHQGWRRFFXU LQVLGHWKHW\SLFDODXGLRWUDQVPLVVLRQIUHTXHQF\UDQJHRIPRELOHSKRQHV)RUWKLVUHDVRQPRGHOOLQJRI WKH WUDQVLWLRQ LV LPSRUWDQW3RO\QRPLDO DSSUR[LPDWLRQVRI WKH ILUVW IDFWRU LQ HT ,,,
$SSHQGL[,,,'HULYDWLRQV,,,
ZHUH IRXQGXVLQJRSWLPL]DWLRQDOJRULWKPVRI WKH$3/$& FLUFXLW VLPXODWRU GHYHORSHGE\+HOVLQNL8QLYHUVLW\RI7HFKQRORJ\1RNLD5HVHDUFK&HQWHUDQG5ROI1HYDQOLQQD,QVWLWXWHWRJHWKHUZLWK0DWKFDGIRU:LQGRZV
( )( )5H −
≈ + +M
- [
- [ [[ [
,,,
DQG
( )( ),P −
≈ − + +
− + +M- [
- [[ [ [
[ [ [
,,,
ZLWK
[ N GF= ,,,
DQGDFFXUDWH WRZLWKLQ DERXW± UHDOSDUW DQG± LPDJLQDU\SDUW DSSURDFKLQJFRUUHFWYDOXHVDV\PSWRWLFDOO\LQWKHORZDQGKLJKIUHTXHQF\OLPLWV
$VVXPLQJQRZWKDWWKHUHLVDQDUUD\RILGHQWLFDOKROHVLQSDUDOOHOZLWKQDVWKHQXPEHU RI KROHV LW LV SRVVLEOH WRZULWH WKH ILQDO H[SUHVVLRQV IRU WKH DFRXVWLF UHVLVWDQFH DQGLQGXFWDQFHRIWKHKROHVXVLQJHTV,,,,,,DQG,,,,,,
5I O [ [
QG [D =+ +
ρ,,,
DQG
/[ [ [
[ [ [
O
Q GD = − + +− + +
ρπ
,,,
ZKHUH
[G
WY=
,,,
5HFWDQJXODUKROH
7KHFDVHRIDUHFWDQJXODUKROHLVTXLWHVLPLODUWRWKHFLUFXODUKROHH[FHSWIRUWKHGLDPHWHUEHLQJ H[FKDQJHG E\ WKH SDUDPHWHUVZ ZLGWK DQG K KHLJKW $JDLQ LW LV DVVXPHG WKDWZ K O << λ $QH[SUHVVLRQIRUWKHLPSHGDQFHRIDQLQILQLWHO\ZLGHFKDQQHOFRQVLVWLQJRIWZRSDUDOOHOSODQHVRQHDERYHWKHRWKHUZLWKDVSDFLQJKLVDYDLODEOHLQWKHOLWHUDWXUH>S@
$=M O
N K
N K
DU
U
= −−
ωρ
WDQ
,,,
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
$SSHQGL[,9 0LFUR&DS VLPXODWLRQPDFURV
&RQVWDQWDQGIXQFWLRQGHILQLWLRQV
&2167'()7;7'(),1,7,2162)&2167$176DVVXPLQJDVWDWLFSUHVVXUHRIDWPDQGDWHPSHUDWXUHRI&
'(),1(SN6WDWLFSUHVVXUHRIDWPRVSKHUH'(),1(F6RXQGSURSDJDWLRQYHORFLW\'(),1(UKR$LUGHQVLW\'(),1(PX(&RHIILFLHQWRIYLVFRVLW\'(),1(=FDLU&KDUDFWHULVWLFDFRXVWLFLPSHGDQFHRIDLU'(),1(3DLU3UDQGWOQXPEHURIDLU
'(),1(.DLUUKR F $LUFRPSUHVVLELOLW\
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS,QJDUG.81RWHVRQVRXQGDEVRUSWLRQWHFKQRORJ\86$1RLVH&RQWURO)RXQGDWLRQS
78%('()7;7)81&7,216)2578%($1'$,5/2$'02'(/6
3RO\QRPLDODSSUR[LPDWLRQVIRXQGE\QXPHULFDORSWLPL]DWLRQ
%RXQGDU\OD\HUWKLFNQHVVHV'(),1(WY6457PXUKR SL I9LVFRXVERXQGDU\OD\HU'(),1(WKWY64573DLU7KHUPDOERXQGDU\OD\HU
)XQFWLRQVIRUGLPHQVLRQVYVERXQGDU\OD\HUV'(),1(GU[[ WY'(),1(GF[[6457 WY
)XQFWLRQVIRUFLUFXODUWXEHV'(),1(57U&[ [ [ [ 5HVLVWDQFHWUDQVLWLRQ'(),1(/7U&[ [ [ [ [ [ [ ,QGXFWDQFHWUDQVLWLRQ'(),1(5&LUF+ROHGOQ I UKR OQ G 57U&GFG5HVLVWDQFH'(),1(/&LUF+ROHGOQ UKR OQ SL G /7U&GFG,QGXFWDQFH
)XQFWLRQVIRUUHFWDQJXODUWXEHV'(),1(57U5[ [ [ [ 5HVLVWDQFHWUDQVLWLRQ'(),1(/7U5[ [ [ [ [ [ [ ,QGXFWDQFHWUDQVLWLRQ'(),1(55HFW+ROHZKOQ SL UKR O IQ Z K 57U5GUZ57U5GUK5HVLVWDQFH'(),1(/5HFW+ROHZKOQUKR OQ Z K /7U5GUZ /7U5GUK,QGXFWDQFH
5()(5(1&(66WLQVRQ056KDZ($*$FRXVWLFLPSHGDQFHRIVPDOOFLUFXODURULILFHVLQWKLQSODWHV-$FRXVW6RF$PYROQR,QJDUG.81RWHVRQVRXQGDEVRUSWLRQWHFKQRORJ\86$1RLVH&RQWURO)RXQGDWLRQSS.UH\V]LJ($GYDQFHGHQJLQHHULQJPDWKHPDWLFV-RKQ:LOH\6RQV,QFS
'()0&86(5'(),1,7,216
'(),1(63/S'%0$*S6457X6RXQGSUHVVXUHOHYHODPSOLWXGHDVDUJXPHQW
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
6KDSHVHOHFWULFDOGHILQLWLRQVDQGGHVFULSWLRQV
,PSHGDQFHV
=P
5P /P &P=D
5D /D &D
)LJXUH ,9 ,GHDO LPSHGDQFH FRPSRQHQWV WRS URZ DFRXVWLFDO LPSHGDQFH UHVLVWDQFHLQGXFWDQFH DQG FDSDFLWDQFH ERWWRP URZ WKH VDPH FRPSRQHQWV LQ WKH PHFKDQLFDO GRPDLQ$OORIWKHVHKDYHWZRSLQVH[FHSWWKHPHFKDQLFDOLQGXFWDQFHPDVVZLWKRQO\RQHSLQWKHRWKHUSLQLVLQWHUQDOO\JURXQGHG
3OXV 0LQXV 3OXV 0LQXV 3OXV 0LQXV
)LJXUH,96RPHRIWKHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQWKHPHFKDQLFDOLQGXFWDQFHQRWVKRZQKHUHKDVLWVSLQDWWKHFHQWHURIWKHILOOHGFLUFOH
YDOXH
=0&,50(&+$1,&$/,03('$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIPHFKDQLFDOLPSHGDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDOPHFKDQLFDOLPSHGDQFH
35,1&,3/(7KHUHFLSURFDORIWKHJLYHQLPSHGDQFHYDOXHLVWDNHQWRSURYLGHWKHQHHGHGDGPLWWDQFHYDOXHIRUWKHDGPLWWDQFHDQDORJ\
YDOXH
50&,50(&+$1,&$/5(6,67$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIPHFKDQLFDOUHVLVWDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDOPHFKDQLFDOUHVLVWDQFH
35,1&,3/(7KHUHFLSURFDORIWKHJLYHQUHVLVWDQFHYDOXHLVWDNHQWRSURYLGHWKHQHHGHGFRQGXFWDQFHYDOXHIRUWKHDGPLWWDQFHDQDORJ\
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
YDOXH
/0&,50(&+$1,&$/,1'8&7$1&(0$66
3$5$0(7(56YDOXH
3LQ
3$5$0(7(5YDOXH YDOXHRIPHFKDQLFDOLQGXFWDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDOPHFKDQLFDOLQGXFWDQFHPDVV
35,1&,3/($PHFKDQLFDOLQGXFWDQFHDSSHDUVDVDFDSDFLWDQFHLQWKHDGPLWWDQFHDQDORJ\2QHWHUPLQDOLVJURXQGHGEHFDXVHWKHLQHUWLDOIUDPHJURXQG]HURYHORFLW\LVWKHUHIHUHQFH
YDOXH
&0&,50(&+$1,&$/&$3$&,7$1&(&203/,$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIPHFKDQLFDOFDSDFLWDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDOPHFKDQLFDOFDSDFLWDQFHFRPSOLDQFH
35,1&,3/($PHFKDQLFDOFDSDFLWDQFHDSSHDUVDVDQLQGXFWDQFHLQWKHDGPLWWDQFHDQDORJ\
YDOXH
=$&,5$&2867,&,03('$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIDFRXVWLFLPSHGDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDODFRXVWLFLPSHGDQFH
YDOXH
5$&,5$&2867,&5(6,67$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIDFRXVWLFUHVLVWDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDODFRXVWLFUHVLVWDQFH
YDOXH
/$&,5$&2867,&,1'8&7$1&(,1(57$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIDFRXVWLFLQGXFWDQFH
86$*(7KLVPDFURLPSOHPHQWVDJHQHUDODFRXVWLFLQGXFWDQFHLQHUWDQFH
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
YDOXH
&$&,5$&2867,&&$3$&,7$1&(
3$5$0(7(56YDOXH
0LQXV3OXV
3$5$0(7(5YDOXH YDOXHRIDFRXVWLFFDSDFLWDQFH
86$*(7KLVLVDJHQHUDODFRXVWLFFDSDFLWDQFHLHQRWVSHFLILFDOO\IRUDFDYLW\LQZKLFKFDVHRQHWHUPLQDOLVJURXQGHG
6RXUFHVWUDQVIRUPLQJWZRSRUWVDQGJURXQGV
)RUFH9HORFLW\
9RO9HO3UHVVXUH ,GHDO7UI
,GHDO*\U
$WP3UHVV
)L[HG3W
)LJXUH ,9 9HORFLW\ IRUFH SUHVVXUH DQG YROXPH YHORFLW\ VRXUFH LPPRYDEOH SRLQW´PHFKDQLFDO JURXQG´ DWPRVSKHULF SUHVVXUH ´DFRXVWLF JURXQG´ LGHDO J\UDWRU DQGWUDQVIRUPHU
9FWUO
3OXV
0LQXV
9FWUO
3OXV
0LQXV
9FWUO
3OXV
0LQXV
9FWUO
3OXV
0LQXV
3OXV
0LQXV
3OXV
0LQXV
3OXV
0LQXV
3OXV
0LQXV
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQWKHWZRJURXQGVKDYHMXVWRQHSLQ
0LQXV
3OXV9FWUO
9(/2&,7<&,59(/2&,7<6285&(92/7$*(&21752//('
3$5$0(7(56
3,169FWUOYROWDJHFRQWUROLQSXW3OXV0LQXVRXWSXWRIYHORFLW\
86$*(7KLVPDFURFDQEHFRQWUROOHGE\DQ\DYDLODEOH0LFUR&DSYROWDJHVRXUFHRUFLUFXLWYROWDJHWRSURGXFHDYHORFLW\LQWKHPHFKDQLFDOGRPDLQ7KHYHORFLW\LVRXWSXWDVDYROWDJHLQWKHPHFKDQLFDOGRPDLQDGPLWWDQFHDQDORJ\
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
)25&(&,5)25&(6285&(92/7$*(&21752//('
0LQXV
3OXV
9FWUO
3$5$0(7(56
3,169FWUOYROWDJHFRQWUROLQSXW3OXV0LQXVRXWSXWRIIRUFHDSRVLWLYHIRUFHLVDFURVVWKHORDGIURP0LQXVWR3OXV
86$*(7KLVPDFURFDQEHFRQWUROOHGE\DQ\DYDLODEOH0LFUR&DSYROWDJHVRXUFHRUFLUFXLWYROWDJHWRSURGXFHDIRUFHLQWKHPHFKDQLFDOGRPDLQ7KHIRUFHLVRXWSXWDVDFXUUHQWLQWKHPHFKDQLFDOGRPDLQDGPLWWDQFHDQDORJ\
35(6685(&,535(6685(6285&(92/7$*(&21752//('
0LQXV
3OXV9FWUO
3$5$0(7(56
3,169FWUOYROWDJHFRQWUROLQSXW3OXV0LQXVRXWSXWRISUHVVXUH
86$*(7KLVPDFURFDQEHFRQWUROOHGE\DQ\DYDLODEOH0LFUR&DSYROWDJHVRXUFHRUFLUFXLWYROWDJHWRSURGXFHDSUHVVXUHLQWKHDFRXVWLFDOGRPDLQ7KHSUHVVXUHLVRXWSXWDVDYROWDJHLQWKHDFRXVWLFDOGRPDLQLPSHGDQFHDQDORJ\
0LQXV
3OXV
9FWUO
92/9(/&,592/80(9(/2&,7<6285&(92/7$*(
&21752//('
3$5$0(7(56
3,169FWUOYROWDJHFRQWUROLQSXW3OXV0LQXVRXWSXWRIYROXPHYHORFLW\DSRVLWLYHYROXPHYHORFLW\LVWKURXJKWKHORDGIURP0LQXVWR3OXV
86$*(7KLVPDFURFDQEHFRQWUROOHGE\DQ\DYDLODEOH0LFUR&DSYROWDJHVRXUFHRUFLUFXLWYROWDJHWRSURGXFHDYROXPHYHORFLW\LQWKHDFRXVWLFDOGRPDLQ7KHYROXPHYHORFLW\LVRXWSXWDVDFXUUHQWLQWKHDFRXVWLFDOGRPDLQLPSHGDQFHDQDORJ\
N
N
,'($/75)&,5,'($/75$16)250(5
0LQXV0LQXV
3OXV3OXV
3$5$0(7(56N
3$5$0(7(5N YROWDJHUDWLRWXUQVUDWLRVHFRQGDU\SULPDU\
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
J
J
,'($/*<5&,5*<5$725
0LQXV0LQXV
3OXV3OXV
3$5$0(7(56J
3$5$0(7(5J WUDQVFRQGXFWDQFH
3K\VLFDOVWUXFWXUHV
&DYLW\/V&DYLW\
&LU+ROH 5FW+ROH
+HOPK5HV
&LU'XFW 5FW'XFW
0HPEUQ 0HPEUQ
)LJXUH,9/RVVIUHHDQGGDPSHGDLUFDYLW\+HOPKROW]UHVRQDWRUPHPEUDQHVFLUFXODUDQGUHFWDQJXODUKROHFLUFXODUDQGUHFWDQJXODUGXFW
3LQ 3LQ
3LQ
3LQ
3LQ 3LQ
3LQ 3LQ
3LQ
3LQ
3LQ
3LQ
3LQ
3RUW
3LQ 3LQ
3LQ 3LQ
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ7KHSLQVRIWKHFDYLW\FRPSRQHQWVDUHLQIDFWRQHDQGWKHVDPHVHSDUDWHSLQVLVMXVWDIHDWXUHWRPDNHVFKHPDWLFVORRNEHWWHULQWKHFRPPRQFDVHRIPDQ\HQWUDQFHVWRRQHVLQJOHFDYLW\7KHVDPHJRHVIRUWKHOHIWPRVWSLQVRIWKH+HOPKROW]UHVRQDWRU
(&FDY
&$9,7<&,5$,5&$9,7<:$9(/(1*7+
,1&/8'(&2167'()7;7
'(),1(&FDY.DLU YRO
3$5$0(7(56YRO
3LQ 3LQ
3LQ 3LQ
3$5$0(7(5YRO FDYLW\DLUYROXPH
3,163LQ3LQHQWUDQFHVWRFDYLW\
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
86$*(7KLVPDFURFDQEHXVHGWRPRGHODORVVOHVVFDYLW\ZKRVHGLPHQVLRQVDUHFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWK
/,0,7$7,2161RORVVHVDUHLQFOXGHG,IWKHPDFURLVXVHGWRPRGHODFDYLW\QRWVPDOOHUWKDQWKHZDYHOHQJWKDFFXUDF\LVORVWEHFDXVHUHIOHFWLRQVDQGVWDQGLQJZDYHVLQVLGHWKHFDYLW\DUHQHJOHFWHG$GLDEDWLFFRQGLWLRQVDUHDVVXPHGQRDSSUHFLDEOHKHDWGLIIXVLRQLHWKHUPDOERXQGDU\OD\HUWKLFNQHVVFRQVLGHUDEO\VPDOOHUWKDQFDYLW\GLPHQVLRQV
35,1&,3/(7KHFRPSUHVVLRQRIDLULQWKHFDYLW\DSSHDUVDVDQDFRXVWLFFDSDFLWDQFH2QHSLQLVJURXQGHGEHFDXVHVWDWLFDWPRVSKHULFSUHVVXUHLVWKHUHIHUHQFH7KHRSSRVLWHUHVLVWRUSDLUVDUHXVHGPHUHO\WRSUHYHQWDQHUURUUHVXOWLQJIURPVKRUWLQJGLIIHUHQWSLQVWRJHWKHU7KHSLQVLQVWHDGRIVLQJOHSLQDUHMXVWDFRQYHQLHQWIHDWXUHZKHQGUDZLQJVFKHPDWLFV
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS
5ILOO
5OHDN
&FDY
&$9,7</6&,5$,5&$9,7<:$9(/(1*7+:,7+/266(6
,1&/8'(&2167'()7;7
'(),1(&FDY YROFI &FDY
