)DOO
(WKQRPXVLFRORJ\
9RO 1R
0XVLF RI3RHWU\ DQG 3RHWU\ RI 6RQJ LQ
DQG *UDPPDU ([SUHVVLYLW\ 9RFDO 3HUIRUPDQFH 7\OHU %LFNIRUG
&ROXPELD 8QLYHUVLW\
LQ SRHWU\ DWWHPSWV WR FRQYH\ VRPHWKLQJ EH\RQG ZKDW FDQ EH FRQYH\HG SURVH UK\WKPV LWUHPDLQV DOO WKH VDPH RQH SHUVRQ WDONLQJ WR DQRWKHU DQG WKLV LV MXVW DV WUXH LI\RX VLQJ LWIRU VLQJLQJ LVDQRWKHU ZD\ RI WDONLQJ
:KLOH
"76(OLRW ,Q WKH SRHWU\ RI WKH IRONVRQJ LPLWDWH PXVLF ")ULHGULFK
ODQJXDJH
LV VWUDLQHG
WR LWVXWPRVW
WKDW LW PD\
1LHW]VFKH
,QWURGXFWLRQ 6(OLRW DQG )ULHGULFK1LHW]VFKH >@ WKLVDUWLFOH GHYHORSV WKHFODLPV WKDW VLQJLQJ LVRQO\ GLVFRXUVH"QRW )ROORZLQJ7 WKH VXSHUODWLYH
VLWH RI H[SUHVVLRQ
WKDW URPDQWLF
LGHDOLVP
ZRXOG
KDYH
LWDQG
VLQJLQJ LVPRUH WKDQ MXVW ODQJXDJH"OLNH YHUVH LWRUJDQL]HV XWWHUDQFHV LQ IRUPVQRWQDWLYH WR ODQJXDJH 7KH ERXQGDULHV RIVSHHFK DQG VRQJKDYH ORQJ EHHQ DPRQJ WKH LPSRUWDQW WRSLFV RI HWKQRPXVLFRORJ\ QRWDEO\ DGGUHVVHG LQ*HRUJH /LVW V IRXQGDWLRQDO DUWLFOH LQ*HRUJH +HU]RJ V HDUO\H[SOR LQ UDWLRQV RI WKH UHODWLRQVKLS EHWZHHQ PXVLF DQG WH[W -RKQ%ODFNLQJ V DFFRXQW RIPXVLFDO GLVFRXUVH DQG LQOLQJXLVWLFDOO\ LQIRUPHGZRUN VXFK DV WKDWE\ /HDQQH +LQWRQ /DXUD*UDKDP
&KDUOHV %ULJJV -HDQ-DFTXHV 1DWWLH] DQG$DURQ )R[ 7KLV GLDORJXH ZLWK OLQJXLVWLFVSURPLQHQW LQHWKQRPX VLFRORJ\ WKURXJK WKH V KDV ODUJHO\ UHFHGHG IURPYLHZ VLQFH ,Q WKLV DUWLFOH ,UHYLVLWD WRSLF RIHDUO\ LQWHUVWWRRXU GLVFLSOLQH E\ LQYHVWLJDWLQJ WKH SDWWHUQV RIVRXQG DQG JHVWXUH WKDWVWUXFWXUHDFWVRIVSHDNLQJ DQG VLQJLQJ DV
LQWHOOLJLEOH DQG LQWHUSUHWDEOH XWWHUDQFHV 5HFRJQL]LQJ DV%DNKWLQ QRWHV WKDW WKURXJKRXW LWVHQWLUH UDQJH DQG LQ GLVFRXUVH LVD VRFLDO SKHQRPHQRQ
" E\ WKH 6RFLHW\ IRU(WKQRPXVLFRORJ\
(WKQRPXVLFRORJ\
)DOO
HDFK DQG HYHU\ RI LWVIDFWRUVIURPWKHVRXQG LPDJH WRWKHIXUWKHVWUHDFKHV RI DEVWUDFWPHDQLQJ >@ ,H[DPLQH WKH H[SUHVVLYH UROH RI
SKRQRORJ\ DQGSKRQHWLFV LQYRFDO SHUIRUPDQFH LQRUGHU WRDUWLFXODWH DFORVHU SHUVSHFWLYH RQ WKHSODFH RIVLQJLQJ LQGLVFRXUVH DQG WKHUHE\ WRFRQWULEXWH WRDQXQGHUVWDQGLQJ RIGLVFXUVLYH SUDFWLFH JHQHUDOO\
:KHUH WKHERXQGDULHV RIPXVLFDO IRUPVDUHRIWHQ LPSUHFLVH RUXQVWDEOH WKHVRXQGV RI ODQJXDJH DUH DOZD\V SDUW RID UHJXODU V\VWHPRIPHDQLQJ 7KH GLVWLQFWLYH IHDWXUHVRI ODQJXDJH DUH WKHVXEVWDQWLYH EDVLV RIDOO WKH OHYHOVRI V\VWHPDWLFKLHUDUFKLFDO DQGSURGXFWLYH UHJXODULW\WKDWOLQJXLVWVKDYH IRXQG LQ V\QWD[ PRUSKRORJ\ DQGSKRQRORJ\ -DNREVRQ 7KHUHIRUH ODQJXDJH LV IXQFWLRQDOO\XQLTXH DPRQJ WKHSKHQRPHQD RIFXOWXUH 6LOYHUVWHLQ
)ROORZLQJ 6LOYHUVWHLQ DQG8UEDQ ZKR H[SORUH RWKHU SKH QRPHQD RIFXOWXUH E\FRQVLGHULQJ WKHLULQWHUUHODWLRQVZLWK WKH IXQFWLRQDOO\ JURXQGHG IRUPVRI ODQJXDJH ,SURSRVH WKDW WKH VXEVWDQWLYH UHJXODULW\ RI
OLQJXLVWLF JUDPPDU FRQVWLWXWHV DXVHIXO DQDO\WLFDO FRQWH[W LQWKH VWXG\ RI VRQJ %HFDXVH WKHVRXQGV RI ODQJXDJH DUH DOUHDG\ SDUVHG LQWR IXQFWLRQDOO\ DQG SHUFHSWXDOO\ UHOHYDQW XQLWV WKH VRXQGV RI ODQJXDJH LQVRQJ SURYLGH D PDWHULDO JURXQGLQJ WKDWFDQ KHOS FRQVWUDLQ WKHVOLSSHU\ DFRXVWLF ERXQGV RI PXVLFDO
IRUPV
(OHPHQWV RISKRQRORJ\ VXFK DV VWUHVVSKUDVLQJ DQG V\OODEOH VWUXFWXUHWR QDPH
D IHZ KDYH
UHDO EHDULQJ
RQ VLQJLQJ
DQG WKHLU IXQFWLRQDO
LHJUDPPDWL
FDO SUHVHQFH LQWKH OLQJXLVWLF FRQWH[W RID VRQJ V O\ULFVSOD\V DQ LPSRUWDQW UROH LQWKHH[SUHVVLYH IRUPVRI VLQJLQJ0\ DLP LVQRW VRPXFK WRYLHZ WKH VRXQGV RISRHWU\ DV WKHPVHOYHVPXVLFDO /HUGDKO DV LWLVWRYLHZ WKH VRXQGV RI ODQJXDJH LQPXVLF )HOG DQG )R[ DV D VLWHRI H[SUHVVLYH LQWHUDFWLRQ
EHWZHHQ
V\VWHPV
RI DXUDO PHDQLQJ
DQG IRUP
,QSXUVXLW RI WKLVJRDO ,SUHVHQW DQ DQDO\VLV RI%RE '\ODQ V UHFRUGHG SHU IRUPDQFHRI 'RZQ WKH+LJKZD\IURP 7KH)UHHZKHHOLQ %RE '\ODQ >@ 'RZQ WKH+LJKZD\ LVDQHDV\ DQG FRPSHWHQW EOXHV LWVVSDUVH JXLWDU DFFRPSDQLPHQW IDFLOLWDWHVFORVH DWWHQWLRQWR'\ODQ V LGLRV\QFUDWLFVLQJLQJVW\OH
ZKLFK KLJKOLJKWV WKHSURQXQFLDWLRQ DQG LQIOHFWLRQRIZRUGV DQGSKUDVHV $Q H[WHQVLYH OLWHUDWXUHH[SORUHV WKHELRJUDSKLFDO OLWHUDU\ SROLWLFDO DQG FRPPHU FLDOFRQWH[WV RI'\ODQ V PXVLFZKLOH LQWHUURJDWLQJKLVSRVLWLRQ DVDFXUDWRU DQG
$PHULFDQ YHUQDFXODU PXVLF HJ*LOO 5LFNV 0DUFXV LQWHUSUHWHURI 6KDQN *UD\ %RXFKHU DQG %URZQLQJ &RUFRUDQ ,IRFXVKHUH RQ WKHPLFUROHYHO LQWHUUHODWLRQVRI ODQJXDJH DQGPXVLF LQ '\ODQ V VLQJLQJ LQRUGHU WRDGGUHVV LVVXHVRIYRFDO SHUIRUPDQFH PRUH JHQHU DOO\
7KH IROORZLQJ VHFWLRQ SURYLGHV D UHYLHZ RI UHOHYDQW OLWHUDWXUHDUJXLQJ IRUDJUDPPDWLFDO SKHQRPHQRORJLFDO DQG VHPLRWLF XQGHUVWDQGLQJ RI WKH DUH LQVLQJLQJ,QWKHWKLUGDQG IRXUWK VRXQGV PXVLFDO ZD\V ODQJXDJH SURSHUO\ VHFWLRQV ,SUHVHQW DGHWDLOHG DQDO\VLV RI WKHSRHWLFV DQGPXVLF RI'\ODQ V
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
VLQJLQJ DQG DUJXH WKDWWKHH[SUHVVLYH IRUPRI 'RZQ WKH+LJKZD\ FDQQRW EH XQGHUVWRRG ZLWKRXW DQ LQWHJUDWHGDSSURDFK WRPXVLF DQG ODQJXDJH LQWKH YRLFH1H[W ,DFNQRZOHGJH DQGDFFRXQW IRUFHUWDLQFRQWH[WV RIWKHUHFRUGLQJ V PHDQLQJ
SHUIRUPDQFH
DQG UHFHSWLRQ
7KH
FRQFOXVLRQ
VLWXDWHV
WKHVH
DQDO\WL
FDOSRVLWLRQV ZLWKLQ DEURDGHU DSSURDFK WRWKH OD\HULQJRIPHDQLQJ DQG IRUP LQ GLVFRXUVH
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
SURDFK HVSHFLDOO\ WKDWRI DSSO\LQJ OLQJXLVWLF IRUPDOLVPV WRPXVLF ZLWKRXW LQWHUURJDWLQJ WKHDVVXPSWLRQV WKDWXQGHUO\ WKHPRWLYDWLQJ ODQJXDJHPXVLF DQDORJ\ )HOG 5DWKHU VLQJLQJ LQSDUWLFXODU PXVW EH XQGHUVWRRG LQ GLDORJXH ZLWK OLQJXLVWLFVEHFDXVH VLQJLQJ LVIXOORI ODQJXDJH WKLVLVQRW WRVD\ WKDWVLQJLQJ LV ODQJXDJH RU WKDWWUDQVIRUPDWLRQDO OLQJXLVWLFV VKRXOG SURYLGH
PRUH WKDQSDVVLQJ LQVLJKWLQWR PXVLFDO IRUP([SUHVVLYH VLQJLQJ LVLQWLPDWHO\ ERXQG E\ WKHJUDPPDU RI ODQJXDJH EHFDXVH WKHZRUGV LWLQFOXGHV DUH VR ERXQG WKHUHIRUH OLQJXLVWLFJUDPPDUPXVW EH JLYHQ VRPH DWWHQWLRQ LQDQ DS SURDFK WRH[SUHVVLYH VLQJLQJ %\ WKH VDPH PRYH"DVVHUWLQJ
WKH UHOHYDQFH
RI OLQJXLVWLF
IRUPV
LQ VRQJ"
WKLVDUWLFOH FRQWULEXWHV WRDQ DSSURDFK WRYHUEDO DUWWKDWKDV EHHQ IUXLWIXOO\ GHYHORSHG E\ OLQJXLVWLFDOO\ LQFOLQHG DQWKURSRORJLVWV DQG IRONORULVWV8UEDQ DUJXHV
WKDW WKH PDWHULDO
VXEVWDQFH
RI DFWXDOO\
RFFXUULQJ
LQVWDQFHV
RI GLV
FRXUVH FRQVWLWXWHV WKHSULQFLSDO VLWHRI FXOWXUH DV D FROOHFWLRQ RUKLVWRU\ RISXEOLFO\ DFFHVVLEOH VLJQYHKLFOHV LELG /LWHUDWXUH LQWKLV
WUDGLWLRQFODLPV WKDWWKHIRUPDOSURSHUWLHV RIGLVFRXUVH DUHFOXHV WRWKHIXQF WLRQRI VLJQYHKLFOHV LQVRFLDO OLIH6LOYHUVWHLQ +\PHV 7HGORFN 8UEDQ 6KHU]HU %ULJJV 7KH IDFWWKDWGLVFRXUVH DQG YHUEDO DUW LQSDUWLFXODU LVVRRIWHQ VWUXFWXUHG LQUHJXODU DQG VHQVLEOH IRUPV ZKLFK SURYLGHV D IRRWKROG IURPZKLFK WRH[SORUH WKHXQFRQVFLRXV ZD\V LQ VRFLDO OLIHVWUXFWXUHV HPERGLHG SUDFWLFHV RI WKRXJKW DQG EHKDYLRU 8UEDQ $V:RRGEXU\ GHPRQVWUDWHV WKDWWKHVWUXFWXUHV RIGLVFRXUVH DUHSHUYDVLYHO\ LQYROYHGZLWK SDWWHUQV RIV\QWD[DQGSKRQRORJ\ DQG DV-DNRE
VRQ >,@ DUJXHV IRUXQGHUVWDQGLQJ JUDPPDU DQGSRHWLFV DV UHODWHG DQG LQWHUDFWLQJ IXQFWLRQV LQYHUEDO DUW,GHYHORS WKHFODLP WKDWVLQJLQJ LV VWUXFWXUHG E\ WKHLQWHUUHODWLRQVRIGLIIHUHQWOHYHOVRIGLVFRXUVH %\DVVHUWLQJ
(WKQRPXVLFRORJ\
)DOO
WKHUHOHYDQFH RI ODQJXDJH VRXQGV WRVLQJLQJ ,PDNH D FODLP DERXW WKHSKH QRPHQRORJ\ RI VRQJ WKH OLQJXLVWLF V\VWHPV RIVRXQG DQGPHDQLQJ PHGLDWH WKHVHQVRU\ DQG VHPLRWLFPRGHV RIH[SUHVVLYLW\ LQVLQJLQJ /LQJXLVWLF $SSURDFKHV
WR6LQJLQJ
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
IRONEDOODGV DUH DOO H[SRQHQWV UDS DUWLVWV DQG WKH VLQJHUV RI$SSDODFKLDQ LQZKDW LV DUJXDEO\ LWVPRVW QDWXUDO IRUP +D\HV DQG .DXQ
RI
7H[WVHWWLQJ LQYROYHVSURGXFWLYH LQWHUDFWLRQEHWZHHQ WKHGLIIHUHQWUK\WKPLF V\VWHPV RIPXVLF DQG ODQJDXJH+D\HV DQG.DXQ ZRUN ZLWK ODERUDWRU\ GDWD
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
LQYHUVLRQ"ZKHUH
LQ VLQJLQJ
WKH VSRNHQ
VWUHVV
FRQWRXU
RI
DZRUG RUPHWULFDO IRRW LVUHYHUVHG DWDSURVRGLH SKUDVH ERXQGDU\ HJ D VWURQJZHDN IRRWPD\ EH UHQGHUHGZHDNVWURQJ DWWKHHQG RID OLQH 3KUDVH VWUXFWXUH LQ PDQ\ FDVHV LVIDYRUHG RYHU V\OODEOH VWUHVV
,Q UHVSRQVH WRVWXGLHV E\+DOOH DQG /HUGDKO DQG+DOOH +D\HV )RUWKFRPLQJ E DUJXHV IRUXQGHUVWDQGLQJ WH[WVHWWLQJ LQWHUPVRI2SWL PDOLW\7KHRU\ 3ULQFH DQG 6PROHQVN\ >@ ZKLFK LGHQWLILHVUDQNDEOH FRQVWUDLQWVRQZHOOIRUPHGQHVV WKDWPDUNDJDLQVW LGHQWLI\DVSRWHQWLDOO\
LOOIRUPHG SKRQRORJLFDO VWUXFWXUHV+D\HV UHIRUPXODWHVKLV DQG.DXQ V FRQFOXVLRQV DVDUDQNHG OLVWRIFRQVWUDLQWV RQ (QJOLVK WH[WVHWWLQJ,QSDUWLFXODU (QJOLVK WH[WVHWWLQJ LVVHHQ WREH VWUXFWXUHG E\ WKHIROORZLQJ FRQVWUDLQWV DJDLQVW DVVRFLDWLQJ VWURQJ V\OODEOHV ZLWK ZHDN EHDWV DQG YLFH YHUVD D FRQVWUDLQW DJDLQVW RYHUORQJ SDXVHV EHWZHHQ V\OODEOHV FRQVWUDLQWV WKDW FRQGLWLRQ WKHUHDOL]DWLRQ RI WKHSKRQHWLF OHQJWKRI V\OODEOHV DV UK\WKPLFGX
%LFNIRUG 0XVLF
RI3RHWU\ DQG 3RHWU\ RI6RQJ
UDWLRQDQG FRQVWUDLQWV WKDWOLQHXSSURVRGLH SKUDVH HGJHV ZLWK PXVLFDO SKUDVH HGJHV 7KHVH DXWKRUV DOOGHOLPLW WKHLUVWXGLHV LQWZR LPSRUWDQWZD\V )LUVWWKH\ HPSKDVL]H WKHLUDYRLGDQFH RITXHVWLRQV RIH[SUHVVLYLW\EUDFNHWLQJ VSRQWD QHRXV DUWLVWLFGHFLVLRQ>V@ +D\HV DQG.DXQ DQG LPSXOVHV >WKDW@ PD\ EH SUHIHUUHG E\ FRPSRVHUV SUHFLVHO\ EHFDXVH WKH\DUHYLRODWLRQV DQG KHQFH DUH VWULNLQJDQGXQH[SHFWHG+DOOH DQG/HUGDKO :KLOH VXFK D
QDUURZ IRFXVKDV LWVXVHV IRUWKHGHYHORSPHQW RIV\VWHPDWLF UHSUHVHQWDWLRQV RIWKHVHPXVLFDO SURFHVVHV LWLVQRW FOHDUZLWK UHJDUG WRQRUPDOPXVLFDO SUDF WLFHLHEH\RQG WKHVWDQGDUGL]LQJ FRQWH[W RIWKH OLQJXLVWLFV ODERUDWRU\ WKDW
WKHVH DQDO\VHV GHYHORS RXU XQGHUVWDQGLQJ RI VLQJHUV FRPSHWHQFH DWVHWWLQJ OLQHV LQQRYHOZD\V 1RQHWKHOHVV WKHVH VWXGLHVPLJKW SURYLGH LQVLJKWVDERXW DUWLVWLFVLQJLQJ ZKLFK ,WDNH WREH WKHQRUP UDWKHU WKDQ WKHH[FHSWLRQ E\ IRUPDOL]LQJ DQ LPSOLFLWJURXQG DJDLQVWZKLFK YDULDWLRQV LQSHUIRUPDQFH
DUH FRQWH[WXDOL]HG DQG XQGHUVWRRG 6HFRQG WKHVH DXWKRUV FKRRVH QRW WR H[DPLQH SLWFK DQGPHOLVPD FRQVLGHULQJ RQO\ UK\WKP LQWKHLUDQDO\VHV RI WH[WVHWWLQJ ,ILQG WKDW LQ'\ODQ V VLQJLQJ ERWKPHORG\ DQG UK\WKP LQWHUDFW
ZLWK SKRQRORJLFDO HOHPHQWV LQ ZD\V WKDWVSHFLILFDOO\ HPSKDVL]H WKHVLQJHU V H[SUHVVLYH
PRYHV
'LVFRXUVH&HQWHUHG
$SSURDFKHV
WR9HUEDO $UW
(WKQRJUDSKLF VWXGLHV RIYHUEDO DUWE\ IRONORULVWV DQG DQWKURSRORJLVWV KDYH FRQWULEXWHG EURDG FURVVFXOWXUDO NQRZOHGJH DERXW WKHPHGLDWLRQV RI ODQJXDJH DQGFXOWXUH 6KHU]HU +\PHV E ,QSDUWLFXODUE\H[DPLQ LQJWKHIRUPDOVWUXFWXUHVRIYHUEDO DUWLQWKHFRXUVH RIFDUHIXO HWKQRJUDSKLF DWWHQWLRQ WRVRFLHW\ DQG FXOWXUH OLQJXLVWLFDQWKURSRORJLVWV KDYH DUJXHG WKDW YHUEDO DUWDFURVV FXOWXUHV LVVWUXFWXUHG E\YDULRXV W\SHVRISDUDOOHOLVP WKH UHSHWLWLRQ RI VHJPHQWV RIGLVFRXUVH IURPRQH LQVWDQFH WRDQRWKHU ZKLFK WDNHVSODFH DWWKH OHYHORI WKH OLQHDQG YHUVH +\PHV LQWLPLQJ
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
(WKQRPXVLFRORJ\
)DOO
YHUEDO UHIHUHQWLDOLW\ LQRUGHU WR UHYHDO WKH IRUPDO DQG VXSSUHVVHV FRQWH[WV 0XVLF V RI FRGHV DQG FRPPXQLFDWLYH PHVVDJHV RUGHULQJ
FRPPXQLFDWLRQ
SUDJPDWLF IRUPDO UHGXQGDQF\ PXVLFDO
PHWDODQJXDJH
DQG DXWRUHIHUHQWLDOLW\ KHLJKWHQ )HOG DQG )R[
WH[WV DQG SURGXFH
SRHWLF
3DUDOOHOLVP LQYHUVH GHSHQGV RQ FDWHJRULFDO HTXLYDOHQFHV JXLVWLF
HOHPHQWV
SURGXFHG
WKURXJK
UK\PH
DVVRQDQFH
DQG
D
EHWZHHQ OLQ
VWUHVV
DV WKH FRQVWLWXWLYH LVSURPRWHG GHYLFH RI WKH VHTXHQFH >LQSRHWU\@ (TXLYDOHQFH ,QSRHWU\ RQH V\OODEOH LVHTXDOL]HG ZLWK DQ\ RWKHU V\OODEOH RI WKH VDPH VHTXHQFH WRHTXDO ZRUG VWUHVV DV XQVWUHVV HTXDOV XQVWUHVV SURVRGLH ZRUG VWUHVV LVDVVXPHG ORQJ LVPDWFKHG ZLWK ORQJ DQG VKRUW ZLWK VKRUW ZRUG ERXQGDU\ HTXDOV ZRUG QR QR SDXVH HTXDOV HTXDOV V\QWDFWLF V\QWDFWLF ERXQGDU\ ERXQGDU\ ERXQGDU\ LQWR XQLWV RIPHDVXUH SDXVH QR SDXVH HTXDOV QR SDXVH 6\OODEOHV DUH FRQYHUWHG DQG VR DUHPRUDH
RU VWUHVVHV
-DNREVRQ
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
KDV PXFK
IRUPDO
UHGXQGDQF\
DQG WKHUHIRUH
SDUDOOHOLVP EXWPXVLFDO SURJUHVVLRQV DOVR RIWHQGHSHQG RQ JUDGLHQW DUWLFXOD WLRQVRI VRXQG DQRWLRQ WKDWFDQQRW EH H[SUHVVHG ZHOO LQWHUPVRISDUDOOHO LVP 0XVLF SKRQRORJ\ DORQJ
LVQRW
DSSDUHQWO\
5DWKHU
FRQWLQXRXV
3KRQRORJ\
DQG
FRQVWUDLQHG
OLNH SKRQHWLFV JUDGLHQW
WKHUHIRUH
VFDOHV SRHWLFV
PXVLFDO
E\ FDWHJRULFDO SDUDPHWHUV
DV LQ HTXLYDOHQFHV VHHP WR RSHUDWH
RIWHQ
RI SLWFK WLPEUH UK\WKP WR H[SUHVV KDV QR PHDQV
DQG G\QDPLFV VWUXFWXUHV
WKDW
GHSHQG XSRQ FRQWLQXRXV SURJUHVVLYH FKDQJH OLNHVXFK FDQRQLFDOO\ PXVLFDO IRUPV
DV FUHVFHQGR
DFFHOHUDQGR
RU PHORGLF
VHTXHQFLQJ
:KHUH
IRUPDO
OLQJXLVWLFVWDNHVDV LWVVWDUWLQJSRLQW WKHFDWHJRULFDO GLVWLQFWLRQV IHDWXUHVPDNH EHWZHHQ DFRXVWLFDOO\ FRQWLQXRXV VRXQGV -DNREVRQ WKHUHLVVLPSO\QR PXVLF 0XVLFDO IRUPVDUH UHODWHG RU HTXLYDOHQW RI WKHGLVWLQFWLYH IHDWXUH LQ
GLVWLQJXLVKHG EDVHG RQ VKLIWLQJDQG QHYHU XQLYHUVDOO\ VDOLHQW VHJPHQWDWLRQV RIJUDGLHQW DFRXVWLF VFDOHV LQGLIIHUHQWZD\V LQGLIIHUHQWHQYLURQPHQWV &RQQHFWLQJ SKRQHWLFV DQGPXVLF WKURXJK JUDGLHQFH LQDQ DQDO\WLFDO DSSURDFK WR ODQJXDJH LQVRQJ FRQWULEXWHV D UHFRJQLWLRQ WKDWWKHIHDWXUDO TXDOLWLHV RI OLQJXLVWLFVHJPHQWV FDQKDYH GLVWLQFWO\PXVLFDO YDOXH LQWKHULJKW
FRQWH[WV 7ZR UHFHQW VWXGLHV LQSDUWLFXODU ERWK LQTXLULHV LQWRVSHHFK DERXW PXVLF GHPRQVWUDWH WKHSRWHQWLDO PXVLFDOLW\ RI ODQJXDJH 7KRPDV 3RUFHOOR V HWKQRJUDSKLF DFFRXQW RID7H[DV UHFRUGLQJ VWXGLR 7DONDERXW7LPEUH LQWKH 5HFRUGLQJ 6WXGLR )HOG)R[3RUFHOOR DQG 6DPXHOV
DQG&DUR
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
OLQH7UDXEH V GLVVHUWDWLRQ $Q,QWHUGLVFLSOLQDU\ 6WXG\ RI WKH7LPEUH RI WKH &ODVVLFDO *XLWDU 3RUFHOOR H[DPLQHV WKHFRQYHUVDWLRQV RIPXVLFLDQV DQG UHFRUGLQJ HQJL QHHUV DV WKH\GLVFXVV WKHVRXQG TXDOLWLHV RI LQVWUXPHQWV$PRQJ WKHPDQ\ GLVFXUVLYH VWUDWHJLHV VWXGLR SDUWLFLSDQWV XVH WRFRPPXQLFDWH DERXW VRXQG VSRNHQVXQJ YRFDEOHV DUHXVHG LQDQDWWHPSW WRLFRQLFDOO\PLPLF LQYRFDOL]D WLRQVWKHWLPEUDLIHDWXUHVRIWKHPXVLFDO VRXQGV XQGHU FRQVLGHUDWLRQ )HOG
)R[3RUFHOOR DQG 6DPXHOV 7KHVH YRFDEOHV FRPSULVH OLQJXLVWLF ZKDW DUHRIWHQ JUDPPDWLFDOO\ TXHVWLRQDEOH V\OODEOHV VHJPHQWV UHQGHUHG LQ HWF VHH WKHDSSHQGL[ IRUDJXLGH WRSKRQHWLF V\PEROV >QWV@ HJ >Q@>HIH@
XVHG LQWKLVDUWLFOH 7KH VHJPHQWV LQVXFK IRUPVGR WKHLUXVXDO SKRQHPLF ZRUN GLVWLQJXLVKLQJ EHWZHHQ VWUXFWXUHVEXWKHUH WKHIRUPVWKHPVHOYHV DUHDG KRF DQGXQFRQYHQWLRQDOO\ PRUSKRORJLFDO UHSUHVHQWDWLRQV RIPXVLFDO VRXQGV 7KH VRXQGV RI ODQJXDJH DUHSXW WRXVH LQDGHFLGHGO\ OLQJXLVWLFFRQWH[W EXW
DV VRXQGV WKH\DUHQHZO\ LQIOHFWHGZLWK DPHWDSKRULFDO PXVLFDOLW\ 7UDXEH V ILQGLQJV DUH VLPLODUWKRXJK VKH GLVUHJDUGV WKHSUDJPDWLF H[ SUHVVLYH IXQFWLRQRIRQRPDWRSRHLD LQIDYRURIV\VWHPDWLF LQYHVWLJDWLRQRIWKH
SHUFHSWXDO UHODWLRQEHWZHHQ PXVLFDO DFRXVWLFV DQGSKRQHWLFV ([DPLQLQJ WKH PXVLFDO FDWHJRUL]DWLRQ RIFODVVLFDO JXLWDU WLPEUHV WKURXJK LQIRUPDQWV SKR QHWLF UHSUHVHQWDWLRQV RIVRXQG FRORU7UDXEH FROOHFWHG DJUHHGXSRQ WLPEUDL FDWHJRULHV
HJEUDVV\URXQG
WKDW DSSHDUHG
WR FRUUHVSRQG
FRQVLVWHQWO\