3$5$0(7(56YROYROFI7ILOO7OHDN
'(),1(5ILOO7ILOO&FDY
'(),1(5OHDN7OHDN&FDY
'(),1(&FDY.DLU YRO
3LQ 3LQ
3LQ 3LQ
3$5$0(7(56YRO FDYLW\DLUYROXPHYROFI YROXPHLQFUHDVHIDFWRU YROFI 7ILOO WLPHFRQVWDQWFRQVLGHULQJILOOLQJRQO\7OHDN WLPHFRQVWDQWFRQVLGHULQJOHDNVRQO\
3,163LQ3LQHQWUDQFHVWRFDYLW\
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
/,0,7$7,216,IWKHPDFURLVXVHGWRPRGHODFDYLW\QRWVPDOOHUWKDQWKHZDYHOHQJWKDFFXUDF\LVORVWEHFDXVHSRVVLEOHUHIOHFWLRQVDQGVWDQGLQJZDYHVLQVLGHWKHFDYLW\DUHQHJOHFWHG7KHUHLVQRVLPSOHZD\RIFDOFXODWLQJWKHYROFI7ILOODQG7OHDNSDUDPHWHUVIRUDQ\JHQHUDOFDVH,QVWHDGWKHVHSDUDPHWHUVDUHEHWWHUGHWHUPLQHGE\H[SHULPHQWV7ILOODQG7OHDNFDQQRWEHJLYHQ]HURRULQILQLWHYDOXHVEXWYHU\VPDOORUYHU\ODUJHYDOXHVFDQEHXVHGLQVWHDG7KHPRGHODVVXPHVWKDWWKHOHDNVDQGILOOLQJFDQEHDSSUR[LPDWHGE\SXUHO\UHVLVWLYHFRPSRQHQWVZKLFKLVQRWWUXHLQDOOFDVHV
35,1&,3/(,WLVDVVXPHGWKDWWKHORVVHVLQWKHFDYLW\FDQEHFKDUDFWHUL]HGDFFXUDWHO\HQRXJKXVLQJWZRUHVLVWDQFHVRQHLQVHULHVDQGRQHLQSDUDOOHOZLWKWKHDFRXVWLFFDSDFLWDQFHIRUPHGE\WKHFDYLW\7KHDSSDUHQWLQFUHDVHLQYROXPHGXHWRWKHUPRG\QDPLFHIIHFWVRIWKHILOOLQJLVPRGHOOHGDVDFRUUHVSRQGLQJLQFUHDVHLQWKHDFRXVWLFFDSDFLWDQFHYDOXH7KHVHULHVUHVLVWDQFHPRGHOVWKHORVVHVGXHWRWKHILOOLQJDQGWKHSDUDOOHOUHVLVWDQFHUHSUHVHQWVWKHOHDNV)RUPRUHGHWDLOVVHHWKHGHVFULSWLRQRIWKH&DYLW\PDFUR
5()(5(1&(6/HDFK:0(OHFWURDFRXVWLFDQDORJRXVFLUFXLWPRGHOVIRUILOOHGHQFORVXUHV-$XGLR(QJ6RFYROQR%UDGEXU\/-67KHXVHRIILEURXVPDWHULDOVLQORXGVSHDNHUHQFORVXUHV-$XGLR(QJ6RFYROQR%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5K /K
(
&K
+(/0+5(6&,5+(/0+2/7=5(621$725
,1&/8'(&2167'()7;7
'(),1(&K.DLU YRO
3$5$0(7(56YROIUHV4
3LQ
3LQ
3LQ
3RUW
'(),1(/K SL IUHV &K
'(),1(5K SL IUHV /K4
3$5$0(7(56YRO YROXPHRIFDYLW\IUHV UHVRQDQFHIUHTXHQF\4 4YDOXHTXDOLW\IDFWRU
3,163LQ3LQHQWUDQFHVWRWKHUHVRQDWRUFDYLW\3RUWUHVRQDWRUSRUW
86$*(7KLVPDFURLVXVDEOHZKHQPRGHOOLQJD+HOPKROW]UHVRQDWRUZLWKJLYHQUHVRQDQFHIUHTXHQF\DQGTXDOLW\IDFWRU7KHYROXPHQHHGVWREHJLYHQWRGHWHUPLQHXQLTXHFRPSRQHQWYDOXHV7KHVSHFLILHGUHVRQDQFHIUHTXHQF\DQGTXDOLW\IDFWRUGHVFULEHWKHSURSHUWLHVRIWKHUHVRQDWRUZLWKDOOLWVHQWUDQFHVH[FHSWWKHSRUWEORFNHG
/,0,7$7,216,WLVDVVXPHGWKDWDOOUHVRQDWRUGLPHQVLRQVDUHFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWK
35,1&,3/(/XPSHGFRPSRQHQWVDUHXVHGWRPRGHOWKHFDYLW\DQGWKHSRUW7KHRSSRVLWHUHVLVWRUSDLUVDUHXVHGPHUHO\WRSUHYHQWDQHUURUWKDWZRXOGUHVXOWIURPVKRUWLQJGLIIHUHQWSLQVWRJHWKHU7KHSLQVLQVWHDGRIVLQJOHSLQDUHMXVWDFRQYHQLHQWIHDWXUHZKHQGUDZLQJVFKHPDWLFV
5PHP
0(0%51&,55,*,'3(50($%/(0(0%5$1(6
3LQ 3LQ
3$5$0(7(565VSHFDUHDQR
'(),1(5PHP5VSHFDUHD QR
3$5$0(7(565VSHF IORZUHVLVWDQFHSHUXQLWDUHDDUHD DUHDRIPHPEUDQHVQR QXPEHURIPHPEUDQHV
86$*(7KLVPDFURPRGHOVDSHUPHDEOHPHPEUDQHRUDQDUUD\RIVLPLODUPHPEUDQHVLQSDUDOOHO$W\SLFDOH[DPSOHLVDGXVWDQGZDWHUVKLHOGPHPEUDQHWRSURWHFWVRXQGRSHQLQJV7KHVSHFLILFIORZUHVLVWDQFHRIWKHPHPEUDQHLVSDVVHGDVDSDUDPHWHU
/,0,7$7,2167KHPRGHODVVXPHVWKDWWKHPHPEUDQHLVFRPSOHWHO\ULJLG$Q\DFRXVWLFLQGXFWDQFHDVVRFLDWHGZLWKWKHPHPEUDQHLVQHJOHFWHG
35,1&,3/(7KHSHUPHDEOHPHPEUDQHDSSHDUVDVDVLQJOHUHVLVWDQFHFRUUHVSRQGLQJWRWKHDFRXVWLFUHVLVWDQFHRIWKHPHPEUDQHPDWHULDO
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
/P/PP
/PPDLU
5P5PP
5D5DSUV
/D/HQGF&P&PP
0
$
0$,QW$RSHQ
0
$0$,QW$FOV
0
$0$,QW$RSHQ
0(0%51&,53(50($%/(0(0%5$1(6
3LQ
3LQ
3$5$0(7(565VSHF5PPHP/PPHP&PPHPDUHDSUFRSHQWKLFNHQGFQR
'(),1($FOVDUHD SUFRSHQ QR
'(),1($RSHQDUHD SUFRSHQ QR
'(),1(PDLU$RSHQ WKLFN UKR
'(),1(/HQGFUKR HQGF$RSHQ
'(),1(5DSUV5VSHFDUHD QR
'(),1(5PP5PPHPQR
'(),1(/PP/PPHPQR
'(),1(&PP&PPHP QR
,1&/8'(&2167'()7;7
3$5$0(7(565VSHF VSHFLILFDFRXVWLFUHVLVWDQFH5PPHP PHFKDQLFDOUHVLVWDQFHRIDVVHPEOHGPHPEUDQHV/PPHP PRYLQJPDVVRIDVVHPEOHGPHPEUDQHV&PPHP FRPSOLDQFHRIDVVHPEOHGPHPEUDQHVDUHD DUHDRSHQFORVHGSUFRSHQ SHUFHQWRSHQDUHDWKLFN WKLFNQHVVOHQJWKRISRUHVLQIORZGLUHFWLRQHQGF HQGFRUUHFWLRQOHQJWKLQIORZGLUHFWLRQQR QXPEHURISDUDOOHOPHPEUDQHV
86$*(7KLVPDFURPRGHOVDSHUPHDEOHPHPEUDQHRUDQDUUD\RIVLPLODUPHPEUDQHVLQSDUDOOHO$W\SLFDOH[DPSOHLVDGXVWDQGZDWHUVKLHOGPHPEUDQHWRSURWHFWVRXQGRSHQLQJV.QRZQPDWHULDOSDUDPHWHUVDUHSDVVHGWRWKHPDFURWKHVSHFLILFDFRXVWLFUHVLVWDQFHKDVWKHXQLWRIUHVLVWDQFHWLPHVDUHDWKLFNDQGSUFRSHQVKRXOGWRJHWKHUGHILQHWKHWRWDOYROXPHRIDLUFRQWDLQHGLQWKHSRUHV7KHHQGFRUUHFWLRQLVJLYHQDVDOHQJWKLQWKHIORZGLUHFWLRQDQGLWDSSOLHVWRHDFKSRUH5PPHP/PPHP&PPHPDQGDUHDGHVFULEHWKHSURSHUWLHVRIWKHPHPEUDQHZKHQPRXQWHGLQWKHDVVHPEO\
/,0,7$7,2167KHPRGHODVVXPHVWKDWWKHPHPEUDQHLVIXOO\IOH[LEOH7KLVLVW\SLFDOO\QRWWKHFDVHDQRQOLQHDUFRPSOLDQFHZRXOGEHPRUHUHDOLVWLF$Q\IUHTXHQF\GHSHQGHQFHRIWKHDFRXVWLFLPSHGDQFHRIWKHSRUHVLVQHJOHFWHG
35,1&,3/(7KHSHUPHDEOHPHPEUDQHDSSHDUVDVDSDUDOOHOFRQQHFWLRQRIWKHVROLGSDUWVRIWKHPHPEUDQHDQGWKHDLULQWKHSRUHV7KHUHODWLYHGLIIHUHQFHLQYHORFLW\EHWZHHQWKHVHWZRHTXDOVWKHYHORFLW\RIWKHDLULQUHODWLRQWRWKHSRUHZDOOVDQGWKLVUHODWLYHPRYHPHQWLVDIIHFWHGE\WKHDFRXVWLFUHVLVWDQFHDQGDQDGGHGDFRXVWLFLQGXFWDQFHGXHWRWKHHQGFRUUHFWLRQRIWKHSRUHV
5()(5(1&(3ROG\&$(OHFWULFDODQDORJVIRUPHPEUDQHVZLWKDSSOLFDWLRQWRHDUSKRQHV-$XGLR(QJ6RFYROQR
5KROH /KROH
&,5+2/(&,5&,5&8/$5+2/(6:$9(/(1*7+
3LQ
3$5$0(7(56GLDPOHQJWKQR
3LQ
,1&/8'(&2167'()7;7
,1&/8'(78%('()7;7
'(),1(5KROH5&LUF+ROHGLDPOHQJWKQR
'(),1(/KROH/&LUF+ROHGLDPOHQJWKQR
3$5$0(7(56GLDP GLDPHWHURIKROHVOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQVQR QXPEHURISDUDOOHOKROHV
86$*(7KLVPDFURPRGHOVWKHDFRXVWLFLPSHGDQFHRIDFLUFXODUKROHRUWXEHRUVHYHUDOKROHVWXEHVLQSDUDOOHO2QO\WKHLQWHUQDOSDUWLVPRGHOOHGQRHQGFRUUHFWLRQVDUHDGGHGDXWRPDWLFDOO\
/,0,7$7,2167KHPRGHOLVDSSOLFDEOHWRKROHVRUWXEHVZLWKFLUFXODURUDOPRVWFLUFXODUFURVVVHFWLRQZLWKDOHQJWKLQWKHIORZGLUHFWLRQWKDWLVFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWK
35,1&,3/(7KHLPSHGDQFHLVFDOFXODWHGGLUHFWO\FDOOLQJSUHGHILQHGLPSHGDQFHIRUPXODHWKDWLQFOXGHWKHIUHTXHQF\GHSHQGHQFH
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5KROH /KROH
5&7+2/(&,55(&7$1*8/$5+2/(6:$9(/(1*7+
3LQ
3$5$0(7(56ZLGWKKHLJKWOHQJWKQR
3LQ
,1&/8'(&2167'()7;7
,1&/8'(78%('()7;7
'(),1(5KROH55HFW+ROHZLGWKKHLJKWOHQJWKQR
'(),1(/KROH/5HFW+ROHZLGWKKHLJKWOHQJWKQR
3$5$0(7(56ZLGWK ZLGWKRIKROHVKHLJKW KHLJKWRIKROHV! RUZLGWKOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQVQR QXPEHURISDUDOOHOKROHV
86$*(7KLVPDFURPRGHOVWKHDFRXVWLFLPSHGDQFHRIDUHFWDQJXODUKROHRUWXEHRUVHYHUDOKROHVWXEHVLQSDUDOOHO2QO\WKHLQWHUQDOSDUWLVPRGHOOHGQRHQGFRUUHFWLRQVDUHDGGHGDXWRPDWLFDOO\$QDUURZVOLWFDQDOVREHPRGHOOHGXVLQJWKLVVDPHPDFUR
/,0,7$7,2167KHOHQJWKLQWKHIORZGLUHFWLRQPXVWEHFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWK(YHQLIVRPHRWKHUGLPHQVLRQLVJUHDWHUWKDQWKHZDYHOHQJWKDQGREOLTXHSURSDJDWLRQPRGHVFRXOGDSSHDUWKHVHPRGHVDUHQRWPRGHOOHGE\WKHPDFUR
35,1&,3/(7KHLPSHGDQFHLVFDOFXODWHGGLUHFWO\FDOOLQJSUHGHILQHGLPSHGDQFHIRUPXODHWKDWLQFOXGHWKHIUHTXHQF\GHSHQGHQFH
/(1 OHQJWK5 5G/ /G& &G
&,5'8&7&,5&,5&8/$5'8&76
3LQ
3$5$0(7(56GLDPOHQJWKQRIUHTFRPSFI
3LQ
,1&/8'(&2167'()7;7
'(),1(5G 6457PX UKR SL IUHTSL GLDP QR N5G
'(),1(/G UKRSL GLDP QR
'(),1(&G.DLU SL GLDP QR
'(),1(N5G FRPSFI VKXQWUHVLVWDQFHFRPSHQVDWLRQ
GLVWULEXWHGUHVLVWDQFH
GLVWULEXWHGLQGXFWDQFH
GLVWULEXWHGFDSDFLWDQFH
3$5$0(7(56GLDP GLDPHWHURIGXFWVOHQJWK OHQJWKRIGXFWVQR QXPEHURIGXFWVIUHT GHVLUHGIUHTXHQF\RIEHVWDFFXUDF\FRPSFI VKXQWUHVLVWDQFHFRPSHQVDWLRQFRHIILFLHQW FRPSFI
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
35,1&,3/($WUDQVPLVVLRQOLQHLVXVHGWRPRGHOWKHGXFW0LFUR&DSVXSSRUWVWKUHHGLVWULEXWHGLPSHGDQFHVDWPRVWWKXVWKHVKXQWUHVLVWDQFHGXHWRWKHUPDOGLIIXVLRQPXVWEHOHIWRXW$QRSWLRQDOFRPSHQVDWLQJFKDQJHLVPDGHWRWKHVHULHVUHVLVWDQFHLQVWHDG
5()(5(1&(6,QJDUG.81RWHVRQVRXQGDEVRUSWLRQWHFKQRORJ\86$1RLVH&RQWURO)RXQGDWLRQSS1ROOH$:6PDOOVLJQDOLPSHGDQFHRIVKRUWWXEHV-$FRXVW6RF$PYROQR
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
/(1 OHQJWK5 5G/ /G& &G
5&7'8&7&,55(&7$1*8/$5'8&76
3LQ
3$5$0(7(56ZLGWKKHLJKWOHQJWKQRIUHTFRPSFI
3LQ
,1&/8'(&2167'()7;7
'(),1(5G ZLGWKKHLJKW 6457PX UKR SL IUHTZLGWK KHLJKW QR N5G
'(),1(/GUKRZLGWK KHLJKW QR
'(),1(&G.DLU ZLGWK KHLJKW QR
'(),1(N5G FRPSFI VKXQWUHVFRPSHQVDWLRQ
GLVWULEXWHGUHVLVWDQFH
GLVWULEXWHGLQGXFWDQFH
GLVWULEXWHGFDSDFLWDQFH
3$5$0(7(56ZLGWK ZLGWKRIGXFWVKHLJKW KHLJKWRIGXFWVOHQJWK OHQJWKRIGXFWVQR QXPEHURIGXFWVIUHT GHVLUHGIUHTXHQF\RIEHVWDFFXUDF\FRPSFI VKXQWUHVLVWDQFHFRPSHQVDWLRQFRHIILFLHQW FRPSFI
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
35,1&,3/($WUDQVPLVVLRQOLQHLVXVHGWRPRGHOWKHGXFW0LFUR&DSVXSSRUWVWKUHHGLVWULEXWHGLPSHGDQFHVDWPRVWWKXVWKHVKXQWUHVLVWDQFHGXHWRWKHUPDOGLIIXVLRQPXVWEHOHIWRXW$QRSWLRQDOFRPSHQVDWLQJFKDQJHLVPDGHWRWKHVHULHVUHVLVWDQFHLQVWHDG
5()(5(1&(6,QJDUG.81RWHVRQVRXQGDEVRUSWLRQWHFKQRORJ\86$1RLVH&RQWURO)RXQGDWLRQSS1ROOH$:6PDOOVLJQDOLPSHGDQFHRIVKRUWWXEHV-$FRXVW6RF$PYROQR
$LUORDG
(QG&&LU
$LU/&LU
3OQ5DG5
(QG&5FW
$LU/&LU% $LU/5FW $LU/5FW%
6SK5DG5
)LJXUH,9*HQHUDOHQGFRUUHFWLRQIRUFLUFXODUDQGUHFWDQJXODUUDGLDWRUVWRSURZDLUORDGRQ FLUFXODUDQG UHFWDQJXODU UDGLDWRUV DQ\ VROLG UDGLDWLRQ DQJOH RU HTXLSSHGZLWKILQLWH EDIIOH PLGGOH URZ UDGLDWLRQ UHVLVWDQFH RI UDGLDWRU UDGLDWLQJ VSKHULFDO RU SODQHZDYHVERWWRPURZ
3LQ 3LQ 3LQ 3LQ
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQDOOWKHDLUORDGPDFURVPRGHOOLQJVSKHULFDOZDYHVZDYHOHQJWK!!GLPHQVLRQVKDYHWKHVDPHVKDSHDQGSLQSRVLWLRQLQJ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5HQG /HQG
(1'&&,5&,5*(1(5$/(1'&255(&7,21)25&,5&8/$55$',$7256
3LQ
3$5$0(7(56GLDP5FRUU/FRUUQR
3LQ
,1&/8'(&2167'()7;7
'(),1(5HQG PX 5FRUUSL GLDP QR
'(),1(/HQG UKR /FRUU SL GLDP QR
3$5$0(7(56GLDP GLDPHWHURIUDGLDWRUV5FRUU HQGFRUUHFWLRQLQSURSRUWLRQWRGLDPHWHUIRUUHVLVWDQFH/FRUU HQGFRUUHFWLRQLQSURSRUWLRQWRGLDPHWHUIRULQGXFWDQFHQR QXPEHURIUDGLDWRUV