ZLWK DFRXVWLFDO FKDUDFWHULVWLFV DQGSHUIRUPDQFH WHFKQLTXHV +HU VWXG\IRXQG KLJKO\SURGXFWLYH FRUUHODWLRQV EHWZHHQ WLPEUDLFDWHJRULHV DQG WKHFRQVRQDQW YRZHO SKRQHWLF JHVWXUHV LH V\OODEOHV WKDWVKHHOLFLWHG IURPKHU LQIRUPDQWV WRUHSUHVHQW WKHDWWDFNDQG UHOHDVH RIJXLWDUQRWHV >WH@ >WR@>J$@ HWF 7UDXEH WKXV SURYLGHV
UHDOZRUOG
GLVFRXUVHEDVHG
OLQNV EHWZHHQ
OLQJXLVWLFDOO\
WH[WXDOL]HG XWWHUDQFHV WKDWDUHSURVRGLILHG LQWRV\OODEOHV"&9& VHJPHQWV
WKDW DUH DFFRXQWDEOH
WR JUDPPDU"DQG
WKH PXVLFDO
FRQ
VWULQJVRI
IXQFWLRQ
DQG
PHDQLQJ RIWKHVHXWWHUDQFHV LQSHUIRUPHUV XQGHUVWDQGLQJ RIWKHVRXQGV RI WKHJXLWDU/DQJXDJH DV ODQJXDJHKHUH LVVHHQ WRKDYHPXVLFDO PHDQLQJ IRU 7UDXEH V
LQIRUPDQWV
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
)DOO
(WKQRPXVLFRORJ\
HQWLDO DQG IRUPDO VHPLRWLF V\VWHPV'HWHUPLQLQJ WKHSK\VLFDO FRUUHODWHV RI PXVLFDO
YDOXHV"PDWFK>LQJ@
SHUFHSWXDO
DQG DFRXVWLF
V\VWHPV7DOHV
DQG
OHVV UHOHYDQFH IRUTXHVWLRQV RIPXVLFDO IRUPDQGPHDQ %HUJHU "KDV LQJWKDQDQDO\VLV WKDWORRNV IRUVWUXFWXUH LQWKHFRPSOH[ LQWHUSOD\EHWZHHQ YDULRXV VHPLRWLF V\VWHPV DQG EHWZHHQ LQGLYLGXDO OHYHOVZLWKLQ RQH V\VWHP $QDO\VLV
VKRXOG
VHQVXRXV
EHWZHHQ
EH JURXQGHG
FRQFUHWHQHVV
DQG GHGXF
WLYHO\RUJDQL]HG DEVWUDFWLRQ 8UEDQ LQHYHUPRUH GHWDLOHG OHYHOVRI GLVFRXUVH 7KLV IUDPHZRUNH[SDQGV RXWZDUG WKURXJKWKHIRUPDOFRQVWLWXHQWV RISHUIRUPDQFH WKHUHODWLRQVKLSV WKDWWLHSRHWLF IRUPWRVRFLDO IXQFWLRQDQG
LQWHUSUHWLYHPHDQLQJ DQG WKHEURDGHU UROHRISHUIRUPDQFH LQWKHFRQGXFW RIVRFLDO OLIH%DXPDQ ZH VHHN VRPHWKLQJ OLNH WKLVDSSURDFK WRFXOWXUH DQG GLVFRXUVH IRU ,I
SURSRVHG HVVHQWLDOO\ WKLVXQGHU WKHUXEULF WKHIRUPDOHOHPHQWV RIPXVLF PXVW EH EHWWHU XQ VRFLRPXVLFRORJ\"WKHQ GHUVWRRG 7KH PHGLDWLRQ RIFXOWXUH E\ GLVFRXUVH RFFXUV LQPRVW FDVHV MXVW WKHVWXG\RIPXVLF")HOG
RXWVLGH GLUHFW FRQVFLRXVQHVV EHWZHHQ VHQVLELOLW\ DQG LQWHOOLJLELOLW\8UEDQ DOVR 6LOYHUVWHLQ DQG LWLVWKHSUHVHQFH RI DQDO\WLFDOO\ DQG SUDFWLFDOO\ VDOLHQW IRUPVDWWKRVH OHYHOV WKDWDOORZV DQDO\VLV LWVLQVLJKWV7KH PXOWLSOH PHGLDWLRQV RIVRXQG DQGPHDQLQJ LQVRQJ KDYH SKHQRPHQDO UHVR
QDQFH LQWKHLUHPERGLHG SUDFWLFHV RISHUIRUPDQFH DQG UHFHSWLRQ .QRZLQJ KRZ VRQJ VWUXFWXUHV LWVHOI"KRZ FXOWXUH JUDEV KROG RI WKHVLQJLQJYRLFH WR VRXQGV
HOLFLW SDUWLFXODU
DQG IRUPV 8UEDQ
D ILUVW VWHS
"LV
LQXQGHU
VWDQGLQJ KRZ WKHPLFUR DQGPDFURVWUXFWXUHV RI VLQJLQJ UHIOHFWDQG VXEWO\ VKDSH
WKH PLFUR
DQG PDFURVWUXFWXUHV
PHGLDWHV WKHSKHQRPHQRORJLFDO ODQJXDJH
LQ DPDWUL[
H[LVW
RI WKHLU UHFHSWLRQ
MXVW
DV ODQJXDJH
UHFHSWLRQ RIVRXQGVZKHUH ERWKPXVLF DQG
RI VRFLDO
DQG
VHPLRWLF
V\VWHPV
7KH IROORZLQJ DQDO\VLV LVDQ DWWHPSW DWVXFK DSURMHFW WUHDWLQJODQJXDJH
DV DQ LQWHJUDO PHGLDWRU
EHWZHHQ
IRUP DQG PHDQLQJ
7KH
DXUDO
FKDUDFWHULV
WLFVRIPXVLFDO IRUPDUH VHHQ WREH OLQJXLVWLFYDOXHV YRZHOV V\OODEOHV IHHW DQG SKUDVHV LQFRPELQDWLRQ ZLWK PHORG\ UK\WKPWLPEUHDQG G\QDPLFV ,Q VLQJLQJ
ODQJXDJH"DOUHDG\
LQJ"LQWHUYHQHV
D FRQVWDQW
PHGLDWRU
EHWZHHQ
VRXQG
DQG PHDQ
LQ PXVLF DVSDUW RI D VSHFLILFDOO\ YRFDO PHGLDWLRQ RIVRXQG
DQG PHDQLQJ
%RE '\ODQ V
'RZQ
WKH +LJKZD\
'\ODQ V VW\OHRI VLQJLQJ LVXQXVXDO HYHQ FRQVLGHULQJ KLV SRVLWLRQ DWWKH LQWHUVHFWLRQV
RI VHYHUDO
PXVLF
DQG YHUEDO
DUW WUDGLWLRQV
+H
SODFHV
LUUHJXODU
VWUHVVRQZRUGV VLQJVZLWK DVWUDLQHGQDVDOLW\DQGRIWHQSURQRXQFHV O\ULFVLQ XQH[SHFWHG ZD\V ,DPFRQFHUQHG ZLWK LQVWDQFHVZKHUH '\ODQ V SHUIRUPDQFH UXQVDJDLQVW P\ H[SHFWDWLRQV LQSDUWLFXODU E\DOWHULQJ FRQYHQWLRQDO UK\WK
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
PLF VHWWLQJV DQG E\ VLQJLQJZLWK SURQRXQFHG RUDO FRQVWULFWLRQ 7R LGHQWLI\ VXFK WURSHV DV LPSXOVHV SUHIHUUHG E\ FRPSRVHUV SUHFLVHO\ EHFDXVH WKH\ DUH YLRODWLRQV DQG KHQFH DUH VWULNLQJDQG XQH[SHFWHG +DOOH DQG /HUGDKO LVRQO\ KDOI WKH VWRU\7KH H[SUHVVLYH DUWLVWLFPXVLFDO RU SRHWLF IUDPHZRUN LQZKLFK WKHVH WURSHV H[LVW"WKDW PRWLYDWH DQG FRQWH[WXDOL]H WKHVWULNLQJDQG XQH[SHFWHG SKUDVHV RU JHVWXUHV"VKRXOG EH DFFRXQWDEOH
WKURXJKDQDO\VLV 7KHRULHV RIH[SUHVVLYH IRUPDOORZ XV WRXQGHUVWDQG WKHDSSDUHQW XQSUH GLFWDELOLW\RI'\ODQ V SHUIRUPDQFH LQWHUPVRISRHWLF SDUDOOHOLVP DQGPXVLFDO SURJUHVVLRQ '\ODQ V VLQJLQJPDNHV VHQVH /RFDOO\ XQJUDPPDWLFDO XWWHUDQFHV
LQ'RZQ WKH+LJKZD\ DUH LQIDFWFRQVLVWHQWZLWK DQGPRWLYDWHG E\ ODUJHU VFDOH IRUPV,QWKHIROORZLQJ VHFWLRQ IRUH[DPSOH WKHLQYHUVLRQRIWKHVWUHVV FRQWRXU RIWKH ZRUG VXLWFDVHLQWKHILUVWYHUVH LVVHHQ WRKLJKOLJKW WKHV\OODEOH FDVH LQDZD\ WKDWXQGHUVFRUHV RQH LQWHUSUHWDWLRQ RI WKHSRHWLF FRQWH[W FDVH
VKDUHV
DQ
LPSRUWDQW
DVVRQDQFH
ZLWK
VHYHUDO
RWKHU
SURPLQHQW
ZRUGV
DQG LWLVUHSHDWHG ODWHULQWKHVRQJ DVSDUW RID ODUJHUSDUDOOHOLVP EHWZHHQ WKH YHUVHV,Q WKHVHFWLRQ RQ VRQRULW\DQRUDOO\FRQVWULFWHG V\O ILUVWDQG WKHILIWK ODEOH >Q@ RI RFHDQ WKDWLVPDUNHGDVXQOLNHO\ LQDSURPLQHQWO\ VXVWDLQHG DQGPHOLVPDWLF PHORGLF ILJXUH LVLQIDFWSHUIRUPHG LQVXFK DQ HQYLURQPHQW DVSDUWRID ODUJHUSURJUHVVLRQ RYHU WKHFRXUVH RIVHYHUDOYHUVHV WRZDUGRUDOO\
FRQVWULFWHG V\OODEOHV ,WUHVROYHV LQWKHIROORZLQJ YHUVH ERWK WKURXJKDUHWXUQ WRRUDOO\RSHQ V\OODEOHV LQSURPLQHQW SRVLWLRQV DQG WKURXJK WKHUHSHWLWLRQ RI WKLV PDUNHG V\OODEOH LQDQH[SHFWHG XQVWUHVVHG SRVLWLRQ 7KHUHIRUH H[SUHVVLYH VW\OHVE\YLUWXHRIWKH LPSRVLWLRQ RI ODUJHUIRUPDOVWUXFWXUHVRQWR VPDOOVFDOH RU ORFDOXWWHUDQFHV FDQEH VHHQ WRDOORZ DQGHYHQPRWLYDWH RWKHUZLVHPDUNHG VWUXFWXUHV
5K\WKP DQG 0HWHU 7KH RSHQLQJ OLQHRI 'RZQ WKH+LJKZD\ LVVXQJ WZLFHZLWK WZRGLIIHU HQWUK\WKPLFVHWWLQJV :HOO, PZDONLQJ GRZQ WKHKLJKZD\ZLWK P\ VXLWFDVH LQP\ KDQG LVPHWULFDOO\ VWUDLJKWIRUZDUG$V YHUVH QRW VHW WRPXVLF LWLV FRPSULVHG RI VLPSOH WURFKHHV [[
[[
[[[
ZHOO
[
, PZDON
[ ZLWK
LQJ GRZQ WKH KLJKZD\
[
[[[ P\
VXLW
[[[[
[
[ [
[[[
FDVH
LQ
P\
KDQG
,XVH JULGQRWDWLRQ WRUHSUHVHQW SURVRGLH DQGPXVLFDO UK\WKPLQWKHPDQQHU RI+D\HV DQG.DXQ DQG ,UHSUHVHQW VWURQJDQGZHDN XQGHUO\LQJ V\O
(WKQRPXVLFRORJ\
)DOO
ODEOHVWUHVVZLWK DFXWH DQGJUDYH DFFHQWPDUNV UHVSHFWLYHO\7KLV VHWWLQJOLNH DQ\LVLPSHUIHFW,WGRHV QRW H[SUHVV WKHZHDN VWUHVVRIWKHVHFRQG V\OODEOH RI VXLWFDVH VHWWLQJ LWLQDZHDNHU SRVLWLRQ WKDQ WKH IROORZLQJ XQVWUHVVHG IXQFWLRQZRUGLQ7KHUH LVQR JRRGZD\ RIJHWWLQJ DURXQG WKLVSUREOHP DQG
WKLVHYHQO\ WURFKDLF VHWWLQJ LVWKHFOHDU SRHWLFSDUVH ,QVLQJLQJXQOLNH LQ(QJOLVK YHUVH GXUDWLRQ LVUHOHYDQW+D\HV DQG.DXQ ILQG WKDWDOOHOVH EHLQJ HTXDO WKHLULQIRUPDQWVSURYLGH VHWWLQJV WKDW DFFRXQW IRUWKHSKRQHWLF OHQJWKRI V\OODEOHV 7KH\ DOVR ILQG WKDWHGJHV RI SKUDVHV HVSHFLDOO\ SKUDVH HQGLQJVFRQGLWLRQ VRPH GXUDWLRQDO H[WHQVLRQV WKDW LPSURYH WKHFRUUHVSRQGHQFH EHWZHHQ WH[WXDODQGPXVLFDO SKUDVHV '\ODQ V JLYLQJ WZREHDWV WRHDFK ORQJ V\OODEOH SHUIRUPDQFH LQLWLDOO\VHHPV WRGR WKLV RI KLJKZD\ [ [
[ [
[
;;
[[[
;
ZHOO
;
, P ZDON
[
LQJ GRZQ
[[[[[ WKH KLJK
"
ZD\
"
(PGDVKHV GHQRWH V\OODEOHV VXVWDLQHG IURP WKHSRVLWLRQ WRWKH LPPHGLDWH OHIW $VFHQGLQJ OHYHOV RQ WKHJULG UHSUHVHQW HLJKWKTXDUWHUKDOIDQGZKROH ZKDW IROORZV , ZLOO QRWHV UHVSHFWLYHO\DV LQ/HUGDKO DQG-DFNHQGRII ,Q UHIHUWRWKHILUVWLQVWDQFHRIWKLVOLQHDV WKHVWDWHPHQWDQG WKHVHFRQG DV WKH UHSHDW7KH
LQ GRZQ
GLSKWKRQJ
LVQRW H[SUHVVHG
DV H[WUD
GXUDWLRQ
LQ WKLV
VHWWLQJEXW WKHQHHG IRUGLSKWKRQJV DQG ORQJYRZHOV WRKDYH UHODWLYHO\ ORQJ GXUDWLRQ
VWHPV
IURP D ORZUDQNHG
DOOHOVHEHLQJHTXDO
FRQVWUDLQW
/HQJWKHQ
ZRXOG UHTXLUH DOVR SODFLQJ XQVWUHVVHG WKHLQ LQJLWWRWZREHDWV DV LQKLJK D VWUHVVHG