86$*(7KLVPDFURLVDJHQHUDOIRUPRIHQGFRUUHFWLRQPDFURDOORZLQJWKHXVHUWRVHOHFWDQ\VXLWDEOHHQGFRUUHFWLRQIRUWKHUHVLVWLYHDQGLQGXFWLYHSDUWVVHSDUDWHO\7KHPDFURFDQEHXVHGZKHQHYHUHQGFRUUHFWLRQVQHHGWREHPRGHOOHGLQZKLFKFDVHLWLVFRQQHFWHGLQVHULHVZLWKWKHKROHRUGXFWRSHQLQJVRUUDGLDWLQJVXUIDFHV$VVXFKWKHPDFURLVPHDQWSULPDULO\WRPRGHODWWDFKHGDLUPDVVDQGYLVFRXVORVVHVQRWUDGLDWLRQUHVLVWDQFHZKLFKLVVWURQJO\GHSHQGHQWRQIUHTXHQF\(QGFRUUHFWLRQVDUHJLYHQDVIDFWRUVLQSURSRUWLRQWRWKHGLDPHWHURIWKHUDGLDWRUV
/,0,7$7,2161RVHSDUDWHWHUPIRUWKHUDGLDWLRQUHVLVWDQFHRIDVPDOOVRXUFHLVLQFOXGHGDQGPXWXDOLQWHUDFWLRQLVQRWDXWRPDWLFDOO\WDNHQLQWRDFFRXQW$Q\IUHTXHQF\GHSHQGHQFHLVQHJOHFWHGXQOHVV5FRUURU/FRUUDUHJLYHQIUHTXHQF\GHSHQGHQWYDOXHV
35,1&,3/(7KHDFWXDOLPSHGDQFHVDUHFDOFXODWHGXVLQJWKHORZIUHTXHQF\LPSHGDQFHIRUPXODIRUDVKRUWFLUFXODUWXEH7KHOHQJWKRIWKLVWXEHLVWKHJLYHQHQGFRUUHFWLRQVHSDUDWHOHQJWKVJLYHQIRUUHVLVWDQFHDQGLQGXFWDQFH
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS
5HQG /HQG
(1'&5&7&,5*(1(5$/(1'&255(&7,21)255(&7$1*8/$55$',$7256
3LQ
3$5$0(7(56ZLGWKKHLJKW5FRUU/FRUUQR
3LQ
,1&/8'(&2167'()7;7
'(),1(Z0$;ZLGWKKHLJKW
'(),1(K0,1ZLGWKKHLJKW
'(),1(5HQG PX 5FRUUZ K QR
'(),1(/HQG UKR /FRUU Z QR
3$5$0(7(56ZLGWK ZLGWKRIUDGLDWRUVKHLJWK KHLJKWRIUDGLDWRUV5FRUU HQGFRUUHFWLRQLQSURSRUWLRQWRVPDOOHUGLPHQVLRQIRUUHVLVWDQFH/FRUU HQGFRUUHFWLRQLQSURSRUWLRQWRVPDOOHUGLPHQVLRQIRULQGXFWDQFHQR QXPEHURIUDGLDWRUV
86$*(7KLVPDFURLVDJHQHUDOIRUPRIHQGFRUUHFWLRQPDFURDOORZLQJWKHXVHUWRVHOHFWDQ\VXLWDEOHHQGFRUUHFWLRQIRUWKHUHVLVWLYHDQGLQGXFWLYHSDUWVVHSDUDWHO\7KHPDFURFDQEHXVHGZKHQHYHUHQGFRUUHFWLRQVQHHGWREHPRGHOOHGLQZKLFKFDVHLWLVFRQQHFWHGLQVHULHVZLWKWKHKROHRUGXFWRSHQLQJVRUUDGLDWLQJVXUIDFHV$VVXFKWKHPDFURLVPHDQWSULPDULO\WRPRGHODWWDFKHGDLUPDVVDQGYLVFRXVORVVHVQRWUDGLDWLRQUHVLVWDQFHZKLFKLVVWURQJO\GHSHQGHQWRQIUHTXHQF\(QGFRUUHFWLRQVDUHJLYHQDVIDFWRUVLQSURSRUWLRQWRWKHVPDOOHUGLPHQVLRQRIWKHUDGLDWRUV
/,0,7$7,2161RVHSDUDWHWHUPIRUWKHUDGLDWLRQUHVLVWDQFHRIDVPDOOVRXUFHLVLQFOXGHGDQGPXWXDOLQWHUDFWLRQLVQRWDXWRPDWLFDOO\WDNHQLQWRDFFRXQW$Q\IUHTXHQF\GHSHQGHQFHLVQHJOHFWHGXQOHVV5FRUURU/FRUUDUHJLYHQIUHTXHQF\GHSHQGHQWYDOXHV
35,1&,3/(7KHDFWXDOLPSHGDQFHVDUHFDOFXODWHGXVLQJWKHORZIUHTXHQF\LPSHGDQFHIRUPXODIRUDVKRUWUHFWDQJXODUWXEHDVVXPLQJQRYLVFRXVGUDJDWWKHWZRPRUHZLGHO\VHSDUDWHGZDOOV7KHOHQJWKRIWKLVWXEHLVWKHJLYHQHQGFRUUHFWLRQVHSDUDWHOHQJWKVJLYHQIRUUHVLVWDQFHDQGLQGXFWDQFH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
5UDG 5YLVF /DWW
$,5/&,5&,5$,5/2$'21&,5&8/$55$',$7256:$9(/(1*7+
3$5$0(7(56GLDPQRVSDFHFIPXWXDOFI
3LQ
,1&/8'(&2167'()7;7
UHVLVWDQFHGXHWRSXUHUDGLDWLRQ
UHVLVWDQFHHQGFRUUHFWLRQYLVFRVLW\
LQGXFWDQFHHQGFRUUHFWLRQDWWDFKHGDLU
,1&/8'(78%('()7;7
'(),1(O[U GLDP6457 VSDFHFI
'(),1(O[O PXWXDOFI QR GLDP6457 VSDFHFI
'(),1(5YLVF5&LUF+ROHGLDPO[UQR
'(),1(5UDGSL UKR I VSDFHFI F
'(),1(/DWW/&LUF+ROHGLDPO[OQR
3LQ
3$5$0(7(56GLDP GLDPHWHURIUDGLDWRUVQR QXPEHURIUDGLDWRUVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRVSDFHFI IXOOVSDFH KDOIVSDFHHWF
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
PXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGHVFULELQJDYHUDJHVWUHQJWKRIPXWXDOFRXSOLQJ PXWXDOFI
86$*(7KLVPDFURPRGHOVWKHDLUORDGRQRQHVLQJOHFLUFXODUUDGLDWRURUDQDUUD\RIVLPLODUUDGLDWRUVO\LQJLQWKHVDPHSODQH7KHPDFURVKRXOGEHXVHGZKHQHYHUDLUORDGHIIHFWVQHHGWREHWDNHQLQWRDFFRXQWLQZKLFKFDVHLWLVFRQQHFWHGLQVHULHVZLWKWKHRSHQLQJRUYLEUDWLQJVXUIDFHWKDWUDGLDWHVVRXQG7KHUDGLDWRURUUDGLDWRUDUUD\FDQUDGLDWHLQWRDQ\VROLGDQJOHDVVSHFLILHGE\VSDFHFI)RUPRVWFDVHVZLWKUDGLDWLRQLQWRIUHHDLUVSDFHFI LVDSSURSULDWHXQOHVVWKHUHLVDODUJHEDIIOH7KHPXWXDOFRXSOLQJFRHIILFLHQWPXWXDOFIFDQEHVHWWR]HURLIWKHVWUHQJWKRIWKHPXWXDOFRXSOLQJLVQRWNQRZQPXWXDOFIGHVFULEHVWKHDYHUDJHFRXSOLQJDYHUDJHGRYHUDOOSDLUVRIUDGLDWRUVDQGLWLVQRUPDOL]HGVRWKDWPXWXDOFI PHDQVWKHVWURQJHVWSRVVLEOHLQWHUDFWLRQZKLFKDSSHDUVRQO\ZKHQWKHUHDUHRUUDGLDWRUVWRXFKLQJHDFKRWKHU,QDOORWKHUSRVVLEOHFDVHVPXWXDOFIDQGGHFUHDVHVZLWKLQFUHDVLQJGLVWDQFHVEHWZHHQUDGLDWRUV,IJRRGDFFXUDF\LVZDQWHGPXWXDOFIPXVWEHFDOFXODWHGVHSDUDWHO\IURPWKHJHRPHWU\RIWKHUDGLDWRUDUUD\,IWKHYROXPHYHORFLW\RXWSXWE\WKHUDGLDWRULVQRWQHHGHGDQ\IXUWKHUWKHPDFURVKRXOGEHIROORZHGE\DJURXQGFRQQHFWLRQLH$WP3UHVV,IWKHVRXQGSUHVVXUHDWVRPHGLVWDQFHIURPWKHUDGLDWRULVZDQWHGWKHPDFURVKRXOGEHIROORZHGE\DVXLWDEOHUDGLDWLRQPDFUR,IUDGLDWLRQLVLQWRDQDUURZWXEHQRWVSKHULFDOZDYHVRWKHUDLUORDGPDFURVVKRXOGEHXVHG
/,0,7$7,2169LVFRXVORVVHVDUHPRGHOOHGDVVXPLQJDUDGLDWLQJRSHQLQJLHQRWDSLVWRQ7KHRYHUDOOGLPHQVLRQVRIWKHUDGLDWRURUUDGLDWRUDUUD\PXVWEHVPDOOHUWKDQWKHZDYHOHQJWKLQRUGHUWRPDLQWDLQDFFXUDF\7KHPRGHOWUHDWVVSDFHFIDVGHVFULELQJDQLQILQLWHVSDFHHJLGHDOIXOOVSDFHDQLQILQLWHEDIIOHVSDFHFI RUDQLQILQLWHFRQLFDOKRUQVSDFHFI
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
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS.LQVOHU/()UH\$5)XQGDPHQWDOVRIDFRXVWLFV0RQWHUH\&DOLI86$-RKQ:LOH\6RQV,QFSS6WLQVRQ056KDZ($*$FRXVWLFLPSHGDQFHRIVPDOOFLUFXODURULILFHVLQWKLQSODWHV-$FRXVW6RF$PYROQR-DFREVHQ26RPHDVSHFWVRIWKHVHOIDQGPXWXDOUDGLDWLRQLPSHGDQFHFRQFHSWZLWKUHVSHFWWRORXGVSHDNHUV-$XGLR(QJ6RFYROQR2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QFSS
$LU/&LUGLDPQRVSDFHFIPXWXDOFI
$,5/&,5%&,5$,5/2$'21&,5&8/$55$',$7256:$9(/(1*7+6855281'('%<),1,7(%$))/(
3LQ
3$5$0(7(56GLDPQRESHULPPXWXDOFI
3LQ
,1&/8'(&2167'()7;7
'(),1(VSDFHFI IIF IIF
'(),1(IF FESHULP WUDQVLWLRQIUHTXHQF\KDOIZD\EHWZHHQIXOODQGKDOIVSDFHUDGLDWLRQ
WUDQVLWLRQIURPVSDFHFI WRVSDFHFI
3$5$0(7(56GLDP GLDPHWHURIUDGLDWRUVQR QXPEHURIUDGLDWRUVESHULP SHULPHWHURIEDIIOHPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGHVFULELQJDYHUDJHVWUHQJWKRIPXWXDOFRXSOLQJ PXWXDOFI
86$*(7KLVPDFURLVVLPLODUWRWKH$LU/&LUPDFURH[FHSWWKDWLWPRGHOVRQHRUPRUHUDGLDWRUVVXUURXQGHGE\DILQLWHEDIIOHZKRVHSHULPHWHULVVSHFLILHG)RUPRUHGHWDLOVVHHWKHGHVFULSWLRQRIWKH$LU/&LUPDFUR
/,0,7$7,216,QPRGHOOLQJWKHEDIIOHDFFXUDF\LVUHDVRQDEOHLQYLFLQLW\RIWKHWUDQVLWLRQIUHTXHQF\IURPIXOOWRKDOIVSDFHUDGLDWLRQDVORQJDVWKHEDIIOHVKDSHGRHVQRWGHSDUWWRRPXFKIURPDFLUFOHRUVTXDUHLHWKHDVSHFWUDWLRPXVWQRWEHODUJH$OVRWKHUDGLDWRUVPXVWEHORFDWHGFORVHHQRXJKWRWKHFHQWHURIWKHEDIIOH)RURWKHUOLPLWDWLRQVVHHWKHGHVFULSWLRQRIWKH$LU/&LUPDFUR
35,1&,3/(7KHWUDQVLWLRQIURPIXOOWRKDOIVSDFHUDGLDWLRQDVIUHTXHQF\LQFUHDVHVLVPRGHOOHGKHUHXVLQJDIUHTXHQF\GHSHQGHQWYDOXHIRUVSDFHFIZKLFKLVSDVVHGWRWKH$LU/&LUPDFUR7KHIXQFWLRQGHVFULELQJWKLVFKDQJHZDVREWDLQHGE\PDQXDOO\ILWWLQJLWVJUDSKWRDFXUYHGHULYHGIURPWKHIUHTXHQF\GHSHQGHQFHRIWKHUDGLDWLRQLPSHGDQFHRIDFLUFXODUSLVWRQLQWKHHQGRIDORQJWXEH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
5UDG /DWW5YLVF
$,5/5&7&,5$,5/2$'215(&7$1*8/$55$',$7256:$9(/(1*7+
3$5$0(7(56ZLGWKKHLJKWQRVSDFHFIPXWXDOFI
3LQ
,1&/8'(&2167'()7;7
UHVLVWDQFHGXHWRSXUHUDGLDWLRQ
UHVLVWDQFHHQGFRUUHFWLRQYLVFRVLW\
LQGXFWDQFHHQGFRUUHFWLRQDWWDFKHGDLU
,1&/8'(78%('()7;7
'(),1(O[U K6457 VSDFHFI
'(),1(O[OPXWXDOFI QR /1ZK K6457 VSDFHFI
'(),1(5YLVF55HFW+ROHZKO[UQR
'(),1(5UDGSL UKR I VSDFHFI F
'(),1(/DWW/5HFW+ROHZKO[OQR
'(),1(K0,1ZLGWKKHLJKW
'(),1(Z0$;ZLGWKKHLJKW ODUJHUGLPHQVLRQ
VPDOOHUGLPHQVLRQ
3LQ
3$5$0(7(56ZLGWK ZLGWKRIUDGLDWRUVKHLJKW KHLJKWRIUDGLDWRUV! RUZLGWKQR QXPEHURIUDGLDWRUV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
VSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRVSDFHFI IXOOVSDFH KDOIVSDFHHWFPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGHVFULELQJDYHUDJHVWUHQJWKRIPXWXDOFRXSOLQJ PXWXDOFI
86$*(7KLVPDFURPRGHOVWKHDLUORDGRQRQHVLQJOHUHFWDQJXODUUDGLDWRURUDQDUUD\RIVLPLODUUDGLDWRUVO\LQJLQWKHVDPHSODQH7KHPDFURVKRXOGEHXVHGZKHQHYHUDLUORDGHIIHFWVQHHGWREHWDNHQLQWRDFFRXQWLQZKLFKFDVHLWLVFRQQHFWHGLQVHULHVZLWKWKHRSHQLQJRUYLEUDWLQJVXUIDFHWKDWUDGLDWHVVRXQG7KHUDGLDWRURUUDGLDWRUDUUD\FDQUDGLDWHLQWRDQ\VROLGDQJOHDVVSHFLILHGE\VSDFHFI)RUPRVWFDVHVZLWKUDGLDWLRQLQWRIUHHDLUVSDFHFI LVDSSURSULDWHXQOHVVWKHUHLVDODUJHEDIIOH7KHPXWXDOFRXSOLQJFRHIILFLHQWPXWXDOFIFDQEHVHWWR]HURLIWKHVWUHQJWKRIWKHPXWXDOFRXSOLQJLVQRWNQRZQPXWXDOFIGHVFULEHVWKHDYHUDJHFRXSOLQJDYHUDJHGRYHUDOOSDLUVRIUDGLDWRUVDQGLWLVQRUPDOL]HGVRWKDWPXWXDOFI PHDQVWKHVWURQJHVWSRVVLEOHLQWHUDFWLRQZKLFKDSSHDUVWKHRUHWLFDOO\RQO\ZKHQWKHUHDUHUDGLDWRUVZLWKLQILQLWHDVSHFWUDWLRWRXFKLQJHDFKRWKHUDORQJWKHORQJHUVLGHV7KXVLQDOOSUDFWLFDOFDVHVPXWXDOFIDQGGHFUHDVHVZLWKLQFUHDVLQJGLVWDQFHVEHWZHHQUDGLDWRUV,IJRRGDFFXUDF\LVZDQWHGPXWXDOFIPXVWEHFDOFXODWHGVHSDUDWHO\IURPWKHJHRPHWU\RIWKHUDGLDWRUDUUD\,IWKHYROXPHYHORFLW\RXWSXWE\WKHUDGLDWRULVQRWQHHGHGDQ\IXUWKHUWKHPDFURVKRXOGEHIROORZHGE\DJURXQGFRQQHFWLRQLH$WP3UHVV,IWKHVRXQGSUHVVXUHDWVRPHGLVWDQFHIURPWKHUDGLDWRULVZDQWHGWKHPDFURVKRXOGEHIROORZHGE\DVXLWDEOHUDGLDWLRQPDFUR,IUDGLDWLRQLVLQWRDQDUURZWXEHQRWVSKHULFDOZDYHVRWKHUPDFURVVKRXOGEHXVHG
/,0,7$7,2169LVFRXVORVVHVDUHPRGHOOHGDVVXPLQJDQHQGFRUUHFWLRQIRUWKHUHVLVWDQFHHTXDOWRWKHLQGXFWDQFHHQGFRUUHFWLRQIRUDUDGLDWRUZLWKDVSHFWUDWLR7KHDFFXUDF\RIWKLVDVVXPSWLRQKDVQRWEHHQYHULILHG7KHRYHUDOOGLPHQVLRQVRIWKHUDGLDWRURUUDGLDWRUDUUD\PXVWEHFOHDUO\VPDOOHUWKDQWKHZDYHOHQJWKLQRUGHUWRPDLQWDLQDFFXUDF\7KHPRGHOWUHDWVVSDFHFIDVGHVFULELQJDQLQILQLWHVSDFHHJLGHDOIXOOVSDFHDQLQILQLWHEDIIOHVSDFHFI RUDQLQILQLWHFRQLFDOKRUQVSDFHFI
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
5()(5(1&(6.LQVOHU/()UH\$5)XQGDPHQWDOVRIDFRXVWLFV0RQWHUH\&DOLI86$-RKQ:LOH\6RQV,QFSS6WLQVRQ056KDZ($*$FRXVWLFLPSHGDQFHRIVPDOOFLUFXODURULILFHVLQWKLQSODWHV-$FRXVW6RF$PYROQR2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QFSS%DQN*:ULJKW-55DGLDWLRQLPSHGDQFHFDOFXODWLRQVIRUDUHFWDQJXODUSLVWRQ-$XGLR(QJ6RFYROQR
$LU/5FWZLGWKKHLJKWQRVSDFHFIPXWXDOFI
$,5/5&7%&,5$,5/2$'215(&7$1*8/$55$',$7256:$9(/(1*7+6855281'('%<),1,7(%$))/(
3LQ
3$5$0(7(56ZLGWKKHLJKWQRESHULPPXWXDOFI
3LQ
,1&/8'(&2167'()7;7
'(),1(VSDFHFI IIF IIF
'(),1(IF FESHULP WUDQVLWLRQIUHTXHQF\KDOIZD\EHWZHHQIXOODQGKDOIVSDFHUDGLDWLRQ
WUDQVLWLRQIURPVSDFHFI WRVSDFHFI
3$5$0(7(56ZLGWK ZLGWKRIUDGLDWRUVKHLJKW KHLJKWRIUDGLDWRUV! RUZLGWKQR QXPEHURIUDGLDWRUVESHULP SHULPHWHURIEDIIOHPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGHVFULELQJDYHUDJHVWUHQJWKRIPXWXDOFRXSOLQJ PXWXDOFI
86$*(7KLVPDFURLVVLPLODUWRWKH$LU/5FWPDFURH[FHSWWKDWLWPRGHOVRQHRUPRUHUDGLDWRUVVXUURXQGHGE\DILQLWHEDIIOHZKRVHSHULPHWHULVVSHFLILHG)RUPRUHGHWDLOVVHHWKHGHVFULSWLRQRIWKH$LU/5FWPDFUR
/,0,7$7,216,QPRGHOOLQJWKHEDIIOHDFFXUDF\LVUHDVRQDEOHLQYLFLQLW\RIWKHWUDQVLWLRQIUHTXHQF\IURPIXOOWRKDOIVSDFHUDGLDWLRQDVORQJDVWKHEDIIOHVKDSHGRHVQRWGHSDUWWRRPXFKIURPDFLUFOHRUVTXDUHLHWKHDVSHFWUDWLRPXVWQRWEHODUJH$OVRWKHUDGLDWRUVPXVWEHORFDWHGFORVHHQRXJKWRWKHFHQWHURIWKHEDIIOH)RURWKHUOLPLWDWLRQVVHHWKHGHVFULSWLRQRIWKH$LU/5FWPDFUR
35,1&,3/(7KHWUDQVLWLRQIURPIXOOWRKDOIVSDFHUDGLDWLRQDVIUHTXHQF\LQFUHDVHVLVPRGHOOHGKHUHXVLQJDIUHTXHQF\GHSHQGHQWYDOXHIRUVSDFHFIZKLFKLVSDVVHGWRWKH$LU/5FWPDFUR7KHIXQFWLRQGHVFULELQJWKLVFKDQJHZDVREWDLQHGE\PDQXDOO\ILWWLQJLWVJUDSKWRDFXUYHGHULYHGIURPWKHIUHTXHQF\GHSHQGHQFHRIWKHUDGLDWLRQLPSHGDQFHRIDFLUFXODUSLVWRQLQWKHHQGRIDORQJWXEH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
5UDG
63+5$'5&,55$',$7,215(6,67$1&(63+(5,&$/:$9(
,1&/8'(&2167'()7;7
3LQ3LQ
'(),1(5UDGSL UKR I VSDFHFI F
3$5$0(7(56QRVSDFHFI
3$5$0(7(56QR QXPEHURIUDGLDWRUVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRVSDFHFI
86$*(7KLVPDFURPRGHOVWKHSXUHUDGLDWLRQUHVLVWDQFHRIDUDGLDWRURUDUUD\RIVLPLODUUDGLDWRUVUDGLDWLQJVSKHULFDOZDYHVLHRQO\WKHUHVLVWDQFHUHSUHVHQWLQJUDGLDWHGVRXQGSRZHUH[FOXGLQJUHDFWDQFHVDQGSRVVLEOHYLVFRXVORVVHV$VVXFK
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
WKHPDFURFDQEHVHHQDVDVXEVHWRIWKH$LU/&LUDQG$LU/5FWPDFURV7RIRUPDPRUHJHQHUDODLUORDGPRGHOWKDQFDQEHEXLOWXVLQJWKH$LU/&LUDQG$LU/5FWPDFURVXVHLQVWHDGWKLVPDFURLQVHULHVZLWKDQ(QG&&LURU(QG&5FWPDFURZLWKDQ\GHVLUHGIUHTXHQF\GHSHQGHQFHLQWKHSDUDPHWHUV
/,0,7$7,2167KHPRGHODVVXPHVWKDWWKHGLPHQVLRQVRIWKHUDGLDWRUVDUHFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWKRULIWKLVLVQRWWKHFDVHWKDWWKHUDGLDWRUVXUIDFHLVVSKHULFDO7KHPRGHOWUHDWVVSDFHFIDVGHVFULELQJDQLQILQLWHVSDFHHJLGHDOIXOOVSDFHDQLQILQLWHEDIIOHVSDFHFI RUDQLQILQLWHFRQLFDOKRUQVSDFHFI
5()(5(1&(.LQVOHU/()UH\$5)XQGDPHQWDOVRIDFRXVWLFV0RQWHUH\&DOLI86$-RKQ:LOH\6RQV,QFSS
5UDG
3/15$'5&,55$',$7,215(6,67$1&(3/$1(:$9(
,1&/8'(&2167'()7;7
3LQ3LQ
'(),1(5UDGUKR FDUHD QR
3$5$0(7(56DUHDQR
3$5$0(7(56DUHD DUHDRIHDFKZDYHIURQWDQGUDGLDWRUQR QXPEHURIZDYHIURQWVDQGUDGLDWRUV
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
/,0,7$7,2163RVVLEOHUHIOHFWLRQVDOWHULQJWKHORDGLPSHGDQFHDUHQRWWDNHQLQWRDFFRXQWLHWKHPDFURDVVXPHVWKDWWKHVSDFHWKDWVRXQGLVUDGLDWHGLQWRLVLQILQLWHRUWHUPLQDWHGZLWKDPDWFKLQJLPSHGDQFH$Q\SRVVLEOHREOLTXHSURSDJDWLRQPRGHVDUHDOVRQRWPRGHOOHG
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS
'RPDLQLQWHUIDFHV
( 0 (0,QW'\Q(
0(0,QW(V
0
$0$,QW
)LJXUH,9(OHFWULFDOPHFKDQLFDOGRPDLQLQWHUIDFHIRUG\QDPLFWUDQVGXFWLRQHOHFWULFDOPHFKDQLFDO LQWHUIDFH IRU HOHFWURVWDWLF WUDQVGXFWLRQ DQG PHFKDQLFDODFRXVWLFDO GRPDLQLQWHUIDFH1RWHLQWHUIDFHVEHWZHHQDFRXVWLFDOGRPDLQDQGUDGLDWLRQDUHWUHDWHGVHSDUDWHO\EHORZ
( 0
(3OXV
(0LQXV
03OXV
00LQXV
(
0
3OXV
0LQXV
3OXV
0LQXV
0
$
3OXV
0LQXV
3OXV
0LQXV
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
,GHDO7UIN
(0,17'<1&,5(/(&75,&$/0(&+$1,&$/'20$,1
,17(5)$&()25'<1$0,&75$16'8&(5
00LQXV(0LQXV
03OXV(3OXV
3$5$0(7(56N
3$5$0(7(5N IRUFHIDFWRUIRUFHFXUUHQW
3,16(3OXV(0LQXVHOHFWULFDOGRPDLQSLQV03OXV00LQXVPHFKDQLFDOGRPDLQSLQV
86$*(7KLVPDFURLVDQHOHFWULFDOPHFKDQLFDOGRPDLQLQWHUIDFHPRGHOOLQJWKHNLQGRIWUDQVGXFWLRQDSSHDULQJLQG\QDPLFWUDQVGXFHUVRXWSXWIRUFHSURSRUWLRQDOWRLQSXWFXUUHQWRXWSXWYROWDJHSURSRUWLRQDOWRLQSXWYHORFLW\7KHLQWHUIDFHPDFURLVLGHDODQGGRHVQRWLQFOXGHDQ\RWKHUFKDUDFWHULVWLFVVXFKDVHJFRLOLPSHGDQFHVWKHVHPXVWEHDGGHGVHSDUDWHO\
35,1&,3/($QHOHFWULFDOPHFKDQLFDOGRPDLQLQWHUIDFHRIWKHG\QDPLFW\SHDSSHDUVDVDQLGHDOWUDQVIRUPHUEHFDXVHRIWKHFKDQJHWRDGPLWWDQFHDQDORJ\LQJRLQJIURPWKHHOHFWULFDOWRWKHPHFKDQLFDOVLGH2QWKHPHFKDQLFDOVLGHYROWDJHUHSUHVHQWVYHORFLW\DQGFXUUHQWUHSUHVHQWVIRUFH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
,GHDO*\UN
(0,17(6&,5(/(&75,&$/0(&+$1,&$/'20$,1
,17(5)$&()25(/(&75267$7,&75$16'8&(5
0LQXV0LQXV
3OXV3OXV
3$5$0(7(56N
3$5$0(7(5N IRUFHIDFWRUIRUFHYROWDJH
86$*(7KLVPDFURLVDQHOHFWULFDOPHFKDQLFDOGRPDLQLQWHUIDFHPRGHOOLQJWKHNLQGRIWUDQVGXFWLRQDSSHDULQJLQHOHFWURVWDWLFWUDQVGXFHUVRXWSXWIRUFHSURSRUWLRQDOWRLQSXWYROWDJHRXWSXWFXUUHQWSURSRUWLRQDOWRLQSXWYHORFLW\7KHLQWHUIDFHPDFURLVLGHDODQGGRHVQRWLQFOXGHDQ\RWKHUFKDUDFWHULVWLFVVXFKDVHJPHPEUDQHWRSODWHFDSDFLWDQFHWKHVHPXVWEHDGGHGVHSDUDWHO\7KHPDFURFDQEHFRQQHFWHGHLWKHUZD\SRUWHOHFWULFDOSRUWPHFKDQLFDORUYLFHYHUVD
35,1&,3/($QHOHFWULFDOPHFKDQLFDOGRPDLQLQWHUIDFHRIWKHHOHFWURVWDWLFW\SHDSSHDUVDVDQLGHDOJ\UDWRUEHFDXVHRIWKHFKDQJHWRDGPLWWDQFHDQDORJ\LQJRLQJIURPWKHHOHFWULFDOWRWKHPHFKDQLFDOVLGH2QWKHPHFKDQLFDOVLGHYROWDJHUHSUHVHQWVYHORFLW\DQGFXUUHQWUHSUHVHQWVIRUFH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
,GHDO*\UDUHD
0$,17&,50(&+$1,&$/$&2867,&$/'20$,1,17(5)$&(
0LQXV0LQXV
3OXV3OXV
3$5$0(7(56DUHD
3$5$0(7(5DUHD HIIHFWLYHDUHDRIFRQQHFWLQJVXUIDFH
86$*(,IDPHFKDQLFDOFLUFXLWLVWREHFRQQHFWHGWRDQDFRXVWLFDOFLUFXLWWKLVPDFURVKRXOGEHXVHGDVWKHLQWHUIDFH,WUHSUHVHQWVDK\SRWKHWLFDOVXUIDFHWKDWLVFRPPRQWRERWKFLUFXLWV7KHPRVWW\SLFDOFDVHLVWKHDUHDRIORXGVSHDNHUPHPEUDQH7KHPDFURFDQEHFRQQHFWHGHLWKHUZD\SRUWDFRXVWLFDOSRUWPHFKDQLFDORUYLFHYHUVD
35,1&,3/($PHFKDQLFDODFRXVWLFDOGRPDLQLQWHUIDFHDSSHDUVDVDJ\UDWRUQRWDWUDQVIRUPHUEHFDXVHRIWKHFKDQJHIURPDGPLWWDQFHDQDORJ\WRLPSHGDQFHDQDORJ\LQJRLQJIURPWKHPHFKDQLFDOWRWKHDFRXVWLFDOVLGH2QWKHPHFKDQLFDOVLGHYROWDJHUHSUHVHQWVYHORFLW\DQGFXUUHQWUHSUHVHQWVIRUFH2QWKHDFRXVWLFDOVLGHYROWDJHUHSUHVHQWVSUHVVXUHDQGFXUUHQWUHSUHVHQWVYROXPHYHORFLW\
5()(5(1&(
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS
5DGLDWLRQ
5
6QG3UHVV
$ 5
6SK:DYH
$ 5
6SK:DYH%
$ 5
3OQ:DYH
$5 5$,QW $5 5$,QW%
)LJXUH,95DGLDWLRQDFRXVWLFDOGRPDLQLQWHUIDFHJHQHUDODQGZLWKILQLWHEDIIOHVRXQGSUHVVXUHVRXUFHVSKHULFDOZDYHJHQHUDODQGZLWKILQLWHEDIIOHSODQHZDYH
5
/RDG
9FWUO
)UHH)OG
$ 5
,Q
/RDG
2XW
)UHH$LU
$ 5
,Q
2XW
/RDG
)UHH$LU
$55DG $FRXVW
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
N
N
5$,17&,535(6685(9(/2&,7<35(6685(92/80(
9(/2&,7<,17(5)$&(
5DG
3$5$0(7(56DUHDQREDIIOH
$FRXVW
'(),1(NDUHD QREDIIOH
'(),1(NEDIIOH
3$5$0(7(56DUHD DUHDRIFRQQHFWLQJVXUIDFHVVXEMHFWWRVRXQGUDGLDWLRQQR QXPEHURIVXUIDFHVEDIIOH RULQILQLWHEDIIOHRUQREDIIOHDURXQGVXUIDFHV
3,165DGLQSXWRXWSXWRISUHVVXUHYROWDJHDQGSDUWLFOHYHORFLW\FXUUHQW$FRXVWLQSXWRXWSXWRISUHVVXUHYROWDJHDQGYROXPHYHORFLW\FXUUHQW
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
/,0,7$7,216,WLVDVVXPHGWKDWWKHGLPHQVLRQVRIWKHVXUIDFHVFRQQHFWLQJWRWKHIROORZLQJDFRXVWLFFLUFXLWDUHFRQVLGHUDEO\VPDOOHUWKDQWKHZDYHOHQJWK,IDEDIIOHLVSUHVHQWEDIIOH LWLVDVVXPHGWKDWWKHEDIIOHLVFRQVLGHUDEO\ODUJHUWKDQWKHZDYHOHQJWK
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
35,1&,3/(7KHWUDQVIRUPDWLRQEHWZHHQSUHVVXUHYHORFLW\UDGLDWLRQGRPDLQDQGSUHVVXUHYROXPHYHORFLW\QRUPDODFRXVWLFDOGRPDLQLVUHDOL]HGDVDWUDQVIRUPHUZLWKXQHTXDOWUDQVIRUPDWLRQUDWLRVIRUYROWDJHDQGFXUUHQW7KHSUHVVXUHUHPDLQVWKHVDPHRQERWKVLGHVEXWWKHSDUWLFOHYHORFLW\PXVWEHWUDQVIRUPHGWRDYROXPHYHORFLW\DQGYLFHYHUVD,IWKHUHLVDEDIIOHWKHSUHVVXUHDWWKHUHFHLYLQJVXUIDFHGRXEOHVGXHWRUHIOHFWLRQVIURPWKHEDIIOH
5()(5(1&(/HDFK:0-U2QWKHHOHFWURDFRXVWLFDQDORJRXVFLUFXLWIRUDSODQHZDYHLQFLGHQWRQWKHGLDSKUDJPRIDIUHHILHOGSUHVVXUHPLFURSKRQH-$XGLR(QJ6RFYROQR
N
N
5$,17%&,535(6685(9(/2&,7<35(6685(92/80(
9(/2&,7<,17(5)$&(:,7+%$))/(
3$5$0(7(56DUHDQRESHULP
'(),1(NVVF VVF
'(),1(VF SL FESHULP
,1&/8'(&2167'()7;7
5DG $FRXVW
'(),1(NDUHD QRN
3$5$0(7(56DUHD DUHDRIFRQQHFWLQJVXUIDFHVLQWKHEDIIOHVXEMHFWWRVRXQGUDGLDWLRQQR QXPEHURIVXUIDFHVLQWKHEDIIOHESHULP SHULPHWHURIEDIIOH
3,165DGLQSXWRXWSXWRISUHVVXUHYROWDJHDQGSDUWLFOHYHORFLW\FXUUHQW$FRXVWLQSXWRXWSXWRISUHVVXUHYROWDJHDQGYROXPHYHORFLW\FXUUHQW
86$*(7KLVPDFURLVVLPLODUWRWKH5$,QWPDFURH[FHSWWKDWLWPRGHOVRQHRUPRUHHQWUDQFHVVXUURXQGHGE\DILQLWHEDIIOHZKRVHSHULPHWHULVVSHFLILHG)RUPRUHGHWDLOVVHHWKHGHVFULSWLRQRIWKH5$,QWPDFUR
/,0,7$7,216,QPRGHOOLQJWKHEDIIOHDFFXUDF\LVUHDVRQDEOHLQYLFLQLW\RIWKHWUDQVLWLRQIUHTXHQF\IURPIXOOWRKDOIVSDFHUDGLDWLRQDVORQJDVWKHEDIIOHVKDSHGRHVQRWGHSDUWWRRPXFKIURPDFLUFOHRUVTXDUHLHWKHDVSHFWUDWLRPXVWQRWEHODUJH$OVRWKHFRQQHFWLRQVWRWKHORDGLQJDFRXVWLFFLUFXLWPXVWEHORFDWHGFORVHHQRXJKWRWKHFHQWHURIWKHEDIIOH)RURWKHUOLPLWDWLRQVVHHWKHGHVFULSWLRQRIWKH5$,QWPDFUR
35,1&,3/(7KHJUDGXDOSUHVVXUHULVHGXHWRWKHVXUURXQGLQJEDIIOHDERYHDFHUWDLQWKUHVKROGIUHTXHQF\LVPRGHOOHGDVDJUDGXDOFKDQJHLQWKHJDLQVRIWKHFRQWUROOHGVRXUFHV7KHIXQFWLRQGHVFULELQJWKLVFKDQJHZDVREWDLQHGE\PDQXDOO\ILWWLQJLWVJUDSKWRDFXUYHGHULYHGIURPWKHIUHTXHQF\GHSHQGHQFHRIWKHUDGLDWLRQLPSHGDQFHRIDFLUFXODUSLVWRQLQWKHHQGRIDORQJWXEH
5()(5(1&(6/HDFK:0-U2QWKHHOHFWURDFRXVWLFDQDORJRXVFLUFXLWIRUDSODQHZDYHLQFLGHQWRQWKHGLDSKUDJPRIDIUHHILHOGSUHVVXUHPLFURSKRQH-$XGLR(QJ6RFYROQR%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
=FDLU
=FDLU
61'35(66&,56281'35(6685(6285&(3/$1(
:$9(92/7$*(&21752//('
)UHH)OG9FWUO
,1&/8'(&2167'()7;7
/RDG9FWUO
3$5$0(7(56