DPRUH
SRVLWLRQ
IDWDO YLRODWLRQ
,W LVFOHDU
IURP +D\HV V
DQG .DXQ V
GDWD WKDWSKRQHWLF OHQJWK LVVDOLHQW LQWH[WVHWWLQJVRQO\ LILWGRHV QRW FRQIOLFWZLWK RWKHU FRQVWUDLQWV VXFK DV IDLWKIXOO\ PDSSLQJ VWUHVVFRQWRXUV WR
FRQWRXUV
UK\WKPLF
$ VLPLODUHQYLURQPHQW LVIRXQGDWWKH ZRUG VXLWFDVH LQWKHVHFRQG OLQH KDQG+HUH WKH ZLWKP\ VXLWFDVH LQ P\ OHQJWKRIERWK VXLWDQG FDVHFDQ EH WKH ZRUG V GHVFHQGLQJ VWUHVVFRQWRXU ZKLOH SUHVHUYLQJ HDVLO\ H[SUHVVHG [ [
[ [
[
[
[[[[[[[
ZLWK '\ODQ V
P\ DFWXDO
VXLW
[
[
[ [[
"
SKUDVLQJ
FDVH
"
LV FORVH
LQ P\
KDQG
"
WR WKLV EXW KH DUWLFXODWHV
FDVH
D ELW HDUO\
7KH VRQJ V PHWHU LVUDWKHU IOH[LEOH VR LWLVQRW WRWDOO\FOHDU WRZKDW H[WHQW '\ODQ V UHQGHULQJ FRQVWLWXWHV WUXH UK\WKPLFV\QFRSDWLRQ RU MXVWLPSUHFLVH SKUDVLQJ EXW LWLVFOHDUO\ DXGLEOH WKDWFDVH LVVWUHWFKHG VRPHZKDW
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
[ [
[
[
[
[[[
[[[ ZLWK
[ P\
[[[[ " "
VXLW FDVH
;; LQ P\
KDQG
"
:KLOH WKHSODFHPHQW RI FDVHLQWKHSKUDVLQJ RIWKHVWDWHPHQW LVVRPHZKDW PXFK FOHDUHU DQG DW WKHVDPH WLPH DPELJXRXV LQWKH UHSHDW WKH UK\WKPLV PRUH
XQXVXDO
[
[
;
;
;; ;
;;; ZLWK
P\
"
;;;; FDVH "
VXLW
;
; LQ P\
KDQG
7KLV VHWWLQJSODFHV XQGHUO\LQJO\ VWUHVVHG VXLWDW DQ XQVWUHVVHG UK\WKPLF ZHDN SRVLWLRQ ZLWK SRVLWLRQ JLYHV LWUHODWLYHO\ VKRUWGXUDWLRQ DQG VHWV LWLQ UHVSHFW WRFDVH ,QWKLVSRVLWLRQ LQWKHSKUDVH WKHYRZHO RI P\VKRXOG EH UHGXFHG ,QVWHDG LWLVOHQJWKHQHG UHDOL]LQJ LWVORQJXQGHUO\LQJ YRZHO ,Q LWV V\QFRSDWHG SODFHPHQW WKHSKUDVLQJ RI FDVHLQWKHUHSHDW LVYHU\ VLPLODUWR LWVSKUDVLQJ LQWKHVWDWHPHQW0RUHRYHU WKHLQFUHDVHG OHQJWKRI FDVHZLWK
ZKLFK LVVXJJHVWHG LQWKH VWDWHPHQW LVIXOO\HVWDEOLVKHG LQ UHVSHFW WRVXLW WKH UHSHDW
:K\ WKLVSUREOHPDWLF VHWWLQJ" 6XLWFDVH LVWKHGLIILFXOWZRUG HYHQ LQ WKH UHODWLYHO\ VWUDLJKWIRUZDUG YHUVH PHWHU ,WRFFXUV DW WKH ULJKWHGJH RID SKRQRORJLFDO SKUDVH ZLWK P\ VXLWFDVH@
LQP\ KDQG SSKUDVF
3KUDVH HGJHV DUHPXFK OHVV UHVWULFWLYH VLWHV IRUSURFHVVHV OLNH OHQJWKHQLQJ RUPHWULFDO LQYHUVLRQ +D\HV DQG.DXQ 1RQHWKHOHVV OHQJWKHQLQJ DQG PHWULFDO LQYHUVLRQ VWLOOPXVW EHPRWLYDWHG E\ VRPH IRUPDO LQWHUHVWVXFK DV SKRQRORJLFDOUK\WKPLF SKUDVH DOLJQPHQWZKLFK LVQRW WKHFDVH KHUH 7KH PRWLYDWLRQZKHQ ZH QRWH WKDWWKH SRHWLF FRQWH[WKRZHYHU VXJJHVWV D IRUPDO YRZHO
RI FDVHLV
LVSURQRXQFHG
DVVRQDQW
ZLWK
WKH UK\PH RI KLJKZD\
DQG EDE\"EDE\
>EHLEHL@ WREHWWHU UK\PHZLWK KLJKZD\ >KDLZHL@
:HOO , PZDONLQJ GRZQ WKHKLJKZD\ :LWK P\ VXLWFDVH LQP\ KDQG
:LWK P\ VXLWFDVH
LQP\ KDQG
/RUG,UHDOO\ PLVVP\EDE\ 6KH V
LQ VRPH IRUHLJQ
ODQG
(DFK RIWKHVHZRUGV LQIDFWUHFXUV SURPLQHQWO\ ODWHULQWKH VRQJ7KH\ DUH OH[LFDO DQFKRUV WR ZKLFK WKHO\ULFVUHWXUQ7KHLU VKDUHG GLSKWKRQJ >HL@VLPL
)DOO
(WKQRPXVLFRORJ\
ODUO\ UHWXUQV
WKURXJKRXW
WKH VRQJ
DV DQ LPSRUWDQW
DXUDO
IRFXV
)URP
YHUVH
WRYHUVH WKHSRHWLF IRUPFHQWHUV RQ WKHVH WKUHHZRUGV DQG WKHLU UK\PHV GLVFXVVHG LQGHWDLO EHORZ 7KH VWUHVVLQJ RI FDVHWKHUHIRUHLVDFFRXQWHG
IRUE\ WKH LPSRVLWLRQ RI ODUJHUVFDOH VWUXFWXUHVRQWR SKUDVHOHYHO WH[WVHWWLQJV GRLQJ VR LPSURYHV WKHVHWWLQJ 2SWLPDORUVWDQGDUG VHWWLQJVFDQEHYLRODWHG LI
ZLWK UHVSHFW WRWKHPXVLFDO RUSRHWLF IUDPHZRUN RI WKHSHUIRUPDQFH (QXQFLDWLRQ
$V 3RHWLF RU0XVLFDO
)RFXV
7KLV DFFRXQW RI WKHHPSKDVLV RQ FDVHGRHV QRW H[SODLQ WKHSDUDOOHO 7KH H[WHQVLRQ RI P\ PD\ EH D UHODWLYHO\QDWXUDO SUH OHQJWKHQLQJ RI P\ FLSLWDWH
RI WKH IRFXV
RQ FDVH
,WV XQGHUO\LQJ
DV LQ FDVH
GLSKWKRQJ
LV UHDO
L]HG UDWKHU WKDQUHGXFHG $QG E\SXVKLQJ LQWRWKHGXUDWLRQDO DOORWPHQW RI VXLW LW LQFUHDVHV
WKH FRQWUDVW
VXLW DQG
EHWZHHQ
WR IRFXV
FDVH"KHOSLQJ
WKHYRZHO RI FDVHDVSDUW RI DSRHWLF VWUXFWXUH 7KRXJK P\LVWKHRQO\ V\OODEOH WKDWLVUK\WKPLFDOO\UHSRVLWLRQHG VRGUDVWLFDOO\WKHHQWLUH UHSHDW VHHV
WKHUHDOL]DWLRQ RIRWKHUZLVH GURSSHG RU UHGXFHG V\OODEOH VWUXFWXUHV ,QWKHVWDWHPHQWZDONLQJ LVVXQJ >ZDJQ@ZLWK WKHVHFRQG V\OODEOH UH GXFHG DQG WKHN YRLFHG DQG XQDVSLUDWHG %XW LQWKH UHSHDW LWLVKHDUG DV ZLWK D&9& VKDSH DQG DVSLUDWHG N LQWKHVHFRQG V\OODEOH ZDONLQJ >ZDNKLQ@
7KH VDPH WKLQJKDSSHQV RQ ZLWK LQWKH VWDWHPHQW LWVILQDO LVGHOHWHG HQWLUHO\ DQG LWVYRZHO UHGXFHG ZLWKP\ >ZLPD@ ,Q WKH UHSHDW DFRGD LV DXGLEOH P\
DVVLPLODWHG
WR WKH IROORZLQJ
P
DQG
WKH YRZHO
LVXQUHGXFHG
ZLWK
>ZLYPD@ ZHODPZDJQ
GDXQDKDLZHLIOZL
\H ]DPZDNKLQGDXQKDLZHL__ZLYPDVX"
PD VX"NKH]LQPDKDH NKH]PPDKDH
7KH DVSLUDWHG N RI ZDONLQJ >ZDNKP@ LVIRUFHG DQG XQJUDPPDWLFDO MXVWDV VWUHVVLQJP\LVLQFRQVLVWHQWZLWK WKH O\ULFV SURVRGLH SKUDVLQJ (DFK VHHPV ZH FRPSDUH WKHG\QDPLF FRQWRXUV RIWKHVWDWHPHQW WREH RIHUSURQRXQFHG ,I ZH VHH WKDW DV LQ ZKHUHDV LQWKHVWDWHPHQW V\OODEOHV DQG WKHUHSHDW )LJXUH UXQ WRJHWKHU HVSHFLDOO\ ZLWKLQ SRHWLF IHHW LQWKHUHSHDW WKH\KDYH FOHDUO\
GHILQHG ERXQGDULHV (YHQ WKHVXEVWLWXWLRQ RI \HVIRUZHOODWWKHEHJLQQLQJ RIWKHOLQHLQFUHDVHV WKHFRQWUDVWEHWZHHQ YRZHOV DQGFRQVRQDQWV ZHOO , P >ZHODP@ YHUVXV \HV, P >\H]DP@ 7KH GLIIHUHQFHVEHWZHHQ WKHVWDWHPHQWDQG UHSHDWKDYH WKHHIIHFWRIVKLIW PXVLFDO WR OLQJXLVWLF VWUXFWXUH,QWKHVWDWHPHQW LQJWKHDXUDO HPSKDVLV IURP WKHYRLFHG FRQVRQDQWV DOORZ WKHPHORGLF SLWFK WRFRQWLQXH XQLQWHUUXSWHG
E\FRQVRQDQWDO VWRSV ,QHIIHFWWKHPHORG\ LVEURXJKW LQWRIRFXV%XW LQWKH UHSHDW
WKH XQUHGXFHG
YRZHOV
DQG EHWWHUSURQRXQFHG
FRQVRQDQWV
HQXQFLDWH
WKH O\ULFDOVWUXFWXUHV ,QVRIDUDV WKHUH LVQHFHVVDULO\ VRPH LQKHUHQWDPELJXLW\ LQDQ DFRXVWLF VLJQDO WKDWFRQWDLQV ERWKPXVLFDO DQG SKRQHWLF LQIRUPDWLRQ LW VHHPV
UHDVRQDEOH
WKDW VLQJHUV ZRXOG
EH DEOH
WR YDU\
WKHLU SHUIRUPDQFHV
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
)LJXUH '\QDPLF FRQWRXUV GE RI , PZDONLQJ GRZQ WKHKLJKZD\ $ 6WDWHPHQW
ZH
% 5HSHDW
ODP
]DP
\H
ZD
ZD
JQ
GDX QV
KD"
NKLQ GDX QD
KD"
ZHL
ZHL
LQ ZD\V WKDWVHWRQ RQH LQUHOLHIDJDLQVW WKHRWKHU$QG EHFDXVH WKHPXVLFDO UK\WKPLF VHWWLQJ RI WKLV OLQH VHUYHV WRHPSKDVL]H WKHSRHWLF IXQFWLRQ RI WKH V\OODEOH
FDVH
WKH FRQFXUUHQW
DXUDO
HPSKDVLV
RQ
OLQJXLVWLF
RYHU PXVLFDO
LQIRUPDWLRQIROORZV 6XFKSURFHVVHV VXJJHVW FOHDU HPSLULFDO TXHVWLRQV DERXW WKHSDWWHUQLQJ RI PXVLF DQG ODQJXDJH LQVLQJLQJ+RZ GR VLQJHUV VKLIWIRFXVEHWZHHQ PXVLFDO DQG OLQJXLVWLF VWUXFWXUHV LILQIDFWWKH\GR" ,I PXVLFDO DQG SRHWLF VWUXFWXUHV KDYH GLIIHUHQWUROHV LQVLQJLQJ WKHQDQ HPSKDVLV RQ SRHWLF IRUPV DVZLWK WKH
ODUJHVFDOH
DVVRQDQFH
RI FDVH
PLJKW
FRQGLWLRQ
SURFHVVHV
OLNH WKH
HQXQFLDWLRQ LQWKHUHSHDWZKHUHDV IRFXVLQJPXVLFDO IRUPVVKRXOG FRQGL WLRQFRQVRQDQW YRLFLQJ EHWZHHQ V\OODEOHV RU RWKHU SURFHVVHV WKDWHPSKD VL]HPHORGLF RU UK\WKPLF LQIRUPDWLRQ2I FRXUVH VRPH DPELJXLW\ LV OLNHO\
PXVLFDO VWDFFDWRZRXOG EH VXQJZLWK VKRUWYRZHOV DQG SORVLYH VWRSV IRU LQVWDQFH/LVW V GLDJUDP RIWKHVHYHUDO SDUDPHWHUV WKDWGLIIHUHQWLDWH VSHHFK IURPVLQJLQJPLJKW HDVLO\EH H[SDQGHG WRDFFRXQW IRUWKHVHSURVRGLH VWUXFWXUHV
*UDKDP LGHQWLILHVDVLPLODUSURFHVV LQ 1DWLYH 6RXWK$PHULFDQ 6KD YDQWHYRFDO H[SUHVVLRQ WKDWGLIIHUHQWLDWHV VSHHFK VW\OHVIURPRQH DQRWKHU E\ WKHLUUHODWLYH HPSKDVLV RQ OLQJXLVWLFRUPXVLFDO SDUDPHWHUV 7KH GLIIHUHQFHV
)DOO
(WKQRPXVLFRORJ\
EHWZHHQ ULWXDOZDLOLQJ FROOHFWLYH VLQJLQJDQG SROLWLFDO RUDWRU\"DOO PDUNHG VSHHFK
JHQUHV
DPRQJ
D FRQWLQXXP
WKH 6KDYDQWH"VXJJHVW
IURP PHORG\
WR
VHPDQWLFLW\5LWXDOZDLOLQJ ZKLFK LVFKDUDFWHUL]HG E\ VXVWDLQHG DQG IXOO\ SLWFKHG YRZHOV DUHODWLYH ODFNRIFRQWUDVWLYH FRQVRQDQWV KLJKO\PRELOH SLWFK DQG IHZ LIDQ\ GLVFHUQLEOH ZRUGV LVDW WKHIDUHQG RI WKH VSHFWUXP IURP SROLWLFDO RUDWRU\ZKLFK WKRXJK YRFDOO\ KHLJKWHQHG LVFKDUDFWHUL]HG E\ LQ GHWHUPLQDWHO\ SLWFKHG YRZHOV DQG IXOO\UHDOL]HG FRQVRQDQWV DQG FRPSULVHV RQO\ZRUGV FRPPXQDO VLQJLQJ IDOOVVRPHZKHUH LQEHWZHHQ ,IWKHPDUNHUV RIPHORG\ DQG ODQJXDJH FDQ EH SXW WRVXFK SURGXFWLYH XVH LQGLVWLQJXLVK
LQJJHQUHV RIYRFDO H[SUHVVLRQ LWVHHPV UHDVRQDEOH WKDWD VLQJHUPLJKW KDYH VLPLODU DFFHVV WR WKH VDPH YHUEDO DQGPXVLFDO SDUDPHWHUV ZLWKLQ D VLQJOH SHUIRUPDQFH WRGLVWLQJXLVK RQH SKUDVH IURPDQRWKHU DV'\ODQ VHHPV WRGR KHUH E\VKLIWLQJWKHHPSKDVLV IURPFRQWLQXRXV SLWFK WRIXOO\DUWLFXODWHG VHJ PHQWV
6RQRULW\ :LWK WKHH[FHSWLRQ RIRQH SURPLQHQW UHFXUULQJPHORG\ WKH O\ULFVRIWKLV VRQJ DUH VHW V\OODELFDOO\ZLWK HDFK V\OODEOH UHDOL]HG DV D VLQJOHPXVLFDO QRWH ZKLFK (DFK YHUVH KDV DPHORGLF FOLPD[ DWWKHHQG RI LWVSHQXOWLPDWH OLQHLQ D VLQJOHZHDN V\OODEOH LVVXQJ LQDQ XSSHU UHJLVWHUDQGPHOLVPDWLFDOO\ ,ZLOO FDOO WKLV PRWLYH WKHWKHPH )LJXUH ,Q WKH ILUVW YHUVH
WKH WKHPH
LV VXQJ
DW WKH HQG RI WKH ZRUG
EDE\ +HOG
RXW RYHU WKUHHQRWHV ')' WKHILQDOYRZHO RI EDE\ LVGLSKWKRQJL]HG VR YRZHO FKDQJHV DFFRPSDQ\ WKHSLWFK FKDQJHV >EHLL@SHULRGV VHSDUDWH QRWHV UDWKHU WKDQ V\OODEOHV LQWKLVWUDQVFULSWLRQ ,WLVHDV\ WR LPDJLQH DUWLFXODWRU\ RUSKRQRORJLFDO UHDVRQV IRUWKHGLSKWKRQJL]HG SURQXQFLDWLRQ )RU LQVWDQFH
QRWHV DQG V\OODEOHVPLJKW EH WKRXJKW RIDV FRUUHVSRQGLQJ PXVLFDO DQG OLQ JXLVWLF FRQVWLWXHQWV DQG VR VKRXOG DOLJQEUHDNLQJ WKHGLSKWKRQJ DWWKHSLWFK FKDQJH HIIHFWLYHO\FRUUHODWHV DW OHDVW WZR V\OODEOHVZLWK GLIIHUHQWSLWFKHV :H PLJKW VLPLODUO\LPDJLQH DGHVLUDEOH UHVXOWLQWKHDOLJQPHQW RISLWFK KHLJKW ZLWK YRZHO KHLJKW"ORZWRKLJK DFXWH
YRZHO
SLWFKPRWLRQ LVFRDUWLFXODWHG ZLWK JUDYHWR
FKDQJHV
$Q DGGLWLRQDOPRWLYDWLRQ IRUWKHGLSKWKRQJL]HG SURQXQFLDWLRQ RI EDE\ LVDSSDUHQW LQKLJKHUOHYHO VWUXFWXUHZKHQ LWLVSURQRXQFHG >EHLEHL@EDE\
)LJXUH
7KHPH
PRWLYH
RI 'RZQ
"M
WKH +LJKZD\
R"
P"" ED
EH
L
L
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
PHWULFDO SRVLWLRQ LQSDUDOOHOZLWK KLJKZD\ UK\PHVEHWWHUZLWK KLJKZD\,WV PRWLYDWHV WKHDOWHUQDWLRQ LQLWVSURQXQFLDWLRQ ,QWKLV ZD\ WKHGLSKWKRQJL]HG
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
7KH ILIWKOLQHVDUHVHWDSDUWSRHWLFDOO\ DVZHOO DVPHORGLFDOO\ ,QSDUWLFXODU DOWKRXJK WKHSURQXQFLDWLRQ RI EDE\ LQWKHILUVWYHUVH HVWDEOLVKHV DFOHDU
% UK\PH VFKHPH WKH VXEVHTXHQW YHUVHV GR QRW IXOO\DGKHUH WRWKDW VFKHPH 7DEOH 7KH ILIWKOLQHVWKHILQDOZRUGV RIZKLFK DUH VHWWRWKHPH ORGLF WKHPHGR QRW UK\PHDVZH H[SHFW WKHPWRWKHUK\PHVFKHPHV RIWKH
7DEOH ZRUGV
5K\PH DUH VXQJ
LQ YHUVHV
VFKHPH
WR WKH WKHPH
RI 'RZQ
)LJXUH
WKH +LJKZD\
%
$QG\RXUKLJKZD\VJHWWLQJ ILOOHG % 7KH ZD\ , ORYH WKDWZRPDQ & ,VZHDU LW VERXQG WRJHWPH NLOOHG % ,EHHQ JDPEOLQJ VR ORQJ $ ,DLQ W D JRWPXFK PRUH WR ORVH % ,EHHQ JDPEOLQJ VR ORQJ $ ,DLQ W D JRWPXFK PRUH WR ORVH % & 5LJKW QRZ , P KDYLQJ WURXEOH 3OHDVH GRQ W WDNH DZD\ P\ KLJKZD\ % VKRHV , P ERXQG
WRJHW OXFN\ EDE\ $ WRGLH WU\LQJ %
2U , P ERXQG , P ERXQG
WRJHW OXFN\ EDE\ $ WRGLH WU\LQJ %
2U , P ERXQG 0HHW PH
LQ WKHPLGGOH
>XQLQWHOOLJLEOH@
RI WKH RFHDQ
&
OHDYH WKLVROG %
KLJKZD\EHKLQG
%RE '\ODQ " &RS\ULJKW UHQHZHG 5HSULQWHG ZLWK SHUPLVVLRQ
E\ 6SHFLDO 5LGHU 0XVLF
8QGHUOLQHG
(WKQRPXVLFRORJ\
)DOO
VHFRQG WKLUGDQG IRXUWKYHUVHV DUH$%$%&% 'HVSLWH WKHLUIDLOXUHWRUK\PH WKHILQDOV\OODEOHV RIWKHDOWHUQDWLQJ OLQHVGR FRUUHVSRQG WRD UHSHDWLQJ VWUHVV WHPSODWH WKH$ OLQHV DQG RIHDFK YHUVH KDYHZHDNILQDO HQGLQJV ZKLOH WKH% OLQHVKDYH VWURQJILQDOHQGLQJV 6R WKHILUVWYHUVH VHWVZHDNILQDO KLJKZD\ DQG EDE\RQ OLQHV DQG DQG LWVHWV VWURQJILQDOKDQGDQG
ODQGRQ OLQHV DQG 7KH DSSDUHQW H[FHSWLRQV WRWKLVSDWWHUQ WU\LQJ DQG EHKLQG LQYHUVH DUHSURQRXQFHG DVSHUIHFWO\UK\PHGVWURQJILQDOIHHW >WUD"@DQG >EDKD"@6RZKLOH WKH
% UK\PHVFKHPH LVQRW VWULFWO\UHJXODU DYDULHW\RISDUDOOHOLVPV FROODERUDWH WRVWUXFWXUH WKHSRHWLF IRUP 7R VXPPDUL]H WKHHQGLQJV RI WKHILIWKOLQHVRIHDFK YHUVH DUH UHODWHG
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
3DUDOOHOLVP SURMHFWV WKHSULQFLSOH RIHTXLYDOHQFH IURPWKHD[LVRIVHOHF WLRQLQWRWKHD[LVRIFRPELQDWLRQ -DNREVRQ ,Q UK\PHIRULQVWDQFH ZRUGV LQSDUDGLJPDWLF UHODWLRQZLWK HDFK RWKHU E\ WKHLUVKDUHG VRXQGV DUH SXW LQV\QWDJPDWLF UHODWLRQ DWWKHHQGV RI OLQHV"WKH D[LVRIVHOHFWLRQ ZRUGV ZLWK FHUWDLQ VRXQGVKDSHV SURMHFWHG RQWR WKHD[LV RIFRPELQDWLRQ ZRUGV JUDPPDWLFDOO\ DSSURSULDWH DWWKHHQG RI VSHFLILF OLQHV ,QWKLVFDVHPHWULFDO SRVLWLRQ
VWUHVV
IDLOXUH
FRQWRXU
WR UK\PH
DQG PHORGLF
UHSHWLWLRQ
D
FUHDWH
VWURQJVHQVH RISDUDOOHOLVP EHWZHHQ WKHVXFFHVVLYH ILIWKOLQHHQGLQJV )XUWKHU YHUVHLQWHUQDO SDUDOOHOLVP LVHIIHFWLYHO\ QHXWUDOL]HG WKHVHZRUGV GLVWLQFWO\ GR QRW UK\PHZLWK WKH OLQHVZH H[SHFW WKHP WRUK\PHZLWK 7KH ILIWKOLQH LQ HIIHFW
GUDZV
WKH VWURQJHVW
SDUDOOHOV
EHWZHHQ
YHUVHV
ZKHUH
YHUVHV
DUH
LQWHUQDOO\VWUXFWXUHG E\ UK\PHDQGPHWHU WKHILIWKOLQHVDUH VWUXFWXUHV WKDW SDUDOOHO HDFK RWKHUPRUH WKDQ WKH\SDUDOOHO HOHPHQWV LQWKHVDPH YHUVH ,HPSKDVL]H WKHH[WHQWRIWKHFRQQHFWLRQV EHWZHHQ WKHILIWKOLQHHQGLQJV ZDQW WRGUDZ RXW DVWUXFWXUH WKDWLVRWKHUZLVH REVFXUHG E\ OD\HUV EHFDXVH , RI VHPDQWLFV PHWULFV DQG SKRQRORJ\ 6RPDQ\ WKLQJV DUH LGHQWLFDO DERXW WKH VXFFHVVLYH
WKHPHV
RQ
EDE\ZRPDQWURXEOH
DQG RFHDQ"UHSHDWLQJ
PHORGLHV QHDUO\ H[DFW UK\WKPVFRPSDUDEOH SRVLWLRQV LQWKHUK\PHVFKHPH HTXLYDOHQW ZRUGVWUHVV WHPSODWHV DQG VKDUHGPHWULFDO SODFHPHQW LQWKHSHQ XOWLPDWH
OLQH RI HDFK
YHUVH"WKDW
WKH RWKHUZLVH
PLQRU
GLIIHUHQFHV
EHWZHHQ
:KHQ SURVRG\SKUDVH VWUXFWXUH PHORG\ DQG UK\WKP V\OODEOHV DUHVHW LQUHOLHI DUHDOOEDVLFDOO\ WKHVDPHZKDW UHPDLQVEHVLGHV WKHVHPDQWLF UHIHUHQFHRIWKH ZRUGV LVVHJPHQWDO TXDOLW\ WKDWLVWKHGLIIHUHQWVRXQGV RIWKHYRZHOV LQWKH V\OODEOHV
E\PDQEOH
DQG FHDQ
,Q SDUWLFXODU
'\ODQ
VLQJV
WKH VXFFHVVLYH
%LFNIRUG 0XVLF
RI3RHWU\ DQG 3RHWU\ RI6RQJ
WKHPHVZLWK JUHDWHU DQG JUHDWHU RUDO FRQVWULFWLRQ FUHDWLQJ DSURJUHVVLRQ RI GHFUHDVLQJO\ VRQRURXV V\OODEOHV
6RQRULW\GHVFULEHV DJUDGLHQW SKRQHWLF VFDOH WKDWUHSUHVHQWV WKHUHOD WLYHDFRXVWLF SURPLQHQFH RI VHJPHQWV /DF\ ORZYRZHOV VXFK DV >D@ DUHPRVW VRQRURXV DQG XQYRLFHG VWRSV VXFK DV >W@DUH OHDVW VRQRURXV 7KH
HQYLURQPHQWV IRURXU SXUSRVHV DUH V\OODEOH QXFOHL FDOOHG WKHYRZHOV DOVR KHDGV WKRXJK WKLVFDWHJRU\ LVQRW VWULFWO\OLPLWHG WRYRZHOV WR ZKLFK FRQVRQDQWV DWWDFKWRIRUPV\OODEOHV 6\OODEOH QXFOHL DUH PRUH VRQRURXV DQG WKXVORXGHUDQG OHVVRUDOO\FRQVWULFWHG WKDQQHLJKERULQJ UHOHYDQW SKRQRORJLFDO
FRQVRQDQWV $FURVV FXOWXUHV DQG FHUWDLQO\ LQ(XURSHDQ DQG (QJOLVKODQJXDJH PXVLFDO SUDFWLFH V\OODEOHQXFOHL DUHWKHVHJPHQWV WKDWDUHSLWFKHG OHQJWKHQHG DQG RWKHUZLVH FRQVWLWXWHG LQVLQJLQJ DVPXVLFDO QRWHV 3ULQFH DQG 6PROHQVN\ GLVWLQJXLVK EHWZHHQ VRQRULW\DVDSKRQHWLF SURS HUW\DQG LWVSKRQRORJLFDO RUJUDPPDWLFDO LPSOLFDWLRQV LQWHUPVRI WKH2SWL
PDOO\ 7KHRUHWLF FRQFHSW RI KDUPRQ\$KLJKHU VRQRULW\ QXFOHXV LVPRUH KDUPRQLF WKDQRQH RI ORZHU VRQRULW\EXW VHJPHQWV RIKLJK VRQRULW\ DUH QRWPRUH KDUPRQLF WKDQWKRVHRI ORZHU VRQRULW\>@ HPSKDVLV DGGHG +DUPRQ\ UHIHUVWRVWUXFWXUDOIXQFWLRQ V\OODEOH QXFOHXV ZKHUHDV VRQRULW\ LVVLPSO\ D JUDGLHQW IHDWXUH RI LQGLYLGXDO VHJPHQWV ,W LVRQO\ ZKHQ VHJPHQWV DUH FRQWHPSODWHG LQD VWUXFWXUDOFRQWH[W WKDWWKH LVVXHRI