3,169FWUOYROWDJHFRQWUROLQSXW)UHH)OGRXWSXWRIIUHHILHOGVRXQGSUHVVXUHZLWKQRREVWDFOHSUHVHQW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHVRXQGZDYHV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
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
/,0,7$7,217KHPRGHODVVXPHVWKDWWKHZDYHVDUHSODQH
35,1&,3/(2QWKHULJKWVLGHRIWKLVFLUFXLWFXUUHQWFRUUHVSRQGVQRWWRYROXPHYHORFLW\EXWWRSDUWLFOHYHORFLW\7KHVRXQGSUHVVXUHWRWKH/RDGSLQLVGRXEOHGWRDFFRXQWIRUHIIHFWVRIYDULRXVORDGVWKDWFDQEHFRQQHFWHGWRWKLVRXWSXW,PSHGDQFHVVKRZQDUHWKHVSHFLILFDFRXVWLFLPSHGDQFHRIDSODQHZDYH
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QFS/HDFK:0-U2QWKHHOHFWURDFRXVWLFDQDORJRXVFLUFXLWIRUDSODQHZDYHLQFLGHQWRQWKHGLDSKUDJPRIDIUHHILHOGSUHVVXUHPLFURSKRQH-$XGLR(QJ6RFYROQR
5V /V
SRXW/[
5V /V
S SRXW
S[
63+:$9(&,563+(5,&$/:$9(5$',$7,21
VSHFLILFDFRXVWLFUHVLVWDQFHRIZDYH
'(),1(NG SL I GLVWF
3$5$0(7(56GLVWVSDFHFI
'(),1(5VUKR F NG NG
'(),1(/VUKR GLVWNG
SURSDJDWLRQGHOD\DQGDWWHQXDWLRQ
VSHFLILFDFRXVWLFLQGXFWDQFHRIZDYH
,1&/8'(&2167'()7;7
,Q /RDG
'(),1(/[UKR SL VSDFHFI
'(),1(SRXW(;3V GLVWFGLVW
2XW )UHH$LUS[
3$5$0(7(56GLVW GLVWDQFHIURPUDGLDWRUVXUIDFHWRREVHUYDWLRQSRLQWVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRVSDFHFI IXOOVSDFH KDOIVSDFHHWF
3,16,QLQSXWSLQIRUWKHYROXPHYHORFLW\FDXVLQJWKHUDGLDWLRQ2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
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
/,0,7$7,2165HIOHFWLRQVIURPDSRVVLEOHREVWDFOHEDFNWRWKHUDGLDWRUDUHWDNHQLQWRDFFRXQWDWWKH/RDGSLQEXWQRWDWWKHRWKHUHQGDOWKRXJKWKHUHIOHFWHGZDYHVDUULYHWKHUHGHOD\HGDQGDWWHQXDWHG$WYHU\FORVHGLVWDQFHVQHDUILHOGWKHVLPXODWHGVRXQGILHOGLVUHDOO\DFFXUDWHRQO\IRUUDGLDWRUVZLWKDVSKHULFDOVXUIDFHQRWMXVWDQ\UDGLDWRUVVPDOOFRPSDUHGWRWKHZDYHOHQJWK7KHPRGHOWUHDWVVSDFHFIDVGHVFULELQJDQLQILQLWHVSDFHHJLGHDOIXOOVSDFHDQLQILQLWHEDIIOHVSDFHFI RUDQLQILQLWHFRQLFDOKRUQVSDFHFI
35,1&,3/(2QWKHULJKWVLGHRIWKLVFLUFXLWFXUUHQWFRUUHVSRQGVQRWWRYROXPHYHORFLW\EXWWRSDUWLFOHYHORFLW\7KHVRXQGSUHVVXUHWRWKH/RDGSLQLVGRXEOHGWRDFFRXQWIRUHIIHFWVRIYDULRXVORDGVWKDWFDQEHFRQQHFWHGWRWKLVRXWSXW,PSHGDQFHVVKRZQDUHWKHVSHFLILFDFRXVWLFLPSHGDQFHRIWKHVSKHULFDOZDYH
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS0RUVH309LEUDWLRQDQGVRXQGQGHGLWLRQ1HZ<RUN86$0F*UDZ+LOO5HILQ%HUDQHN.LQVOHU/()UH\$5)XQGDPHQWDOVRIDFRXVWLFV0RQWHUH\&DOLI86$-RKQ:LOH\6RQV,QFSS2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QFSS
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
$ 5
6SK:DYHGLVWVSDFHFI
2XW
63+:$9(%&,563+(5,&$/:$9(5$',$7,215$',$7256855281'('%<),1,7(%$))/(
3$5$0(7(56GLVWESHULP
,1&/8'(&2167'()7;7
'(),1(VSDFHFI IIF IIF
'(),1(IF FESHULP
,Q
)UHH$LU
/RDG
WUDQVLWLRQIUHTXHQF\KDOIZD\EHWZHHQIXOODQGKDOIVSDFHUDGLDWLRQ
WUDQVLWLRQIURPVSDFHFI WRVSDFHFI
3$5$0(7(56GLVW GLVWDQFHIURPUDGLDWRUVXUIDFHWRREVHUYDWLRQSRLQWESHULP SHULPHWHURIEDIIOH
3,16,QLQSXWSLQIRUWKHYROXPHYHORFLW\FDXVLQJWKHUDGLDWLRQ2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVVLPLODUWRWKH6SK:DYHPDFURH[FHSWWKDWLWPRGHOVUDGLDWLRQHPLWWHGE\RQHRUPRUHUDGLDWRUVVXUURXQGHGE\DILQLWHEDIIOHZKRVHSHULPHWHULVVSHFLILHG)RUPRUHGHWDLOVVHHWKHGHVFULSWLRQRIWKH6SK:DYHPDFUR
/,0,7$7,216,QPRGHOOLQJWKHEDIIOHDFFXUDF\LVUHDVRQDEOHLQYLFLQLW\RIWKHWUDQVLWLRQIUHTXHQF\IURPIXOOWRKDOIVSDFHUDGLDWLRQDVORQJDVWKHEDIIOHVKDSHGRHVQRWGHSDUWWRRPXFKIURPDFLUFOHRUVTXDUHLHWKHDVSHFWUDWLRPXVWQRWEHODUJH$OVRWKHUDGLDWRUVPXVWEHORFDWHGFORVHHQRXJKWRWKHFHQWHURIWKHEDIIOH)RURWKHUOLPLWDWLRQVVHHWKHGHVFULSWLRQRIWKH6SK:DYHPDFUR
35,1&,3/(7KHWUDQVLWLRQIURPIXOOWRKDOIVSDFHUDGLDWLRQDVIUHTXHQF\LQFUHDVHVLVPRGHOOHGKHUHXVLQJDIUHTXHQF\GHSHQGHQWYDOXHIRUVSDFHFIZKLFKLVSDVVHGWRWKH6SK:DYHPDFUR7KHIXQFWLRQGHVFULELQJWKLVFKDQJHZDVREWDLQHGE\PDQXDOO\ILWWLQJLWVJUDSKWRDFXUYHGHULYHGIURPWKHIUHTXHQF\GHSHQGHQFHRIWKHUDGLDWLRQLPSHGDQFHRIDFLUFXODUSLVWRQLQWKHHQGRIDORQJWXEH
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
TRXW 5V
TRXW 5V
S
3/1:$9(&,53/$1(:$9(5$',$7,21
3$5$0(7(56DUHDQRGLVW
,1&/8'(&2167'()7;7
,Q /RDG
2XW
)UHH$LU
'(),1(TRXW(;3V GLVWF SURSDJDWLRQGHOD\
VSHFLILFDFRXVWLFUHVLVWDQFHRIZDYH'(),1(5VUKR FDUHD QR
3$5$0(7(5DUHD DUHDRIZDYHIURQWDQGUDGLDWRUQR QXPEHURIZDYHIURQWVDQGUDGLDWRUVGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QLQSXWSLQIRUWKHYROXPHYHORFLW\FDXVLQJWKHUDGLDWLRQ2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
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
/,0,7$7,215HIOHFWLRQVIURPDSRVVLEOHREVWDFOHEDFNWRWKHUDGLDWRUDUHWDNHQLQWRDFFRXQWDWWKH/RDGSLQEXWQRWDWWKHRWKHUHQGDOWKRXJKWKHUHIOHFWHGZDYHVDUULYHWKHUHGHOD\HGDQGDWWHQXDWHG
35,1&,3/(2QWKHULJKWVLGHRIWKLVFLUFXLWFXUUHQWFRUUHVSRQGVQRWWRYROXPHYHORFLW\EXWWRSDUWLFOHYHORFLW\7KHVRXQG
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
SUHVVXUHWRWKH/RDGSLQLVGRXEOHGWRDFFRXQWIRUHIIHFWVRIYDULRXVORDGVWKDWFDQEHFRQQHFWHGWRWKLVRXWSXW,PSHGDQFHVVKRZQDUHWKHVSHFLILFDFRXVWLFLPSHGDQFHVRIWKHSODQHZDYH
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOS2OVRQ+)$FRXVWLFDOHQJLQHHULQJHGLWLRQRULJ'YDQ1RVWUDQG&R3KLODGHOSKLD3$86$3URIHVVLRQDO$XGLR-RXUQDOV,QFS/HDFK:0-U2QWKHHOHFWURDFRXVWLFDQDORJRXVFLUFXLWIRUDSODQHZDYHLQFLGHQWRQWKHGLDSKUDJPRIDIUHHILHOGSUHVVXUHPLFURSKRQH-$XGLR(QJ6RFYROQR
7UDQVGXFHUV
'\Q6SNU '\Q6SNU (OFW0LF (OFW0LF
)LJXUH,9'\QDPLFVSHDNHUVDQGHOHFWUHWPLFURSKRQHV
3OXV0LQXV
)URQW%DFN
([FUV
,Q
3OXV 0LQXV
)URQW %DFN
3OXV 0LQXV
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
5FRLO /FRLO
( 0(0,QW'\Q%O
/P/PHFK
5P5PHFK &P&PHFK
0
$0$,QW$HII
'<163.5&,5%$6,&'<1$0,&/28'63($.(5
([FUV
%DFN
)URQW
3$5$0(7(565FRLO/FRLO%O5PHFK/PHFK&PHFK$HII
3OXV
0LQXV
3$5$0(7(565FRLO YRLFHFRLOUHVLVWDQFH/FRLO YRLFHFRLOLQGXFWDQFH%O IRUFHIDFWRU5PHFK PHFKDQLFDOUHVLVWDQFHRIVXVSHQVLRQ/PHFK PHFKDQLFDOLQGXFWDQFHPRYLQJPDVVRIORXGVSHDNHU&PHFK PHFKDQLFDOFDSDFLWDQFHFRPSOLDQFHRIVXVSHQVLRQ$HII HIIHFWLYHDUHDRIGLDSKUDJP
3,163OXVSROHRIYRLFHFRLO0LQXVSROHRIYRLFHFRLO)URQWDFRXVWLFRXWSXWIURQWRIGLDSKUDJP%DFNDFRXVWLFRXWSXWEDFNRIGLDSKUDJP([FUVGLDSKUDJPH[FXUVLRQRXWSXWDVDYROWDJH
86$*(7KLVPDFURPRGHOVWKHEHKDYLRXURIDW\SLFDOG\QDPLFORXGVSHDNHUDWORZIUHTXHQFLHV$FRXVWLFDOORDGVVXFKDVUDGLDWLRQLPSHGDQFHFDQEHFRQQHFWHGWRERWKWKHIURQWDQGWKHEDFNRIWKHGLDSKUDJP
/,0,7$7,2163KHQRPHQDHQWHULQJDWKLJKHUIUHTXHQFLHVEUHDNXSUHVRQDQFHVHWFDUHQRWPRGHOOHG7KXVWKHUHLVDQXSSHUOLPLWLQJIUHTXHQF\DERYHZKLFKWKHPRGHOLVQRORQJHUDFFXUDWHWKDWGHSHQGVRQWKHSURSHUWLHVRIWKHORXGVSHDNHUWKDWLVPRGHOOHG
35,1&,3/(7KHORXGVSHDNHULVPRGHOOHGXVLQJDWKUHHGRPDLQHTXLYDOHQWFLUFXLWZLWKWKHPHPEUDQHDQGLWVVXVSHQVLRQPRGHOOHGDVDPHFKDQLFDOUHVRQDWRUZLWKJLYHQFRPSRQHQWYDOXHV7KHHIIHFWLYHDUHDRIWKHGLDSKUDJPIRUPVWKHLQWHUIDFHEHWZHHQWKHPHFKDQLFDODQGDFRXVWLFDOFLUFXLWVDQGWKHIRUFHIDFWRULVVHHQDVWKHLQWHUIDFHEHWZHHQWKHHOHFWULFDODQGPHFKDQLFDOFLUFXLWV
5()(5(1&(%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5H
( 0(0,QW'\Q%O
/P/PHFK
5P5PHFK &P&PHFK
0
$0$,QW6G
'<163.5&,5%$6,&'<1$0,&/28'63($.(5:,7+7+,(/(60$//3$5$0(7(56
([FUV
%DFN
)URQW
3$5$0(7(565HIV9DV4PV4HV6G
3OXV
0LQXV
'(),1(%O6457UKR F 6G 5H SL IV 9DV 4HV
'(),1(5PHFKUKR F 6G SL IV 9DV 4PV
'(),1(/PHFKUKR F 6G SL IV 9DV
'(),1(&PHFK9DVUKR F 6G
,1&/8'(&2167'()7;7
3$5$0(7(565H YRLFHFRLOUHVLVWDQFHIV IUHHDLUUHVRQDQFHIUHTXHQF\9DV DLUYROXPHHTXLYDOHQWRIVXVSHQVLRQFRPSOLDQFH4PV 4YDOXHDWUHVRQDQFHFRQVLGHULQJQRQHOHFWULFDOUHVRQDQFHVRQO\4HV 4YDOXHDWUHVRQDQFHFRQVLGHULQJHOHFWULFDOUHVRQDQFHVRQO\6G HIIHFWLYHDUHDRIGLDSKUDJP
3,163OXVSROHRIYRLFHFRLO0LQXVSROHRIYRLFHFRLO)URQWDFRXVWLFRXWSXWIURQWRIGLDSKUDJP%DFNDFRXVWLFRXWSXWEDFNRIGLDSKUDJP([FUVGLDSKUDJPH[FXUVLRQRXWSXWDVDYROWDJH
86$*(7KLVPDFURPRGHOVWKHEHKDYLRXURIDW\SLFDOG\QDPLFORXGVSHDNHUDWORZIUHTXHQFLHV$FRXVWLFDOORDGVVXFKDVUDGLDWLRQLPSHGDQFHFDQEHFRQQHFWHGWRERWKWKHIURQWDQGWKHEDFNRIWKHGLDSKUDJP
/,0,7$7,2163KHQRPHQDHQWHULQJDWKLJKHUIUHTXHQFLHVEUHDNXSUHVRQDQFHVHWFDUHQRWPRGHOOHG7KXVWKHUHLVDQXSSHUOLPLWLQJIUHTXHQF\DERYHZKLFKWKHPRGHOLVQRORQJHUDFFXUDWHWKDWGHSHQGVRQWKHSURSHUWLHVRIWKHORXGVSHDNHUWKDWLVPRGHOOHG7KHYRLFHFRLOLQGXFWDQFHLVQRWLQFOXGHGLQWKHPRGHO
35,1&,3/(7KHORXGVSHDNHULVPRGHOOHGXVLQJDWKUHHGRPDLQHTXLYDOHQWFLUFXLWZLWKWKHPHPEUDQHDQGLWVVXVSHQVLRQPRGHOOHGDVDPHFKDQLFDOUHVRQDWRUZLWKFRPSRQHQWYDOXHVFDOFXODWHGIURPJLYHQ7KLHOH6PDOOSDUDPHWHUV7KHHIIHFWLYHDUHDRIWKHGLDSKUDJPIRUPVWKHLQWHUIDFHEHWZHHQWKHPHFKDQLFDODQGDFRXVWLFDOFLUFXLWVDQGWKHIRUFHIDFWRULVVHHQDVWKHLQWHUIDFHEHWZHHQWKHHOHFWULFDODQGPHFKDQLFDOFLUFXLWV
5()(5(1&(6%HUDQHN//$FRXVWLFV1HZ<RUN86$0F*UDZ+LOOSS6PDOO5+'LUHFWUDGLDWRUORXGVSHDNHUV\VWHPDQDO\VLV-$XGLR(QJ6RFYROQR
5RXW
&RXW
VHQV7
(/&70,&&,5%$6,&(/(&75(70,&523+21(
0LQXV
3OXV,Q
3$5$0(7(56VHQV5RXW&RXW
3$5$0(7(56VHQV VHQVLWLYLW\93D5RXW RXWSXWUHVLVWDQFH&RXW RXWSXWFDSDFLWDQFH
3,16,QDFRXVWLFSUHVVXUHLQSXW3OXVHOHFWULFRXWSXWSRVLWLYHDWSRVLWLYHSUHVVXUHV0LQXVHOHFWULFRXWSXW
86$*(7KHPDFURLVXVDEOHDVDVLPSOHPRGHORIDW\SLFDOHOHFWUHWPLFURSKRQH
35,1&,3/(7KHPLFURSKRQHLVPRGHOOHGDVDVLPSOH9&96ZLWKWKHJLYHQRXWSXWLPSHGDQFH$QLQSXWLPSHGDQFHRI7RKPLVLQFOXGHGWRSUHYHQWGLYHUJHQFHWKHDFRXVWLFLQSXWLPSHGDQFHLVLQHIIHFWDVVXPHGKLJKHQRXJKWREHQHJOLJLEOH
5()(5(1&(69DULRXVGDWDVKHHWVIURPPLFURSKRQHPDQXIDFWXUHUV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5RXW
&RXW
VHQV7
%DFN 0LQXV
3OXV)URQW
3$5$0(7(56VHQV5RXW&RXW
(/&70,&&,5%$6,&(/(&75(70,&523+21(35(6685(
*5$',(177<3(
3$5$0(7(56VHQV VHQVLWLYLW\93D5RXW RXWSXWUHVLVWDQFH&RXW RXWSXWFDSDFLWDQFH
3,16)URQWDFRXVWLFSUHVVXUHLQSXWIURQWRIGLDSKUDJP%DFNDFRXVWLFLQSXWEDFNRIGLDSKUDJP3OXVHOHFWULFRXWSXWSRVLWLYHDWSRVLWLYHSUHVVXUHVIURQWKLJKHUWKDQEDFN0LQXVHOHFWULFRXWSXW