ZHOOIRUPHGQHVV DULVHV LELG 1XFOHDU KDUPRQ\ LQ3ULQFH DQG 6PROHQVN\ V DFFRXQW LVGLYLGHG LQWRWZHOYHGLVWLQFWFRQVWUDLQWVHDFK RI ZKLFK FDWHJRULFDOO\ PDUNV DJDLQVW WKHSUHVHQFH RIFHUWDLQ VHJPHQWV LQV\OODEOH QXFOHL >@ VHH FK DQG FK ,ZLOO UHIHUWKURXJKRXW WRVRQRULW\ UDWKHU WKDQ KDUPRQ\ IRUWZR UHDVRQV GHVSLWH DQ LQWXLWLYHO\SODXVLEOH UHODWLRQVKLS
EHWZHHQ
VRQRULW\
DQG
WKHZHOOIRUPHGQHVV
RI VXQJ QRWHV
LW LVQRW FOHDU
WKDW
IRUPDO OLQJXLVWLF DFFRXQWV RI VXFK SKHQRPHQD DUH DSSURSULDWH HVSHFLDOO\ LISURJUHVVLYH IRUPVDUH VHHQ WRUHVXOW IURP LWVHIIHFWDQG WKHPXVLFDO FRQWH[WZRXOG UHQGHU WKHWHUPKDUPRQ\KRSHOHVVO\ DPELJXRXV
6RQRULW\ GHFUHDVHV IURPORZYRZHOV WRKLJK YRZHOV WR OLTXLGV WRQDVDOV WRYRLFHG IULFDWLYHV WRXQYRLFHG VWRSV ,WLVUHSUHVHQWHG DV D VLQJOH IHDWXUH ZLWK HOHYHQ SRVLWLRQV VR >L@DKLJK YRZHO LV >RRRRRRRRR[Y6RQRULW\@ DQG LV XQYRLFHG 7DEOH >V@DQ IULFDWLYH >RR[[[RF[[[[;6RQRWLW\@ /DF\ VKRZV WKHVRQRULW\RIHDFK WKHPHYRZHO 'RZQZDUG DUURZV EHWZHHQ OLQHV LQGLFDWHGHFUHDVLQJ VRQRULW\DQGXSZDUG DUURZV LQGLFDWH LQFUHDVLQJ VRQRULW\
IURPWKHPH WRWKHPH1R DUURZ LQGLFDWHV HTXDO VRQRULW\ :KLOH (QJOLVK WH[WVHWWLQJ LVDSSDUHQWO\ VWUXFWXUHGE\SURFHVVHV KLJKO\ FRQVLVWHQW ZLWK JUDPPDWLFDO DQDO\VLV JURXSV RI VSHDNHUVVLQJHUV ODUJHO\ DJUHH XSRQ WKHEHVW SRVVLEOH UK\WKPLF VHWWLQJ RI D OLQH DQG FDQ LGHQWLI\
VHWWLQJV WKDWDUHXQPHWULFDO LWLVQRW DVFOHDU WKDWXQVRQRURXV VLQJLQJ LVVR UHJXODUO\DFFRXQWDEOH WRV\VWHPDWLF UXOHVRIZHOOIRUPHGQHVV 1RQHWKHOHVV PH KLVYRLFH VRXQGV ZKHQ '\ODQ VLQJV WURXEOH >WU$EM@ DQG RFHDQ >RMQ@WR
)DOO
(WKQRPXVLFRORJ\ 7DEOH
LQ WKH WKHPH
RI YRZHOV
6RQRULW\
'RZQ
RI HDFK
YHUVH
/LQH HQGLQJ ZLWK WKHPH
$V VXQJ
/RUG ,UHDOO\PLVV P\ EDE\
>EHLL@
6RQRULW\ >RRRRRRRRRR[@
, :HOO WKHZD\ , ORYH WKDWZRPDQ
L
>PDVDQ@
>RRRRRRRR[[[@ L
L 5LJKW QRZ , P KDYLQJ WURXEOH
>RRRRR[[[[[[@
:+ L
0HHW PH LQWKHPLGGOH RI WKHRFHDQ 6KH SDFNHG
LWXS LQD VXLWFDVH
L
>-QQQ@ "
>RRRR[[[[[[[@ "
>NHLLV@
>RRRRRRRRRR[@
>ZH LL@
>RRRRRRRRRR[@
" $OO WKHZD\ WR WKH VWDWXH RI OLEHUW\ &UHGLW %RE '\ODQ " &RS\ULJKW 5HSULQWHG ZLWK SHUPLVVLRQ
VWUDLQHG
RI
WKH +LJKZD\
UHHG\
DQG
UHQHZHG
+LV
FRQVWULFWHG
"
>WLLLO
>RRRRRRRRR[[@
E\ 6SHFLDO 5LGHU 0XVLF
RI RFHDQ
SURQXQFLDWLRQ
HVSHFLDOO\
:KHWKHU PXVLFDOO\ EULQJV WKLVSURJUHVVLRQ RIGHFUHDVLQJ VRQRULW\ LQWRUHOLHI RUSKRQRORJLFDOO\ WKHVWUHVVHG ORQJSURQXQFLDWLRQ RID V\OODELF Q LV ZLWKRXW TXHVWLRQ
KLJKO\
PDUNHG
:H
ZRXOG
H[SHFW
D VLQJHU
WR UHDOL]H
DW OHDVW
WKH
XQGHUO\LQJ YRZHOV RIQRUPDOO\ UHGXFHG V\OODEOHV VLQJLQJ WURXEOH >WU$E$LO@ DQG
RFHDQ
>R-DLLL@
,W ZRXOG QRW EH XQUHDVRQDEOH WRSRVLW DFRQVWUDLQW DJDLQVW XQVRQRURXV QRWHKHDGV RQ DQDORJ\ WR V\OODEOH KHDGV RU QXFOHL 7KRXJK D VW\OH OLNH KXPPLQJ
SURYLGHV
VRPH
FRXQWHUHYLGHQFH
VLQJLQJ
LVPRUH
VWULQJHQW
WKDQ
VSHHFK LQUHTXLULQJPRUH YROXPH FRQVLVWHQW ODU\QJHDO DFWLYLW\ WR VXSSRUW
FRQWLQXRXV
SLWFKHG
YRLFLQJ
DQG
GXUDWLRQDO
H[WHQVLRQ
RI YRZHOV
+LQWRQ
IRU LQVWDQFHILQGV WKDW+DYDVXSDL VLQJLQJGLIIHUVSKRQRORJLFDOO\ IURP +DYDVXSDL VSHHFK LWLQFOXGHVPRUH VRQRURXV JOLGHV DQG QDVDOV LWFRQGLWLRQV FKDQJHV LQSURQXQFLDWLRQ WRLQFUHDVH WKHVRQRULW\ RIFRQVRQDQWV OHQLWLRQ DQG LW SUHYHQWV YRZHO UHGXFWLRQ RU LQVHUWVYRZHOV LQSRVLWLRQV WKDWLQFUHDVH
WKHVRQRULW\RIWKHSKRQHWLF PDWHULDO EHLQJ VXQJ,QDQDUURZO\ FRQFHLYHG VLQJLQJ FRQWH[W VXFK DV+D\HV V DQG.DXQ V ODQJXDJH ODERUDWRU\ZH PLJKW H[SHFW WKDW MXVWDV VWUHVV DQG SKUDVLQJ PDS RQWR UK\WKPVR VKRXOG VWUHVV OHQJWKDQG V\OODEOH SURPLQHQFH VRQRULW\ KDYH VDOLHQFH LQWKHYRZHOV RU VHJPHQWV IRU QRWH
RQ ZKLFK KHDGV
RXJKW
QRWHV
DUH VHW 7KDW
WR EH DPRUH
LV WKH FODVV
VRQRURXV
VXEVHW
RI DFFHSWDEOH RI WKH FODVV
VHJPHQWV RI DFFHSWDEOH
VHJPHQWV IRUV\OODEOH QXFOHL ,QVSHHFK WRSURQRXQFH RFHDQ >RMQ@ LVSKRQRORJLFDOO\ LOOIRUPHG(Q JOLVKSKRQRORJ\ DYRLGV VWUHVVLQJUHGXFHG YRZHOV DQGILQDOVKRUWV\OODEOHVDQG
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
LWDEVROXWHO\ IRUELGVVWUHVVHG V\OODELF OLTXLGV DQG QDVDOV :KHQ VXFKPDUNHG IRUPV DULVH"LQ
VSHHFK
RU DQ\ RWKHU
FRQWH[W"ZH
DVVXPH
WKH\
DUH VRPHKRZ
PRWLYDWHG QRW VLPSO\ UDQGRP YDULDWLRQ 8UEDQ %HFDXVH LWFDQ FODLPQR SRVVLEOH SKRQRORJLFDO MXVWLILFDWLRQWKHIDFWWKDWWKLVSURQXQFLDWLRQ RFFXUV LQDPXVLFDOSRHWLF FRQWH[W VXJJHVWVZH ORRN WRH[SUHVVLYH IRUPVDV
PRWLYDWLRQ IRUWKHSUHVHQFH RIWKHVHPDUNHG VWUXFWXUHV 7KH ORZ VRQRULW\ RI WKHILQDO V\OODEOH RI RFHDQ LVWKHSDUWLFXODU FKDU ZH DFWHULVWLF WKDWPDUNV LWVSURQXQFLDWLRQ DV SUREOHPDWLF 7KHUHIRUH LI ZH WRFRQVLGHU WRFRQWH[WXDOL]H LWLQWHUPVRIH[SUHVVLYH IRUP QHHG LQWHQG
VRQRULW\ RQ D ODUJHUVFDOH 7KH SDUDOOHOLVWLF UHODWLRQV EHWZHHQ RFHDQ DQG WKH RWKHU ZRUGV
RI WKH WKHPHEDE\ZRPDQWURXEOHDQG
ODWHU VXLWFDVH
JLYH D JRRG VHQVH RIKRZ WRDFFRXQW IRUWKLVPDUNHGQHVV LQWKH IRXUWK YHUVH ORRNLQJ DW WKHFRQWRXU LQ)LJXUH ZH VHH WKDWRFHDQ LQIDFWVLWVDW WKH ORZHVW VRQRULW\SRLQW RI WKH VHULHV RIFRQQHFWHG WKHPHV 7KDW )LJXUH GHSLFWV FRQWLQXRXV SURJUHVVLRQ WRZDUG ORZ VRQRULW\ LQWKH WKHPH DQG D FOHDU UHWXUQ WRPRUH VRQRURXV YRZHOV DIWHUWKH IRXUWKYHUVH VXJJHVWV D OHVV WKDQUDQGRP UHODWLRQ EHWZHHQ PDUNHGQHVV
DQG ODUJHVFDOH H[SUHVVLYH
IRUPV
7KHUH LVIXUWKHUHYLGHQFH IRUWKHQRQUDQGRPQHVV RIWKHVHXQVRQRURXV VWUHVVHG YRZHOV LQSURPLQHQW SKUDVDO SRVLWLRQ ,Q WKH VHFRQG YHUVH '\ODQ ZKLFK ZRXOG SHUIRUPV ZRPDQRQ WKHWKHPHDV >ZXPALQ@DQGQRW >ZXPQ@ EH FRQVLVWHQWZLWK KLV UHQGHULQJ RI WURXEOHDQG RFHDQ ,QZHDN SRVLWLRQ WKHVHJPHQWV DQGQ DUHRIWHQ V\OODELF WKDWLV SURQRXQFHG DV V\OODEOHQXFOHL
ZLWKRXW DQ LQWHUYHQLQJVFKZD DV LQEXWWRQ >E$WQ@DQG ERWWOH >EDI @,W LV HDVLHUWRDUWLFXODWH ORUQZLWK WKHWLSRIWKHWRQJXH LIWKHSUHFHGLQJ VHJPHQW LVDOVR
LQ WKH VDPH PDQQHU
DUWLFXODWHG
ZRPDQ
QRU
WURXEOH
RFHDQ
VR QHLWKHU WKH WLS RI WKH WRQJXH DQ XQDPELJXRXV HQYLURQPHQW IRU
ZLWK
SURYLGHV
V\OODELF VRQRUDQWV LQWKHLUZHDN VHFRQG V\OODEOHV 7KH -LQRFHDQ EHWWHU FRQGLWLRQV
D
V\OODELF
Q WKDQ
WKH ODELDO
FRQVRQDQWV
RI ZRPDQ
DQG WURXEOH
EXW LWLVVWLOODPELJXRXV >@ LVDUWLFXODWHGZLWK WKH WLSRI WKH WRQJXH RQ WKH KDUG SDODWH UDWKHU WKDQ WKHDOYHRODU ULGJHIDUWKHUEDFN LQWKHPRXWK WKDQ >Q@ (QJOLVK GLFWLRQDULHV GLVWLQJXLVK EHWZHHQ WKHVH HQYLURQPHQWV LQWKHLU )LJXUH
6RQRULW\
FRQWRXU
RI WKH WKHPH
YRZHOV
7KHPH9HUVHV
RI 'RZQ
WKH +LJKZD\
(WKQRPXVLFRORJ\
)DOO DPHDQLQJIXO
VXJJHVWLQJ
SURQXQFLDWLRQV
DQG
YDULDWLRQ
UHJXODU
:KDWHYHU
WKHVWDWXVRIWKH LQWHUYHQLQJYRZHO LQWKHVWDQGDUGSURQXQFLDWLRQ RI ZRPDQ >ZXPVQ@"ZKHWKHU DQXQGHUO\LQJ YRZHO RU WKHSKRQHWLF PDQLIHVWDWLRQ RID YDULDWLRQ IURP QRQDOLJQPHQW RIFRQVRQDQW JHVWXUHV *DIRV "'\ODQ V RQH
PHOLVPDWLF
SURPLQHQW
WR DQRWKHU
HQYLURQPHQW
VXJJHVWV
D FRQWUDVWLYH
IXQFWLRQ EHWZHHQ GLIIHUHQWHOHPHQWV RI WKHVHULHV7KDW WKHVHYDULDWLRQV LQ OLQH XS WR FUHDWH
SURQXQFLDWLRQ
)LQDOO\
FRQWRXU
VXJJHVWV
YDULDWLRQ
WKDW
RU WULYLDO
QRW UDQGRP
LV IXQFWLRQDO
D SURJUHVVLYH
WKLV SURJUHVVLRQUHWXUQ
RFFXUV
FRQWRXU
HQ
LQ FRPSOHPHQWDU\
YLURQPHQWV WKDWUHLQIRUFH WKH VRQRULW\SURJUHVVLRQ WKHUHWXUQLQWKHILIWK YHUVH DOVR RFFXUV OH[LFDOO\ DQG WKURXJK UK\PH :KHQ WKHWKHPHRI WKHILIWK YHUVH
UHWXUQV
RQ D VRQRURXV
YRZHO
RQ WKHZRUG
VXLWFDVH
VKRZQ
DERYH
WR EH
UK\WKPLFDOO\PDUNHG E\ LWVVHWWLQJLWDOVR UHWXUQVRQ WKHVSHFLILF GLSKWKRQJ HPSKDVL]HG LQWKHILUVWYHUVH DQG RQ DZRUG WKDWSUHYLRXVO\ VWRRG RXW DV UHPDUNDEOH0XVLFDO SRHWLF DQG OH[LFDO IRUPV LQWHUVHFW LQWKHILIWKYHUVH 5K\PH DQG $VVRQDQFH :KHQ WKHLQFUHDVLQJO\XQVRQRURXV VHULHVRIWKHPHV\OODEOHV UHVROYHV LQWKH ILIWK GRHV VRRQ DZRUG WKDWKDV DOUHDG\EHHQ VHWDSDUW DVERWK OH[LFDOO\ YHUVH LW DQG SURVRGLFDOO\
UHWXUQ RI WKH WKHPH
VXLWFDVH7KH
LPSRUWDQW
RQ VRQRURXV
OHVVPDUNHG YRZHOV WKHQRFFXUV VLPXOWDQHRXVO\ZLWK D OH[LFDO UHWXUQWRDSR
HWLFDOO\
LPSRUWDQW
ZRUG
ZLWK
KLJKZD\
7KLV
HVWDEOLVKHV
D
UK\PLQJ
UHODWLRQ
EHWZHHQ
WKH ILUVW
DQGILIWK YHUVHV UHHPSKDVL]LQJ WKHYRZHO >HL@ WKDWLVLPSRUWDQW LQWKHRSHQLQJ OLQHV7KH UK\WKPLF PDUNLQJ RI VXLWFDVH LQWKHILUVWYHUVH WKDWHPSKDVL]HV LWV DVVRQDQFH
DQG EDE\ WKHUHIRUH
VHWV
LWXS WR DFW DV DQ DQFKRU
LQWKHILIWK YHUVHZKHQ VHYHUDOSURFHVVHV EHJLQ WRUHVROYH 7DEOH :KLOH WKHILUVWLQVWDQFH RI RFHDQ LVPDUNHG E\ LWVSURQXQFLDWLRQ LWV UHSHWLWLRQ LQWKHILIWKYHUVH LVVHWZLWK QRUPDO SURVRG\ 2FHDQ KHUH LVVHW ZLWK LWV ZHDN VHFRQG V\OODEOH FRUUHVSRQGLQJO\ UK\WKPLFDOO\ OLQHLQWHUQDOO\
ZHDN
QRW DFFHQWHG
DQG H[WHQGHG
DV LQ WKH SUHYLRXV
YHUVH
YHUVH LQDSRVLWLRQ WRUK\PHZLWK VXLW %DE\UHFXUV DVZHOO LQWKHILIWK FDVH DV LW SUHYLRXVO\ UK\PHGZLWK KLJKZD\ LQWKHILUVWYHUVH%XW EDE\KHUH LVDWWKHHQG RIWKHILUVWDQG WKLUGOLQHVDQGQRW VHW WRWKHWKHPH WKHUHIRUHLW
GRHV QRW GLSKWKRQJL]H WRUK\PHZLWK VXLWFDVH7KH RIIUK\PHWKDWLVIL[HG E\GLSKWKRQJL]DWLRQ LQWKHILUVWYHUVH LVKHUH OHIWDVDQRIIUK\PH,QWKHILUVW ZDV ZDV XQFOHDUZKHWKHU WKHEHVW DFFRXQW IRUGLSKWKRQJL]LQJ EDE\ YHUVH LW
LWV PHOLVPDWLF VHWWLQJRU LWVUK\PLQJUHODWLRQZLWK KLJKZD\,WDSSHDUV WKDW PRWLYDWLRQ IRULWV ZKHQ QRW VHWPHOLVPDWLFDOO\ EDE\ GRHV QRWKDYH VXIILFLHQW DOWHUQDWH
SURQXQFLDWLRQ
$W WKHHQG RI WKHVRQJOLEHUW\ LVVXQJ RQ WKHWKHPH OLNHEDE\ LQWKH ILUVWYHUVH DQG LWGRHV QRW GLSKWKRQJL]H WR >HL@ HLWKHU$ VXEWOH VKLIWKDV RF FXUUHG RYHU WKHFRXUVH RI WKH VRQJ IURP >HL@ WR >L@,QIDFWH[FHSW IRUVXLW
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
7DEOH 9HUVHV DQG RI 'RZQ WKH+LJKZD\ :HOO , PZDONLQJ GRZQ WKHKLJKZD\ $ :LWK P\ VXLWFDVH LQP\ KDQG %
$
>EHLEHLL@
6KH V LQVRPH IRUHLJQ ODQG % $ "
WKHRFHDQ WRRNP\ EDE\ 0\ EDE\ WRRNP\ KHDUW IURPPH $
:HOO
>EHLEL@
$ >EHLEL@
0\ EDE\ WRRNP\ KHDUW IURPPH $ 6KH SDFNHG LWXS LQD VXLWFDVH /RUG VKH WRRN LWDZD\ WR ,WDO\,WDO\ $
$ >VXWNHLLV@
6R , PZDONLQJ GRZQ \RXUKLJKZD\ $ -XVWDV IDUDVP\ SRRU H\HV FDQ VHH $
$ >KDLZHLL@
$ $" >OLEDWLLL@
V\OODEOHV DUH VXQJ WR WKHWKHPH DQG OH[LFDO UHSHWLWLRQV EHWZHHQ DUH VHW LQEROGIDFH DQG ODWHYHUVHV HDUO\ %RE '\ODQ " &RS\ULJKW UHQHZHG E\ 6SHFLDO 5LGHU 0XVLF
8QGHUOLQHG
5HSULQWHG ZLWK SHUPLVVLRQ
7DEOH FDVH DQG KLJKZD\HYHU\ OLQH LQWKHILQDO WZRYHUVHV HQGV LQ >L@DV LQ 7KH
UHWXUQ
LQ WKH ILIWK YHUVH
GRHV
QRW PHDQ
WKH VRQJ KDV
HQGHG
5DWKHU
WKHILQDOWZRYHUVHV VXEWO\UHYLVLWWKHRIIUK\PHRIWKHILUVWYHUVHZKLFK HQGV XS LQDGLIIHUHQWSRVLWLRQ ZLWK UHJDUG WRWKHKLJKZD\EDE\ UK\PH WKDQ LW VWDUWHG WKH VOLJKWXSZDUG WXUQRIWKHFRQWRXU LQ)LJXUH LVEHFDXVH RI WKLV KHLJKWHQLQJ RI WKHYRZHO IURPKLJKZD\ WROLEHUW\ )LQDOO\WKH ODVWYHUVH LVDOWHUHG WR LQFOXGH WZR LQVWDQFHV RI WKH WKHPH 7KH ILUVW RFFXUULQJ RQ WKHWKLUGOLQHRIWKHYHUVH LVVHWWRKLJKZD\DUHWXUQ
WRWKHLQLWLDOUK\PHDZRUG RIWLWXODUIRFXVDQG VRPHWKLQJ RIDFRPSOHWLRQ RIWKHWKUHH UK\PLQJDVVRQDQW WURFKHHV LQWKHILUVWYHUVH KLJKZD\EDE\ DQG VXLWFDVH HDFK KDV QRZ EHHQ VHWWRWKHWKHPH%XW KLJKZD\ LVDOVR WKH ZLWK D VZHHW PHORGLF FOLPD[ RI WKHSLHFH '\ODQ VLQJV LWVWKHPH LQIDOVHWWR
YHUVH UHWXUQVWKHWKHPHWRDVRQRURXV YRZHO URXQG WRQH$QG WKRXJK WKHILIWK DQG UHLQFRUSRUDWHV RFHDQ LQWRQRUPDO WURFKDLF VWUHVV WKHQDVDOLW\ RI WKH IDOVHWWRKLJKZD\PLJKW EH VDLG WRFRPSOHWH WKHSURFHVV RIUHVROXWLRQ IURP RFHDQ UHFRQWH[WXDOL]LQJ WKHQDVDOPHORGLF VHJPHQWZLWKLQ DPRUH QRUPDO VLQJLQJ HQYLURQPHQW ,QFOXGLQJ WKH WKHPH WZLFH LQRQH YHUVH FKDQJHV LWV PXVW UHVROYH HIIHFW1RZ LQVWHDGRIEHLQJ MXVW D FOLPD[ LQHDFK YHUVH WKDW
(WKQRPXVLFRORJ\
)DOO
LQWKHILQDO OLQHLWEHFRPHV DSRLQW RI UHVROXWLRQ LWVHOIDQG'\ODQ HQGV WKH YHUVH
DQG
WKH VRQJ
RQ WKH WKHPH
LQ D ORZHU
UHJLVWHU
6XPPDU\ $ FRQWUDVW EHWZHHQ
>HL@ DQG >L@ WKDW LVXQGHUO\LQJO\ SUHVHQW IURPWKH RQ WKHPHRI WKHILUVWYHUVH EDE\VKLIWVVXEWO\RYHU WKHFRXUVH RI WKHVRQJ 7KH ILUVWYHUVH HVWDEOLVKHV >HL@ DV D FKDUDFWHULVWLF UK\PHDVVRQDQFH WKDW LV HPSKDVL]HG E\ WKHUK\WKPLFHPHUJHQFH RIWKHVHFRQG V\OODEOH RI VXLWFDVH DQG WKHUHV\OODELILFDWLRQ DQG GLSKWKRQJL]DWLRQ RI EDE\ LQWKHWKHPH)URP YHUVH WRYHUVH WKHVHULHV RI WKHPHV SURJUHVVHV WKURXJK IRXUYHUVHV WRZDUG
KLJKO\PDUNHG V\OODEOHKHDGV FOLPD[LQJ RQ D V\OODELFQDVDO WKDWLVVXQJPHOLV PDWLFDOO\ LQDQ XSSHU UHJLVWHU7KH ILIWKYHUVH UHVROYHV WKHSURJUHVVLRQ RI WKHILUVWIRXUYHUVHV UHWXUQLQJ WKH WKHPH RQ WKH VRQRURXV >HL@ZKLOH OH[L FDOO\ UHWXUQLQJ WRVWURQJO\HVWDEOLVKHG ZRUGV EDE\ DQG VXLWFDVH7KRXJK
VXLWFDVH LVDQDVVRQDQW UHWXUQWKHVXUURXQGLQJ OLQHV LQFOXGH >L@UDWKHUWKDQ ZKLFK LV >HL@ LQWKHLUILQDOV\OODEOHVHVSHFLDOO\ LQWKHSURQXQFLDWLRQ RI EDE\ DQHZPHWULFDO LQ LV 7KLV GLVWLQFWLRQ KHUH FRQWLQXHG DQG SRVLWLRQ UHSHDWHG
PRUH IXOO\LQFRUSRUDWHG LQWRWKHRYHUDOO UK\PH VFKHPH LQWKHILQDOYHUVH DV WKH VRQJ HQGV RQ OLEHUW\/LNH EDE\DQG XQOLNH KLJKZD\ DQG VXLWFDVH OLEHUW\KDV DZHDN ILQDO V\OODEOH ,WLVVXQJ WRWKH WKHPH RQ WKH VLQJOH VHJ PHQW >L@QRW GLSKWKRQJL]HG OLNHEDE\ LQWKHILUVWYHUVH $Q RYHUDOO
VKDSH
HPHUJHV
IURP
WKH LQWHUDFWLRQ
RI PXVLFDO
SRHWLF
DQG
VXQJ HOHPHQWV 5K\WKP DQGPHORG\ HPSKDVL]H DQG UHGHILQH SURVRGLFDOO\ DPELJXRXV
V\OODEOHV
VXLWFDVH
EDE\
ZRPDQ
WURXEOH
DQG
RFHDQ
DOO
UHFHLYH UK\WKPLFHPSKDVLV RQ WKHLUVHFRQG V\OODEOHV FRQWUDU\ WR WKH WUR
FKHHV
RI WKH XQGHUO\LQJ
WH[W DQG ZLWK
WKH H[FHSWLRQ
RI FDVH
LQ FRQWUDVW
WR WKHLU ODFNRISKRQRORJLFDO VWUHVV 6XFK HPSKDVLV KRZHYHU SURGXFHV D SURVRGLH VWUXFWXUH WKDWLVQRW IRXQG LQWKHWH[WDQG DPXVLFDO VWUXFWXUH WKDW LVQRW IRXQG LQWKHPHORG\ $ VPDOOEXW LPSRUWDQW VKLIWLQWKHSHUIRUPDQFH RI UK\PLQJZRUGV UHGHILQHV WKHGRPLQDQW VRXQG LQDQ RIIUK\PHWKDWSHU VLVWVIURPWKHILUVWYHUVH KLJKZD\EDE\ $QG D ULVLQJDQG IDOOLQJVKDSH LVODLGRYHU WKH UHSHWLWLYHPHORG\ RI WKHYHUVHV E\ D VHULHV RI LQFUHDVLQJO\
OHVV VRQRURXV V\OODEOHV VXQJ RQ WKHPHORGLFDOO\ SURPLQHQW WKHPH 7KLV SURJUHVVLRQ UHVROYHV DVSDUW RID OH[LFDO UHWXUQ LQWKHILIWKYHUVHZKLFK VHWV WKHWKHPH WRVXLWFDVHZKRVH ILQDO >HL@ LVERWK VRQRURXV DQG DSDUDOOHO OLQN WR WKH ILUVW YHUVH
0DUNHG IRUPVRFFXU LQSURPLQHQW SRVLWLRQV PHWULFDO LQYHUVLRQVRIFHU WDLQ ZRUGV DQG VWUHVVHG SODFHPHQW RIXQVRQRURXV VHJPHQWV 7KHVH IRUPVGR QRWDULVHRXWRIUDQGRPYDULDWLRQ RU IULYRORXVUXOHEUHDNLQJ EXWDUHPRWLYDWHG
E\ WKHLUSRVLWLRQ LQSRHWLF DQGPXVLFDO IUDPHZRUNV WKDWVWUXFWXUH WKH VRQJ RYHU
LWV HQWLUHW\
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
0XVLF
DQG /DQJXDJH
LQ WKH 9RLFH
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
VWHS ORZHUDQG WKHILQDOSKUDVH KDV DPHOLVPDWLF FOLPD[ DW LWVKDOIZD\SRLQW EHIRUH UHVROYLQJ GRZQZDUG WRD WRQLFSLWFK %XW IURPYHUVH WRYHUVHRQO\ D PLQRU VHWRIHOHPHQWV FKDQJHV DQGZH DUH OHIW ZLWK DPXVLFDO VKDSH WKDWLV YHUVHV DQH[WUDIDOVHWWR ZLWK IRU I LYH EHIRUH WKHLQVHUWLRQRI UHSHWLWLYH HQGLQJ WKHPH LQWKHILQDOYHUVH 6XFK DSHUVSHFWLYH SUHVHQWV DSLFWXUH WKDW LV MDJ JHG DQGXQHYHQ DQG WKDWGRHV QRW ,WKLQNDGHTXDWHO\ UHSUHVHQW WKLVPXVLF LQ ZKLFK WKHIDOVHWWR UHQGHULQJ RI WKHPH RQ KLJKZD\ LVD VXUSULVH WREH VXUHEXW QRW MDUULQJRURXW RIFRQWH[W 7KRXJK WKHUH LVQR DSULRUL UHDVRQ