86$*(7KLVPDFURLVXVDEOHDVDVLPSOHPRGHORIDW\SLFDOHOHFWUHWPLFURSKRQHRIWKHSUHVVXUHJUDGLHQWW\SH7KHVHQVLWLYLW\LVH[SUHVVHGDVRXWSXWYROWDJHZLWKDJLYHQSUHVVXUHGLIIHUHQFHEHWZHHQIURQWDQGEDFNSUHVVXUH7KLVGLIIHUVIURPWKHZD\VHQVLWLYLW\LVJLYHQLQW\SLFDOGDWDVKHHWVVRVRPHFDOFXODWLRQPLJKWEHQHHGHGWRJHWWKHFRUUHFWVHQVLWLYLW\YDOXHIRUWKHPDFUR
35,1&,3/(7KHPLFURSKRQHLVPRGHOOHGDVDVLPSOH9&96ZLWKWKHJLYHQRXWSXWLPSHGDQFH$QLQSXWLPSHGDQFHRI7RKPLVLQFOXGHGWRSUHYHQWGLYHUJHQFHWKHDFRXVWLFLQSXWLPSHGDQFHLVLQHIIHFWDVVXPHGKLJKHQRXJKWREHQHJOLJLEOH
5()(5(1&(69DULRXVGDWDVKHHWVIURPPLFURSKRQHPDQXIDFWXUHUV
0HDVXULQJHTXLSPHQW
(DU (DU/R (DU+L *HUP/N
)LJXUH,9 ,7873 W\SHVHDOHGFRXSOHU HDUVLPXODWRU W\SH ORZOHDNDQGKLJKOHDNFRXSOHUOHDNULQJ´*HUPDQOHDN´IRUWKHVHDOHGFRXSOHU
,Q 2XW ,Q 2XW
/HDN
3LQ 3LQ
/HDN
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
S 0HJ
0HJ
S
0HJ
N
S
($5&,5,78737<3(($56,08/$725
,Q 2XW
3$5$0(7(56
3,16,QSUHVVXUHLQSXW2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH
86$*(7KLVPDFURPRGHOVWKH,7873W\SHHDUVLPXODWRU7KHSUHVVXUHPHDVXUHGE\WKHLQWHUQDOPLFURSKRQHFDQEHVHQVHGDWWKH2XWSLQ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
/,0,7$7,217KHPDFURVKRXOGQRWEHXVHGDERYHN+]
5()(5(1&(3URGXFWGDWDHDUVLPXODWRUIRUWHOHSKRQRPHWU\W\SH%UHO.M U1 UXP'HQPDUN
,(&
N
S
0HJ
S
/HDN
,Q 2XW
($5/2&,5,78737<3(/2:/($.($56,08/$725
3$5$0(7(56
3,16,QSUHVVXUHLQSXW2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH/HDNOHDNRSHQLQJV
86$*(7KLVPDFURPRGHOVWKH,7873W\SHORZOHDNHDUVLPXODWRU7KHSUHVVXUHPHDVXUHGE\WKHLQWHUQDOPLFURSKRQHFDQEHVHQVHGDWWKH2XWSLQ,QQRUPDOXVDJHWKH/HDNSLQLVWREHFRQQHFWHGWRDWPRVSKHULFSUHVVXUHLHIROORZHGE\DQ$WP3UHVVPDFUR
/,0,7$7,2167KHDFFXUDF\RIWKHPDFURLVEHVWDWORZDQGPLGUDQJHIUHTXHQFLHV$ERYHN+]WKHUHDUHORFDOGHYLDWLRQVRIXSWRDQGG%VLPXODWHGYVUHDO7KHPDFURVKRXOGQRWEHXVHGDERYHN+]
5()(5(1&(3URGXFWGDWDZLGHEDQGHDUVLPXODWRUIRUWHOHSKRQRPHWU\W\SH%UHO.M U1 UXP'HQPDUN
,(&
N
S
N
S
,Q
($5+,&,5,78737<3(+,*+/($.($56,08/$725
2XW
/HDN
3$5$0(7(56
3,16,QSUHVVXUHLQSXW2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH/HDNOHDNRSHQLQJV
86$*(7KLVPDFURPRGHOVWKH,7873W\SHKLJKOHDNHDUVLPXODWRU7KHSUHVVXUHPHDVXUHGE\WKHLQWHUQDOPLFURSKRQHFDQEHVHQVHGDWWKH2XWSLQ,QQRUPDOXVDJHWKH/HDNSLQLVWREHFRQQHFWHGWRDWPRVSKHULFSUHVVXUHLHIROORZHGE\DQ$WP3UHVVPDFUR
/,0,7$7,2167KHDFFXUDF\RIWKHPDFURLVEHVWDWORZDQGPLGUDQJHIUHTXHQFLHV$ERYHN+]WKHUHDUHORFDOGHYLDWLRQVRIXSWRG%VLPXODWHGYVUHDO7KHPDFURVKRXOGQRWEHXVHGDERYHN+]
5()(5(1&(3URGXFWGDWDZLGHEDQGHDUVLPXODWRUIRUWHOHSKRQRPHWU\W\SH%UHO.M U1 UXP'HQPDUN
S
0HJ
/HDN
*(50/.&,5*(50$1/($.5,1*
3LQ 3LQ
3$5$0(7(56
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
3,163LQ3LQFRQQHFWLRQSRLQWVIRU(DUHDUVLPXODWRUDQGDFRXVWLFFLUFXLW/HDNOHDNRSHQLQJV
86$*(7KLVPDFURFDQEHXVHGLQVHULHVZLWKWKH(DUHDUVLPXODWRUPDFURWRPRGHODVSHFLDOOHDNDGDSWHUPDQXIDFWXUHGE\6\VWHO(OHNWURQLN*PE+*HUPDQ\,QQRUPDOXVDJHWKH/HDNSLQLVWREHFRQQHFWHGWRDWPRVSKHULFSUHVVXUHLHIROORZHGE\DQ$WP3UHVVPDFUR
/,0,7$7,2167KHPRGHOGRHVQRWKDYHDQ\IUHTXHQF\GHSHQGHQWLPSHGDQFHVLQLWZKLFKOHDGVWRORZHUDFFXUDF\
35,1&,3/(7KHPRGHOZDVFUHDWHGE\PHDVXULQJPHFKDQLFDOGLPHQVLRQV7KHRSSRVLWHUHVLVWRUSDLULVXVHGPHUHO\WRSUHYHQWDQHUURUWKDWZRXOGUHVXOWIURPVKRUWLQJWZRGLIIHUHQWSLQVWRJHWKHU
5()(5(1&(0RGHOFUHDWHGE\&3ROG\3KLOLSV6SHDNHU6\VWHPV$XVWULD
3UREHVDQGDQQRWDWRUV
9HO3UE )RUFH3UE 'LVS3UE0
0,PS3UE
3UHVV3UE 9RO93UE 9RO3UE$
$,PS3UE
&XUU3UE(
(,PS3UE
)LJXUH ,9&XUUHQWDQGHOHFWULF LPSHGDQFHSUREH WRS URZ YHORFLW\ IRUFHGLVSODFHPHQW DQGPHFKDQLFDO LPSHGDQFH SUREH PLGGOH URZ SUHVVXUH YROXPH YHORFLW\ YROXPHDQGDFRXVWLFLPSHGDQFHSUREHERWWRPURZ
3LQ 3LQ9RXW
3OXV9RXW
0LQXV3LQ 3LQ
9RXW
0
=P
/RDG
3LQ 3LQ
9RXW 9RXW
3OXV 0LQXV 3OXV 0LQXV9RXW
$
=D
/RDG
3OXV 0LQXV9RXW
(
=H
/RDG
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
&85535%&,5&855(17352%(
9RXW
0LQXV3OXV
3$5$0(7(56
86$*(7KHFXUUHQWSUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIFXUUHQWV7KHSUREHLVLQVHUWHGLQWRWKHGHVLUHGEUDQFKDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHFXUUHQWSDVVLQJWKURXJKWKHSUREH7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJFXUUHQWVLQDFLUFXLWRULPSOHPHQWLQJFXUUHQWFRQWUROOHGVRXUFHV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
9RXW
3LQ3LQ
9(/35%&,59(/2&,7<352%(
3$5$0(7(56
86$*(7KHYHORFLW\SUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIYHORFLWLHVLQDPHFKDQLFDOFLUFXLW7KHSUREHLVLQVHUWHGDWWKHGHVLUHGQRGHDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHYHORFLW\RIWKHSUREHGSRLQW7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJYHORFLWLHVLQDPHFKDQLFDOFLUFXLWRULPSOHPHQWLQJYHORFLW\FRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQPHFKDQLFDOFLUFXLWVRQO\7U\LQJWRSUREHYHORFLWLHVLQDQDFRXVWLFFLUFXLWJLYHVZURQJUHVXOWV
35,1&,3/(7KHRSSRVLWHUHVLVWRUSDLULVXVHGPHUHO\WRSUHYHQWDQHUURUUHVXOWLQJIURPVKRUWLQJWZRGLIIHUHQWSLQVWRJHWKHU9HORFLW\FRUUHVSRQGVWRYROWDJHLQWKHDGPLWWDQFHDQDORJ\XVHGLQWKHPHFKDQLFDOGRPDLQ
)25&(35%&,5)25&(352%(
9RXW
0LQXV3OXV
3$5$0(7(56
86$*(7KHIRUFHSUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIIRUFHVLQDPHFKDQLFDOFLUFXLW7KHSUREHLVLQVHUWHGLQWRWKHGHVLUHGEUDQFKDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHIRUFHSDVVLQJWKURXJKWKHSUREH7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJIRUFHVLQDFLUFXLWRULPSOHPHQWLQJIRUFHFRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQPHFKDQLFDOFLUFXLWVRQO\7U\LQJWRSUREHDIRUFHDFWLQJRQVRPHWKLQJLQDQDFRXVWLFFLUFXLWJLYHVZURQJUHVXOWV
35,1&,3/()RUFHFRUUHVSRQGVWRFXUUHQWLQWKHDGPLWWDQFHDQDORJ\XVHGLQWKHPHFKDQLFDOGRPDLQ
'LVS9HOGLVS
3$5$0(7(56GLVS
',6335%&,5',63/$&(0(17352%(
9RXW
3LQ3LQ
3$5$0(7(5GLVS LQLWLDOGLVSODFHPHQW
86$*(7KHGLVSODFHPHQWSUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIGLVSODFHPHQWVLQDPHFKDQLFDOFLUFXLW7KHSUREHLVLQVHUWHGDWWKHGHVLUHGQRGHDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHGLVSODFHPHQWRIWKHSUREHGSRLQW7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJGLVSODFHPHQWVLQDPHFKDQLFDOFLUFXLWRULPSOHPHQWLQJGLVSODFHPHQWFRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQPHFKDQLFDOFLUFXLWVRQO\7U\LQJWRSUREHWKHGLVSODFHPHQWRIVRPHWKLQJLQDQDFRXVWLFFLUFXLWJLYHVZURQJUHVXOWV
35,1&,3/(,QWHJUDWLRQRIWKHYHORFLW\LVFDUULHGRXWWRJHWWKHGLVSODFHPHQW7KHRSSRVLWHUHVLVWRUSDLULVXVHGPHUHO\WRSUHYHQWDQHUURUUHVXOWLQJIURPVKRUWLQJWZRGLIIHUHQWSLQVWRJHWKHU
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
35(6635%&,535(6685(352%(
9RXW
3LQ3LQ
3$5$0(7(56
86$*(7KHSUHVVXUHSUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RISUHVVXUHVLQDQDFRXVWLFFLUFXLW7KHSUREHLVLQVHUWHGDWWKHGHVLUHGQRGHDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHSUHVVXUHDWWKHSUREHGSRLQW7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJSUHVVXUHVLQDPHFKDQLFDOFLUFXLWRULPSOHPHQWLQJSUHVVXUHFRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQDFRXVWLFFLUFXLWVRQO\7U\LQJWRSUREHSUHVVXUHVLQDPHFKDQLFDOFLUFXLWJLYHVZURQJUHVXOWV
35,1&,3/(7KHRSSRVLWHUHVLVWRUSDLULVXVHGPHUHO\WRSUHYHQWDQHUURUUHVXOWLQJIURPVKRUWLQJWZRGLIIHUHQWSLQVWRJHWKHU3UHVVXUHFRUUHVSRQGVWRYROWDJHLQWKHLPSHGDQFHDQDORJ\XVHGLQWKHDFRXVWLFDOGRPDLQ
92/935%&,592/80(9(/2&,7<352%(
9RXW
0LQXV3OXV
3$5$0(7(56
86$*(7KHYROXPHYHORFLW\SUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIYROXPHYHORFLWLHVLQDQDFRXVWLFFLUFXLW7KHSUREHLVLQVHUWHGLQWRWKHGHVLUHGEUDQFKDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHYROXPHYHORFLW\IORZLQJWKURXJKWKHSUREH7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJYROXPHYHORFLWLHVLQDFLUFXLWRULPSOHPHQWLQJYROXPHYHORFLW\FRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQDFRXVWLFFLUFXLWVRQO\
35,1&,3/(9ROXPHYHORFLW\FRUUHVSRQGVWRFXUUHQWLQWKHLPSHGDQFHDQDORJ\XVHGLQWKHDFRXVWLFDOGRPDLQ
9RO9RO9YRO
3$5$0(7(56YRO
9RXW
0LQXV3OXV
92/35%&,592/80(352%(
3$5$0(7(5YRO LQLWLDOYROXPH
86$*(7KHYROXPHSUREHLVXVHGIRUHDV\DQQRWDWLRQDQGDQDO\VLVGLVSOD\RIYROXPHVLQDQDFRXVWLFFLUFXLW7KHSUREHLVLQVHUWHGLQWRWKHGHVLUHGEUDQFKDQGQDPHGE\SXWWLQJJULGWH[WRQSLQ9RXWZKRVHYROWDJHZLOOEHHTXDOLQPDJQLWXGHWRWKHYROXPHIORZLQJWKURXJKWKHSUREH7KLVPDFURLVMXVWDFRQYHQLHQWIHDWXUHZKHQDQQRWDWLQJYROXPHVLQDQDFRXVWLFFLUFXLWRULPSOHPHQWLQJYROXPHFRQWUROOHGVRXUFHV
/,0,7$7,217KHPDFURFDQEHXVHGLQDFRXVWLFFLUFXLWVRQO\
35,1&,3/(,QWHJUDWLRQRIWKHYROXPHYHORFLW\LVFDUULHGRXWWRJHWWKHYROXPH7KHRSSRVLWHUHVLVWRUSDLULVXVHGPHUHO\WRSUHYHQWDQHUURUUHVXOWLQJIURPVKRUWLQJWZRGLIIHUHQWSLQVWRJHWKHU
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
9/RDG
$&'& (
(,0335%&,5,03('$1&(352%()25(/(&75,&,03('$1&(
/RDG
=H
3$5$0(7(56
3,16/RDGWKLVSLQLVORDGHGZLWKWKHLPSHGDQFHWREHPHDVXUHG=HRXWSXWVWKHLPSHGDQFHDVDFRPSOH[YROWDJH
86$*(7KLVPDFURLVVXLWDEOHIRUPHDVXULQJLPSHGDQFHVWRJURXQGDWYDULRXVSRLQWVLQDFLUFXLW$OVRWKHLPSHGDQFHFDQEHDQQRWDWHGE\SXWWLQJJULGWH[WRQQRGH=H
/,0,7$7,216$QLQWHUQDOVKXQWUHVLVWDQFHRI(RKPLVLQFOXGHGWRSUHYHQWGLYHUJHQFH
,5
I
$&'&
0,0335%&,5,03('$1&(352%()250(&+$1,&$/,03('$1&(
/RDG
=P
3$5$0(7(56
3,16/RDGWKLVSLQLVORDGHGZLWKWKHLPSHGDQFHWREHPHDVXUHG=PRXWSXWVWKHLPSHGDQFHDVDFRPSOH[YROWDJH
86$*(7KLVPDFURLVVXLWDEOHIRUPHDVXULQJLPSHGDQFHVWRJURXQGDWYDULRXVSRLQWVLQDFLUFXLW$OVRWKHLPSHGDQFHFDQEHDQQRWDWHGE\SXWWLQJJULGWH[WRQQRGH=P
/,0,7$7,216$QLQWHUQDOVHULHVUHVLVWDQFHRIIRKPLVLQFOXGHGWRSUHYHQWGLYHUJHQFH
9/RDG
$&'& (
$,0335%&,5,03('$1&(352%()25$&2867,&,03('$1&(
/RDG
=D
3$5$0(7(56
3,16/RDGWKLVSLQLVORDGHGZLWKWKHLPSHGDQFHWREHPHDVXUHG=DRXWSXWVWKHLPSHGDQFHDVDFRPSOH[YROWDJH
86$*(7KLVPDFURLVVXLWDEOHIRUPHDVXULQJLPSHGDQFHVWRJURXQGDWYDULRXVSRLQWVLQDFLUFXLW$OVRWKHLPSHGDQFHFDQEHDQQRWDWHGE\SXWWLQJJULGWH[WRQQRGH=D
/,0,7$7,216$QLQWHUQDOVKXQWUHVLVWDQFHRI(RKPLVLQFOXGHGWRSUHYHQWGLYHUJHQFH
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
&RPSRXQGPDFURV
&LU+ROH$ 5FW+ROH$
$ 5
5DG&LU
$ 5
5DG5FW
$ 5
5DG&LU%
$ 5
5DG5FW%
$ 5
5DG3OQ
&LU+ROH( 5FW+ROH(
(DU/R$ (DU+L$ *HUP/N$
)LJXUH ,9*HQHUDO+HOPKROW] UHVRQDWRU FLUFXODUDQGUHFWDQJXODUKROHZLWKDLU ORDGDQGJHQHUDOHQGFRUUHFWLRQVWURZFLUFXODUDQGUHFWDQJXODUUDGLDWRUVJHQHUDODQGZLWKILQLWHEDIIOHQGURZSODQHZDYHUDGLDWRUUGURZORZDQGKLJKOHDNHDUVLPXODWRUVDQGOHDNDGDSWHUHDFKZLWKQRVHSDUDWHOHDNSLQWKURZ
3LQ 3LQ
$ 5
,Q
2XW
/RDG
)UHH$LU
$ 5
,Q
2XW
/RDG
)UHH$LU
,Q 2XW 3LQ 3LQ
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
&LU+ROHGLDPOHQJWKQR
$LU/&LUGLDPQRVSDFHFIPXWXDOFI
$LU/&LUGLDPQRVSDFHFIPXWXDOFI
3LQ3LQ
&,5+2/($&,5&,5&8/$5+2/(6:,7+$,5/2$'
3$5$0(7(56GLDPOHQJWKQRVSDFHFIVSDFHFIPXWXDOFI
3$5$0(7(56GLDP GLDPHWHURIKROHVOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQVQR QXPEHURISDUDOOHOKROHVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRRQHVLGHVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRRWKHUVLGHPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQW
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDFLUFXODUKROHDQGLWVWZRHQGFRUUHFWLRQV)RUPRUHLQVWUXFWLRQVVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH&LU+ROHDQG$LU/&LUPDFURV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
5FW+ROHZLGWKKHLJKWOHQJWKQR
$LU/5FWZLGWKKHLJKWQRVSDFHFIPXWXDOFI
$LU/5FWZLGWKKHLJKWQRVSDFHFIPXWXDOFI
3LQ3LQ
5&7+2/($&,55(&7$1*8/$5+2/(6:,7+$,5/2$'
3$5$0(7(56ZLGWKKHLJKWOHQJWKQRVSDFHFIVSDFHFIPXWXDOFI
3$5$0(7(56ZLGWK ZLGWKRIKROHVKHLJKW KHLJKWRIKROHVOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQVQR QXPEHURISDUDOOHOKROHVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRRQHVLGHVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRRWKHUVLGHPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQW
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDUHFWDQJXODUKROHDQGLWVWZRHQGFRUUHFWLRQV)RUPRUHLQVWUXFWLRQVVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH5FW+ROHDQG$LU/5FWPDFURV
&LU+ROHGLDPOHQJWKQR
(QG&&LUGLDP5FRUU/FRUUQR
(QG&&LUGLDP5FRUU/FRUUQR
3LQ3LQ
&,5+2/((&,5&,5&8/$5+2/(6:,7+(1'&255(&7,21
3$5$0(7(56GLDPOHQJWK5FRUU/FRUU5FRUU/FRUUQR
3$5$0(7(56GLDP GLDPHWHURIKROHVOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQV5FRUU HQGFRUUHFWLRQIRUUHVLVWDQFHRQHVLGH/FRUU HQGFRUUHFWLRQIRULQGXFWDQFHRQHVLGH5FRUU HQGFRUUHFWLRQIRUUHVLVWDQFHRWKHUVLGH/FRUU HQGFRUUHFWLRQIRULQGXFWDQFHRWKHUVLGHQR QXPEHURISDUDOOHOKROHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDFLUFXODUKROHDQGLWVWZRHQGFRUUHFWLRQV)RUPRUHLQVWUXFWLRQVVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH&LU+ROHDQG(QG&&LUPDFURV
5FW+ROHZLGWKKHLJKWOHQJWKQR
(QG&5FWZLGWKKHLJKW5FRUU/FRUUQR
(QG&5FWZLGWKKHLJKW5FRUU/FRUUQR
3LQ3LQ
5&7+2/((&,55(&7$1*8/$5+2/(6:,7+(1'&255(&7,21
3$5$0(7(56ZLGWKKHLJKWOHQJWK5FRUU/FRUU5FRUU/FRUUQR
3$5$0(7(56ZLGWK ZLGWKRIKROHVKHLJKW KHLJKWRIKROHVOHQJWK OHQJWKLQIORZGLUHFWLRQH[FOHQGFRUUHFWLRQV5FRUU HQGFRUUHFWLRQIRUUHVLVWDQFHRQHVLGH/FRUU HQGFRUUHFWLRQIRULQGXFWDQFHRQHVLGH5FRUU HQGFRUUHFWLRQIRUUHVLVWDQFHRWKHUVLGH/FRUU HQGFRUUHFWLRQIRULQGXFWDQFHRWKHUVLGHQR QXPEHURISDUDOOHOKROHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDUHFWDQJXODUKROHDQGLWVWZRHQGFRUUHFWLRQV)RUPRUHLQVWUXFWLRQVVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH5FW+ROHDQG(QG&5FWPDFURV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
$LU/&LUGLDPQRVSDFHFIPXWXDOFI
$ 5
6SK:DYHGLVWVSDFHFI
/RDG
)UHH$LU
2XW
,Q
5$'&,5&,55$',$7,21)520&,5&8/$55$',$7256
:$9(/(1*7+
3$5$0(7(56GLDPQRVSDFHFIPXWXDOFIGLVW
3$5$0(7(56GLDP GLDPHWHURIUDGLDWRUVQR QXPEHURISDUDOOHOUDGLDWRUVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QSLQWREHFRQQHFWHGWRWKHDFRXVWLFFLUFXLW2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDLUORDGDQGUDGLDWLRQVSKHULFDOZDYHVIURPDFLUFXODUUDGLDWRU)RUPRUHLQIRUPDWLRQVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH$LU/&LUDQG6SK:DYHPDFURV
$LU/5FWZLGWKKHLJKWQRVSDFHFIPXWXDOFI
$ 5
6SK:DYHGLVWVSDFHFI
/RDG
)UHH$LU
2XW
,Q
5$'5&7&,55$',$7,21)5205(&7$1*8/$55$',$7256
:$9(/(1*7+
3$5$0(7(56ZLGWKKHLJKWQRVSDFHFIPXWXDOFIGLVW
3$5$0(7(56ZLGWK ZLGWKRIUDGLDWRUVKHLJKW KHLJKWRIUDGLDWRUVQR QXPEHURISDUDOOHOUDGLDWRUVVSDFHFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRPXWXDOFI PXWXDOFRXSOLQJFRHIILFLHQWGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QSLQWREHFRQQHFWHGWRWKHDFRXVWLFFLUFXLW2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDLUORDGDQGUDGLDWLRQVSKHULFDOZDYHVIURPDUHFWDQJXODUUDGLDWRU)RUPRUHLQIRUPDWLRQVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH$LU/5FWDQG6SK:DYHPDFURV
$LU/&LU%GLDPQRESHULPPXWXDOFI
$ 5
6SK:DYH%GLVWESHULP
/RDG
)UHH$LU
2XW
,Q
5$'&,5%&,55$',$7,21)520&,5&8/$55$',$7256
:$9(/(1*7+,1),1,7(%$))/(
3$5$0(7(56GLDPQRESHULPPXWXDOFIGLVW
3$5$0(7(56GLDP GLDPHWHURIUDGLDWRUVQR QXPEHURISDUDOOHOUDGLDWRUVESHULP SHULPHWHURIEDIIOHPXWXDOFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QSLQWREHFRQQHFWHGWRWKHDFRXVWLFFLUFXLW2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDLUORDGDQGUDGLDWLRQVSKHULFDOZDYHVIURPDFLUFXODUUDGLDWRULQDILQLWHEDIIOH)RUPRUHLQIRUPDWLRQVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH$LU/&LU%DQG6SK:DYH%PDFURV
$LU/5FW%ZLGWKKHLJKWQRESHULPPXWXDOFI
$ 5
6SK:DYH%GLVWESHULP
/RDG
)UHH$LU
2XW
,Q
5$'5&7%&,55$',$7,21)5205(&7$1*8/$55$',$7256
:$9(/(1*7+,1),1,7(%$))/(
3$5$0(7(56ZLGWKKHLJKWQRESHULPPXWXDOFIGLVW
3$5$0(7(56ZLGWK ZLGWKRIUDGLDWRUVKHLJKW KHLJKWRIUDGLDWRUVQR QXPEHURISDUDOOHOUDGLDWRUVESHULP SHULPHWHURIEDIIOHPXWXDOFI SRUWLRQRIIXOOVSDFHWKDWWKHUDGLDWLRQLVLQWRGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QSLQWREHFRQQHFWHGWRWKHDFRXVWLFFLUFXLW2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDLUORDGDQGUDGLDWLRQVSKHULFDOZDYHVIURPDUHFWDQJXODUUDGLDWRULQDILQLWHEDIIOH)RUPRUHLQIRUPDWLRQVHHWKHFRUUHVSRQGLQJPDFURV
/,0,7$7,2166HHWKH$LU/5FW%DQG6SK:DYH%PDFURV
3OQ5DG5DUHDQR
$ 5
3OQ:DYHDUHDQRGLVW
/RDG
)UHH$LU
2XW
,Q
5$'3/1&,55$',$7,212)3/$1(:$9(6%<5$',$7256
3$5$0(7(56DUHDQRGLVW
3$5$0(7(56DUHD DUHDRIUDGLDWRUVQR QXPEHURISDUDOOHOUDGLDWRUVGLVW GLVWDQFHIURPUDGLDWRUVWRREVHUYDWLRQSRLQW
3,16,QSLQWREHFRQQHFWHGWRWKHDFRXVWLFFLUFXLW2XWRXWSXWSLQFRS\LQJWKHLQSXWYROXPHYHORFLW\)UHH$LUSLQIRUVHQVLQJRIIUHHILHOGVRXQGSUHVVXUHDWGLVWDQFHVSHFLILHGE\GLVW/RDGSLQWKDWFDQEHFRQQHFWHGWRRWKHUDFRXVWLFDOORDGVWKDWUHFHLYHWKHUDGLDWHGVRXQGZDYHV
86$*(7KLVPDFURLVDUHDG\PDGHFRPELQDWLRQRIDLUORDGDQGUDGLDWLRQSODQHZDYHVIURPDSODQHUDGLDWRURIDUELWUDU\VKDSH,WFDQDOVREHVHHQDVWKHKLJKIUHTXHQF\HTXLYDOHQWWRWKH5DG&LUDQG5DG5FWPDFURV)RUPRUHLQIRUPDWLRQVHHWKH3OQ5DG5DQG3OQ:DYHPDFURV
/,0,7$7,2166HHWKH3OQ5DG5DQG3OQ:DYHPDFURV
(DU/R
($5/2$&,5,78737<3(/2:/($.($5
6,08/$725:,7+2876(3$5$7(/($.3,1
2XW,Q
3$5$0(7(56
3,16,QSUHVVXUHLQSXW
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH
86$*(7KLVPDFURLVHTXLYDOHQWWRDQ(DU/RPDFURZLWKWKHOHDNFRQQHFWHGWRDWPRVSKHULFSUHVVXUH)RUPRUHLQIRUPDWLRQVHHWKH(DU/RPDFUR
/,0,7$7,2166HHWKH(DU/RPDFUR
(DU+L
($5+,$&,5,78737<3(+,*+/($.($5
6,08/$725:,7+2876(3$5$7(/($.3,1
2XW,Q
3$5$0(7(56
3,16,QSUHVVXUHLQSXW2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH
86$*(7KLVPDFURLVHTXLYDOHQWWRDQ(DU+LPDFURZLWKWKHOHDNFRQQHFWHGWRDWPRVSKHULFSUHVVXUH)RUPRUHLQIRUPDWLRQVHHWKH(DU+LPDFUR
/,0,7$7,2166HHWKH(DU+LPDFUR
*HUP/N
*(50/.$&,5*(50$1/($.5,1*
:,7+2876(3$5$7(/($.3,1
3LQ3LQ
3$5$0(7(56
3,163LQ3LQFRQQHFWLRQSRLQWVIRU(DUHDUVLPXODWRUDQGDFRXVWLFFLUFXLW
86$*(7KLVPDFURLVHTXLYDOHQWWRD*HUP/NPDFURZLWKWKHOHDNFRQQHFWHGWRDWPRVSKHULFSUHVVXUH)RUPRUHLQIRUPDWLRQVHHWKH*HUP/NPDFUR
/,0,7$7,2166HHWKH*HUP/NPDFUR
0LVFHOODQHRXVPDFURV
'LVS9HO 9RO9RO9 ,(&
)LJXUH ,9 'HULYDWRUVLQWHJUDWRUV IRU FRQYHUVLRQ EHWZHHQ GLVSODFHPHQW DQG YHORFLW\YROXPHDQGYROXPHYHORFLW\ ,(&FRXSOHU XVHG LQWHUQDOO\E\(DU/RDQG(DU+LPDFURV
'LVS 9HO 9RO 9RO9HO ,Q 2XW
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
(
,& GLVS 7 (
3$5$0(7(56GLVS
',639(/&,5',63/$&(0(179(/2&,7<&219(57(5
9HO'LVS
3$5$0(7(5GLVS LQLWLDOGLVSODFHPHQW
3,16'LVSGLVSODFHPHQWLQSXWRXWSXW9HOYHORFLW\LQSXWRXWSXW
86$*(7KLVPDFURLVDQLQWHJUDWRUGHULYDWRUXVHGWRFRQYHUWEHWZHHQGLVSODFHPHQWDQGYHORFLW\ERWKJLYHQDVYROWDJHVLQWKHPHFKDQLFDOGRPDLQ
(
,& YRO 7 (
92/92/9&,592/80(92/80(9(/2&,7<&219(57(5
9RO9HO9RO
3$5$0(7(56YRO
3$5$0(7(5YRO LQLWLDOYROXPH
3,169ROYROXPHLQSXWRXWSXW9RO9HOYROXPHYHORFLW\LQSXWRXWSXW
86$*(7KLVPDFURLVDQLQWHJUDWRUGHULYDWRUXVHGWRFRQYHUWEHWZHHQYROXPHDQGYROXPHYHORFLW\ERWKJLYHQDVYROWDJHVLQWKHDFRXVWLFDOGRPDLQ
S
0HJ
N
S
S
0HJ
S
S
,(&&,5,(&&283/(586('%<,7873/2:/($.$1'+,*+/($.($5
6,08/$7250$&526
,Q 2XW
3$5$0(7(56
3,16,QSUHVVXUHLQSXW2XWLQWHUQDOSUHVVXUHPHDVXUHGE\PLFURSKRQH
86$*(7KLVPDFURPRGHOVWKH,(&FRXSOHUZKLFKLVDWWDFKHGWR,7873ORZDQGKLJKOHDNHDUVLPXODWRUV,WLVXVHGE\WKHPDFURVPRGHOOLQJWKRVHHDUVLPXODWRUV
5()(5(1&(
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
3URGXFWGDWDZLGHEDQGHDUVLPXODWRUIRUWHOHSKRQRPHWU\W\SH%UHO.M U1 UXP'HQPDUN
0DFURVFUHDWHGHVSHFLDOO\IRUWKHVLVVLPXODWLRQV
7KHVHPDFURV DUH XVHG LQ WKHVLV VLPXODWLRQV MXVW WRPDNH VFKHPDWLFVPRUH FRPSDFW DQGHDV\WRUHDG7KH\DUHQRWVHHQDVEHORQJLQJWRWKHUHDODFRXVWLFVPDFURFROOHFWLRQDQGDUHWKXVQRWLQFOXGHGLQWKHPHQXVWUXFWXUHVHHEHORZ'HILQLWLRQVVFKHPDWLFVDUHLQFOXGHGKHUHZLWKRXWIXUWKHUH[SODQDWLRQEHFDXVHWKHPDFURVDUHVHOIH[SODQDWRU\
6HOHFW 6($/(' *(50$1/($. 6HDO*HUP
)LJXUH,96HOHFWRUSRVLWLRQVZLWFK W\SHFRXSOHUZLWKDQGZLWKRXW*HUPDQ OHDNULQJEXLOWLQWRRQHVLQJOHPDFUR
6($/(' *(50$1/($.
(DU SRXW
)LJXUH,97KHDERYHPDFURVZLWKWKHLUSLQVVKRZQ
LIQR 7
LIQR 7
LIQR 7
LIQR 7
LIQR 7
7
3$5$0(7(56QR
6(/(&7&,56(/(&725
3DUDPHWHU
YDOXH QXPEHURISLQRWKHUYDOXHVQRFRQQHFWLRQ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
6HOHFWQ 6HOHFWQ
*HUP/N$
(DU
3$5$0(7(56Q
6($/*(50&,57<3(&283/(56($/('25:,7+*(50$1
/($.5,1*
SRXW(DU
8QLPSOHPHQWHGPDFURV
7KHIROORZLQJPDFURVZHUHVHHQDVHTXDOO\ LPSRUWDQWEXLOGLQJEORFNVEXW WKH\ZHUHQRWLPSOHPHQWHGLQWKLVWKHVLVGXHWRODFNRIVSDFHDQGWLPHDQGDOVREHFDXVHWKH\ZHUHQRWDFWXDOO\QHHGHGLQDQ\VLPXODWLRQV+RZHYHULIWKHDERYHFROOHFWLRQRIPDFURVZHUHWREHH[WHQGHG WKHVH XQLPSOHPHQWHGPDFURV VKRXOG EH WDNHQ LQWR FRQVLGHUDWLRQ DV LPSRUWDQWFDQGLGDWHV
(P6SNU 3]6SNU 3HUI3OW
)LJXUH ,9 (OHFWURPDJQHWLF DQG SLH]RHOHFWULF ORXGVSHDNHU SHUIRUDWHG SODWH FLUFXODUDQGUDFWDQJXODUGXFWZLWKORVVHV
3OXV0LQXV
)URQW%DFN
([FUV
3OXV0LQXV
)URQW%DFN
([FUV
3LQ 3LQ
)LJXUH,97KHDERYHFRPSRQHQWVZLWKWKHLUSLQVVKRZQ
2WKHUXQLPSOHPHQWHGPDFURVZKRVHVKDSHVKDYH\HWWREHGHVLJQHG
• PHFKDQLFDOVXVSHQVLRQFRPELQDWLRQRIFRPSOLDQFHUHVLVWDQFHDQGSRVVLEO\PDVV• HTXDOL]HUIRUW\SHORZOHDNDQGKLJKOHDNHDUVLPXODWRUV• OHYHUWUDQVIRUPHULQWKHPHFKDQLFDOGRPDLQ
0HQXVWUXFWXUH
7KH IROORZLQJPHQX VWUXFWXUH FRQWDLQLQJ DOO WKH XVHIXO PDFURV ZDV FUHDWHG LQVLGH WKH0LFUR&DS´&RPSRQHQW´PHQXJURXSVLQUHJXODUSULQWPDFURQDPHVLQEROGSULQW
$FRXVWLFV
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
(OHFWULFDOGRPDLQ3UREHV
&XUU3UEFXUUHQWSUREH(,PS3UEHOHFWULFLPSHGDQFHSUREH
0HFKDQLFDOGRPDLQ,GHDOFRPSRQHQWV
=PPHFKDQLFDOLPSHGDQFH5PPHFKDQLFDOUHVLVWDQFH/PPHFKDQLFDOLQGXFWDQFHPDVV&PPHFKDQLFDOFDSDFLWDQFHFRPSOLDQFH)RUFHIRUFHVRXUFH9HORFLW\YHORFLW\VRXUFH)L[HG3WLPPRYDEOHSRLQWPHFKDQLFDOJURXQG
3UREHV)RUFH3UEIRUFHSUREH9HO3UEYHORFLW\SUREH'LVS3UEGLVSODFHPHQWSUREH0,PS3UEPHFKDQLFDOLPSHGDQFHSUREH
0LVFHOODQHRXV'LVS9HOGLVSODFHPHQWYHORFLW\FRQYHUWHU
$FRXVWLFDOGRPDLQ,GHDOFRPSRQHQWV
=DDFRXVWLFLPSHGDQFH5DDFRXVWLFUHVLVWDQFH/DDFRXVWLFLQGXFWDQFHLQHUWDQFH&DDFRXVWLFFDSDFLWDQFH3UHVVXUHSUHVVXUHVRXUFH9RO9HOYROXPHYHORFLW\VRXUFH$WP3UHVVDWPRVSKHULFSUHVVXUHDFRXVWLFDOJURXQG
6RXQG6QG3UHVVVRXQGSUHVVXUHVRXUFH
6WUXFWXUHV&RPSRXQG
&LU+ROH$$LU/&LU&LU+ROH$LU/&LU5FW+ROH$$LU/5FW5FW+ROH$LU/5FW&LU+ROH((QG&&LU&LU+ROH(QG&&LU5FW+ROH((QG&5FW5FW+ROH(QG&5FW
&DYLWLHV&DYLW\DLUFDYLW\&DYLW\/VDLUFDYLW\ZLWKORVVHV
7XEHV&LU+ROHFLUFXODUKROHV5FW+ROHUHFWDQJXODUKROHV&LU'XFWFLUFXODUGXFWV5FW'XFWUHFWDQJXODUGXFWV
0HPEUDQHV0HPEUQULJLGSHUPHDEOHPHPEUDQHV0HPEUQSHUPHDEOHPHPEUDQHV
+HOPK5HV+HOPKROW]UHVRQDWRU$LUORDG
*HQHUDO
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
(QG&&LUHQGFRUUHFWLRQIRUFLUFXODUUDGLDWRUV(QG&5FWHQGFRUUHFWLRQIRUUHFWDQJXODUUDGLDWRUV
3ODQH3OQ5DG5UDGUHVLVWIRUUDGLDWRUVUDGLDWLQJSODQHZDYHV
6SKHULFDO$LU/&LUDLUORDGRQFLUFXODUUDGLDWRUV$LU/&LU%DLUORDGRQFLUFUDGLDWRUVZLWKILQLWHEDIIOH$LU/5FWDLUORDGRQUHFWDQJXODUUDGLDWRUV$LU/5FW%DLUORDGRQUHFWUDGLDWRUVZLWKILQLWHEDIIOH6SK5DG5UDGUHVLVWIRUUDGLDWRUVUDGLDWLQJVSKZDYHV
3UREHV3UHVV3UESUHVVXUHSUREH9RO93UEYROXPHYHORFLW\SUREH9RO3UEYROXPHSUREH$,PS3UEDFRXVWLFLPSHGDQFHSUREH
0LVFHOODQHRXV9RO9RO9YROXPHYROXPHYHORFLW\FRQYHUWHU
'RPDLQLQWHUIDFHV*HQHUDO
,GHDO7UILGHDOWUDQVIRUPHU,GHDO*\ULGHDOJ\UDWRU
(OHFWULFDOPHFKDQLFDO(0,QW'\QHOHFPHFKGRPLQWHUIIRUG\QDPLFWUDQVGXFWLRQ(0,QW(VHOHFPHFKGRPLQWHUIIRUHOHFWURVWDWLFWUDQVGXFWLRQ
0HFKDQLFDODFRXVWLFDO0$,QWPHFKDQLFDODFRXVWLFDOGRPDLQLQWHUIDFH
5DGLDWLRQ$FRXVWLFDOUDGLDWLRQ
3ODQH3OQ:DYHSODQHZDYHUDGLDWLRQ
6SKHULFDO6SK:DYHVSKHULFDOZDYHUDGLDWLRQ6SK:DYH%VSKHULFDOZDYHUDGZLWKILQLWHEDIIOH
5DGLDWLRQDFRXVWLFDO5$,QWUDGLDWLRQDFRXVWLFDOGRPDLQLQWHUIDFH5$,QW%UDGDFRXVWGRPDLQLQWHUIDFHZLWKILQLWHEDIIOH
&RPSRXQG5DG&LU$LU/&LU6SK:DYH5DG&LU%$LU/&LU%6SK:DYH%5DG5FW$LU/5FW6SK:DYH5DG5FW%$LU/5FW%6SK:DYH%5DG3OQ3OQ5DG53OQ:DYH
7UDQVGXFHUV'\Q6SNUEDVLFG\QDPLFORXGVSHDNHU'\Q6SNUEDVLFG\QDPLFORXGVSHDNHUZLWK7KLHOH6PDOOSDUDPHWHUV(OFW0LFEDVLFHOHFWUHWPLFURSKRQH(OFW0LFEDVLFHOHFWUHWPLFURSKRQHSUHVVXUHJUDGLHQWW\SH
0HDVXULQJHTXLSPHQW&RPSRXQG
(DU/R$,7873W\SHORZOHDNHDUVLPZLWKRXWOHDNSLQ(DU+L$,7873W\SHKLJKOHDNHDUVLPZLWKRXWOHDNSLQ
$SSHQGL[,90LFUR&DSVLPXODWLRQPDFURV,9
*HUP/N$OHDNDGDSWHU´*HUPDQOHDNULQJ´ZLWKRXWOHDNSLQ(DU,7873W\SHHDUVLPXODWRU(DU/R,7873W\SHORZOHDNHDUVLPXODWRU(DU+L,7873W\SHKLJKOHDNHDUVLPXODWRU*HUP/NOHDNDGDSWHU´*HUPDQOHDNULQJ´
$SSHQGL[90RGHOVRIHDUSLHFHFDSVXOH9
$SSHQGL[9 0RGHOV RI HDUSLHFHFDSVXOH
)LJXUH92QHPDVVPRGHO RI WKH 3KLOLSV 6SHDNHU 6\VWHPV 366 PP OHDNWROHUDQWHDUSLHFHFDSVXOH$OOPHFKDQLFDOVWUXFWXUHVHJWKHVPDOODLUFDYLW\XQGHUWKHPHPEUDQHDUHQRWPRGHOOHG
$SSHQGL[90RGHOVRIHDUSLHFHFDSVXOH9
)LJXUH97ZRPDVV YHUVLRQRI WKHDERYHPRGHOPRGHOOLQJDOVR WKHGHFRXSOLQJRI WKHGRPH FHQWHU SDUW RI WKHPHPEUDQH 7KHPRGHO LQFOXGHV WKH VPDOO DLU FDYLW\ XQGHU WKHPHPEUDQHOHIWRXWLQWKHVLPSOLILHGRQHPDVVPRGHO
$SSHQGL[90RGHOVRIHDUSLHFHFDSVXOH9
)LJXUH 9 7KUHHPDVV YHUVLRQ RI WKH DERYH PRGHO VHSDUDWLQJ WKH YRLFH FRLO DQG WKHPHPEUDQHLQWRWZRPDVVHVLQWHUFRQQHFWHGE\WKHJOXHEHWZHHQWKHP
$SSHQGL[9,0HDVXUHPHQWVHWXS9,
$SSHQGL[9, 0HDVXUHPHQWVHWXS
7KHHDUSLHFHPHDVXUHPHQWVFRQWDLQHGLQWKLVWKHVLVZHUHPDGHXVLQJD%UHO.M UDFRXVWLFFRXSOHUZLWKDW\SHò´PLFURSKRQHDQGDSUHDPSOLILHU
)LJXUH9,%UHO.M UDFRXVWLFFRXSOHUFRUUHVSRQGLQJWR,7873VSHFLILHGW\SH FRXSOHU WKH VRIW VHDO EODFN FROODU SDUW LV UHPRYDEOH IURP >@ 7KH LQWHUQDOVRXQG VRXUFH LV MXVW IRU YHULI\LQJ WKDW WKH FRXSOHU LV ZHOO VHDOHG EHIRUH DPHDVXUHPHQWEHJLQV
$OWKRXJK WKH FRXSOHU LV HTXLSSHGZLWK D IDLUO\JRRG VHDO LWZDVQHFHVVDU\ WRXVH DGGHGVHDOLQJ PDWHULDO %OX7DFN WR SUHYHQW DQ\ OHDNV EHWZHHQ WKH FRXSOHU DQG WKH SKRQHFRYHU GXULQJ ´VHDOHG´ PHDVXUHPHQWV EHFDXVH RI WKH FXUYHG VXUIDFH RI WKH 1RNLD IURQWFRYHU0RUHRYHUWKHMRLQWEHWZHHQWKHFRYHUDQGWKHGLVSOD\OHQVLQWKHSKRQHZDVVHDOHGVHSDUDWHO\WRHOLPLQDWHDQ\OHDNVRWKHUWKDQWKRVHGHOLEHUDWHO\EXLOWLQWRWKHHDUSLHFH,Q´*HUPDQOHDN´PHDVXUHPHQWVWKHVRIWVHDOEODFNFROODUSDUWZDVUHPRYHGDQGWKH*HUPDQ OHDN ULQJ LQVHUWHG LQ LWV SODFH%OX7DFNZDV XVHG LQ*HUPDQ OHDNPHDVXUHPHQWVDOVRWRHOLPLQDWHOHDNVEHWZHHQWKHSKRQHFRYHUDQGWKHUXEEHUVHDORIWKHOHDNULQJ
$VLQXVRLGDOYROWDJHRIP9SHDNDPSOLWXGHZDVEURXJKWGLUHFWO\WRWKHHDUSLHFHFDSVXOH WHUPLQDOV LQ IUHTXHQF\ UHVSRQVHPHDVXUHPHQWV 8QOHVVPHQWLRQHG RWKHUZLVH DOOVSHHFKSURFHVVLQJDQGRUILOWHULQJFLUFXLWU\LQWKHSKRQHZDVE\SDVVHG
)UHTXHQF\UHVSRQVHPHDVXUHPHQWVZHUHPDGHXVLQJDQ$XGLR3UHFLVLRQ6\VWHP7ZR DQDO\]HU DV FRPELQHGJHQHUDWRU DQG DQDO\]HU7KH VLQXVRLGDO GULYLQJ VLJQDO IURPWKH$XGLR3UHFLVLRQDQDO\]HUZDVURXWHGWRWKHHDUSLHFHWHUPLQDOVWKURXJKD5RWHO5%SRZHU DPSOLILHU ZLWK IHHGEDFN WR WKH$XGLR 3UHFLVLRQ DQDO\]HU WRPDLQWDLQ WKH GHVLUHGOHYHORIWKHGULYLQJVLJQDO7KHPLFURSKRQHZDVFRQQHFWHGWRWKH$XGLR3UHFLVLRQDQDO\]HUYLDD%UHO.M U W\SHPHDVXULQJDPSOLILHU7KHPLFURSKRQH FRXSOHUDQGSKRQHXQGHUWHVWZHUHORFDWHGLQDQDQHFKRLFFKDPEHUGXULQJDOOPHDVXUHPHQWV
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