WRH[SHFW GHYHORSPHQW FOLPD[ DQG UHVROXWLRQ IURPDSHUIRUPDQFH LWLV PH WKDWWKHIRXUWKYHUVH RI 'RZQ WKH+LJKZD\ LVOH[LFDOO\ XQPLVWDNDEOH WR ZD\V WKDW SRHWLFDOO\PXVLFDOO\ DQG V\OODELFDOO\ H[FHSWLRQDO FOLPDFWLF LQ DUH FRQWH[WXDOL]HG E\SDUDOOHOLVP DQG SURJUHVVLRQV WKURXJK WKHSUHFHGLQJ VHYHUDO
YHUVHV
'\ODQ V
SHUIRUPDQFH
HPSKDVL]HV
PXVLFDO
DQG SURVRGLH
HOH
PHQWV RI WKHPHORG\ UK\WKPDQG O\ULFVWKDWVWUXFWXUH WKH LQWHUUHODWLRQVRI WKHVH SDUDPHWHUV ZLWK DXQLTXHO\ PXVLFRSRHWLF VKDSH 7KH FURVVFXOWXUDO VDOLHQFH
RI SDUDOOHOLVP
LQYHUEDO
DUW VXJJHVWV
WKDW HYHQ
LQ DGGLWLYH
VWDQ]D
RU
VWURSKHEDVHG JHQUHV ODUJHVFDOH IRUPV OLQNDQG VWUXFWXUH WKHPDWHULDO RI YHUEDO DUWDFURVV SRWHQWLDOO\ JUHDW VSDQV RI WLPH
$Q DQDO\VLVRIWKHSDJHERXQG WH[WDORQHZRXOG PLVV WKHSULPDU\DVVRQDQW UHODWLRQVKLS LQWKH VRQJEHWZHHQ >HL@ DQG >L@7KH WH[WVHWV KLJKZD\ DQG EDE\ LQDQ RIIUK\PLQJUHODWLRQ LQWKHILUVWYHUVH %XW LQWKHSHUIRUPDQFH WKDWUHODWLRQ LVQRW DQ RIIUK\PHEXW DSHUIHFW UK\PH WKDWFKDQJHV RYHU WLPH LQWRDQRIIUK\PH 7KH WH[WDV VXFK LVFHUWDLQO\UHOHYDQWHVSHFLDOO\ DV LWUHIOHFWV
WKHFRQWUDVW LQVWUHVVEHWZHHQ WKHVHFRQG V\OODEOHV RI EDE\DQG KLJKZD\ WKDWDSSDUHQWO\PRWLYDWHV WKHGLIIHUHQWSURQXQFLDWLRQ RI EDE\ LQLWVYDULRXV PHWULFDO SRVLWLRQV %XW WKHSRHWLFV RI WKH WH[WLQ'\ODQ V SURQXQFLDWLRQ DUH YHU\GLIIHUHQWWKDQ LQWKHWH[WRQ WKHSDJH WKHSDJH FDQ RQO\ UHSUHVHQW WKH
ZKLOH WKHSHUIRUPHG YHUVLRQ KDV DFFHVV WRDJUHDWYDUL XQGHUO\LQJ RIIUK\PH RI HW\ SRVVLEOH SURQXQFLDWLRQV 7KDW WKHVKLIWIURP >HL@ WR >L@RFFXUV ERWK LQ WKHIUHTXHQF\ RIZRUGV WKDWFRQWDLQ WKHVHYRZHOV DQG LQWKHSURQXQFLDWLRQV RI LQGLYLGXDOZRUGV LVHYLGHQFH WKDWVLQJLQJ VKDSHV DQG LVVKDSHG E\SRHWLF DVVRQDQFH )XUWKHUWKHPHWULFDO VLPLODULWLHVEHWZHHQ WKH ZRUGV LQ ZKLFK WKLV
)DOO
(WKQRPXVLFRORJ\
UK\PHVKLIW RFFXUVOLEHUW\ DQG EDE\ZLWKXQVWUHVVHG ILQDOV\OODEOHV LQFRQ WUDVWWRKLJKZD\DQG VXLWFDVH DQG WKHLUSURPLQHQFH DWWKHEHJLQQLQJ DQG HQG RI WKHVRQJ VXJJHVW WKDWWKLVVKLIWIURP >HL@ WR >L@ LVQRW MXVW UDQGRP RU
SKRQHWLF EXW LVLQIDFWSDUW RIWKHRYHUDOO VWUXFWXUHRIWKHVRQJ 6HSDUDWH SRHWLF DQGPXVLFDO DQDO\VHV PLJKW DFFRXQW IRUVRPH IRUPV 7KH UK\WKPLF OHQJWKHQLQJ RI FDVH LQWKHILUVWYHUVH OLQNVSRHWLF SDUDO PXVLFDO UK\WKP LQDZD\ WKDWPLJKW EH OHOLVP"VKDUHG DVVRQDQFH"ZLWK VHHQ E\RYHUOD\LQJ DPXVLFDO DQDO\VLVZLWK DSRHWLF RQH %XW WRSRVLW VXFK D
OLQNDJH UHTXLUHV DVVXPLQJ WKDWPXVLFDO IRUPIROORZV SRHWLF IRUP UK\WKPV DFFRPPRGDWH SRHWLFV ,WLVQRW FOHDUZKHWKHU VXFK DQDFFRXQW FDQ UHVSRQG
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
PHQW
RI ZRPDQ
SUHFHGHQFH FRQWH[W ZH
DQG
WURXEOH
RFHDQ
WKDW
LV VR LPSRUWDQW
WKDW
LW WDNHV
RYHU WKHRWKHUZLVH FRQVLVWHQW UK\PH VFKHPH" ,WLVRQO\ LQWKH
RI WKHPXVLFDO
FDQ XQGHUVWDQG
VHWWLQJ
DQG SDUWLFXODUO\
WKH PRWLYDWLRQ
WKH VRQJ V
IRU WKH SRHWLF
SHUIRUPDQFH
WKDW
VWUXFWXUH
0XVLFDO SDUDOOHOLVP IUHHVXQVWUHVVHG V\OODEOHV IURPWKHLUHTXLYDOHQFH UHOD WLRQV7KH WKHPH LQHDFK YHUVH VHWV WKHVH V\OODEOHV LQSURPLQHQW SRVLWLRQV DQG WKH UHSHDWLQJPHORG\ SURMHFWV QRW WKHSULQFLSOH RI HTXLYDOHQFH EXW D IURPWKHD[LVRIVHOHFWLRQ WKHILQDOV\OODEOHVRI SULQFLSOH RIJUDGLHQW VLPLODULW\ EDE\ZRPDQWURXEOH
DQG RFHDQ
RQWR
WKH D[LV RI FRPELQDWLRQ
WKH HQG
RIWKHSHQXOWLPDWH OLQHRID UHSHDWLQJPXVLFDO DQGSURVRGLH YHUVH VWUXFWXUH 7KH VDPHQHVV RIWKHUHSHDWLQJPHORG\ EHJV WKHTXHVWLRQ RIZKDW LVGLIIHUHQW
'\ODQ V SHUIRUPDQFH IUDPHV WKHDQVZHU E\UHDUWLFXODWLQJ WKH O\ULFV SURVRG\ SHUIRUPLQJ UHGXFHGZHDNILQDO OLQHVDV IXOO\SURQRXQFHG VWURQJILQDOOLQHV WRGUDZ RXW HOHPHQWV RIFRPSDULVRQ XQUHDOL]HG LQWKH OLQHVRIYHUVH ,WLVXQLTXHO\ DSKHQRPHQRQ RIVLQJLQJ VPHGLDWLRQ RIPXVLF DQGSRHWU\ WKDW'\ODQ SUHVHUYHV VRPHWKLQJ KLGGHQ LQWKHWH[W"WKH TXDOLW\ RIXQVWUHVVHG YRZHOV WRZKLFK WKHUH LVQR JRRG UHDVRQ WREH IDLWKIXO"LQ KLV SURQXQFLD
WLRQ7R VLQJWURXEOH >WU$EM@ DQG RFHDQ >RQ@LVWRYLRODWH DQ\SULQFLSOHV RI ZH PLJKW SURSRVH ZKLFK ZRXOG FHUWDLQO\ V\OODEOH KDUPRQ\ LQVLQJLQJ WKDW UHTXLUH UHSODFLQJ >_@ DQG >Q@ZLWK YRZHOV >D@DQG >$Q@'\ODQ V SHUIRU
PDQFH
DVVHUWV
WKH SULPDF\
RI WKH YRLFH
LQ WKLV H[SUHVVLYH
UHODWLRQ
WKH YRLFH
KDV IXOODXWKRULW\RYHU WKHPXVLFDO DQG SRHWLF WH[WVDQG WKHLULQWHUUHODWLRQV $Q DQDO\VLV WKDWGRHV QRW DFFRXQW IRUWKHFRQWDLQPHQW RIPXVLF DQG SRHWU\
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
ZLWKLQ WKHGRPDLQ RI WKHYRLFH PLVVHV D UHPDUNDEO\ FOHDU H[DPSOH RIDGLV WLQFWO\ PXVLFRSRHWLF SURJUHVVLRQ WKDWEXLOGV ODUJHIRUPDOVWUXFWXUHV RXW RI PXVLFDO DQG SRHWLF HOHPHQWV WLQ\
+HVLWDWLRQV *HQUH
%HWZHHQ
,QWHUWH[WXDOLW\
6RXQG
DQG 6HQVH DQG /LVWHQLQJ
PXVLFDO IRUP6\QWDFWLF 7KLV DQDO\VLV IRFXVHV RQ WKHVRXQGV RI ODQJXDJH LQ RU OH[LFDOYDOXHV DUH LQFOXGHG RQO\ LQGLUHFWO\V\QWDFWLFSKUDVLQJ LQIOXHQFHV SKRQRORJLFDO SKUDVLQJ ,QNHODV DQG=HH 6HONLUN ZKLFK SOD\V D
VLJQLILFDQW UROH LQWKHPXVLFDO SKUDVH DOVR FHUWDLQZRUGV DUH VHHQ DVSODFH KROGHUV VXLWFDVH KLJKZD\EDE\ PDUNHUV WKDWUHIHUVWUXFWXUDOO\EDFN WR WKHLURULJLQDO RFFXUUHQFH LQWKH VRQJ EXW DWWHQWLRQ WR WKHLUUHIHUHQWLDO FRQWHQW LVOLPLWHGWRWKDWSDUDOOHOLVWLF IXQFWLRQ1RQHWKHOHVV ODQJXDJH VRXQGV
IXQFWLRQ LQVSHHFK SULPDULO\ WRIDFLOLWDWHFRPPXQLFDWLRQ DQG ,FHUWDLQO\ GR QRW FODLP WKDWIRUPLVLQGHSHQGHQW RIPHDQLQJ RU VHPDQWLF FRQWHQW 5DWKHU DQDO\VLV WKDWWUXO\VHHNV WRXQGHUVWDQG WKH WRWDOLW\RIPXVLFDO IRUPVDQG WKHLU UHFHSWLRQ PXVW LQFOXGH WKHVHPDQWLF PHDQLQJ RI D VRQJ V WH[W-DNREVRQ
PDNHV WKLVDUJXPHQWZLWK UHJDUG WRWKHVRXQGV RI ODQJXDJH LQYHUVH
1R GRXEW YHUVH LVSULPDULO\ D UHFXUUHQW ILJXUH RI VRXQG 3ULPDULO\ DOZD\V EXW QHYHU XQLTXHO\ $Q\ DWWHPSWV WR FRQILQH VXFK SRHWLF FRQYHQWLRQV DVPHWHUV DO RU DUH WR WKH VRXQG OHYHO ZLWKRXW OLWHUDWLRQ UHDVRQLQJV DQ\ HP VSHFXODWLYH UK\PH LQWR WKH VHTXHQFH RI WKH HTXDWLRQDO SULQFLSOH SLULFDO MXVWLILFDWLRQ 7KH SURMHFWLRQ KDV DPXFK EHWZHHQ VFLHQWLILF
GHHSHU DQGZLGHU VLJQLILFDQFH 9DO"U\ V YLHZ RI SRHWU\ WKH VRXQG DQG WKH VHQVH >9DO"U\ @ LVPXFK PRUH WKDQ DQ\ ELDV RI SKRQHWLF LVRODWLRQLVP
DV KHVLWDWLRQ UHDOLVWLF
DQG
'RZQ WKH+LJKZD\ LVTXLWH HYRFDWLYH DQG LWV LPDJHU\ RI D IDLOHG JDPEOLQJ EURNHQKHDUWHG ZDONLQJ WUDYHOHUZLWK D GLVWDQW GHVWLQDWLRQ DQG HYHQPRUH GLVWDQW ORYHU OLPQV WURSRORJLFDO WHUULWRULHV WKDWFDOO RQ UHDODQG $PHULFDQ IRONORUHKLOOELOO\PXVLF DQG$IULFDQ$PHUL LPDJLQHG WUDGLWLRQV LQ FDQ EOXHV UHSUHVHQWLQJ DSHUVSHFWLYH RQ DXWKHQWLF YHUEDO H[SUHVVLRQ WKDWLV
KLVWRULFDOO\ WLHGWRWKHHDUO\V IRONUHYLYDO *LOO +DMGX '\ODQ :HLVVPDQ 0DQ\ RI WKHPRVW VDOLHQW SKRQHWLF DQG SKRQRORJL FDO VWUXFWXUHV ,LGHQWLI\DVSDUW RIWKHVRQJ V H[SUHVVLYH VWUXFWXUH"QRWDEO\ V\QFRSDWLRQ DQG QDVDOLW\"DUH WKHPVHOYHV YRFDO WURSHV WKDWLQGH[ FRPSOH[
DQG KLJKO\ FKDUJHG UHODWLRQVKLSV RI UDFH FODVV DQG SODFH LQPLGFHQWXU\ $PHULFDQ FXOWXUH ,QWKHPDWWHU RI V\QFRSDWLRQ WKHDQDO\VLV RI WH[WVHWWLQJ JUDPPDURQZKLFK ,EDVH P\ RZQ DQDO\VLV RI'\ODQ V UK\WKPV+D\HV DQG .DXQ +D\HV )RUWKFRPLQJ E ZRUNV IURPDQ DGPLWWHGO\ VPDOO GDWD VHW$IULFDQ$PHULFDQ PXVLF DQG WKHEOXHV LQSDUWLFXODUZHUH LQDOO OLNHOL
KRRG QRWZHOO UHSUHVHQWHG LQWKHPXVLFDO EDFNJURXQGV RI+D\HV DQG.DXQ V UHVSRQGHQWV ,QIRUPDQWV IOXHQW LQRWKHU (QJOLVKODQJXDJH VRQJ WUDGLWLRQV
)DOO
(WKQRPXVLFRORJ\
ZRXOG SUREDEO\ KDYH SURGXFHG GLIIHUHQW LGHDO VHWWLQJV DQG WKHUHIRUHGLI IHUHQW
JUDPPDUV
RI WH[WVHWWLQJ
,Q WKHVWUXFWXUHV RIH[SUHVVLYH SHUIRUPDQFH JHQUH LQ ZKLFK VW\OHDQG IRUPEHFRPH PDUNHUV RIPXVLFDO FRPPXQLWLHV RISUDFWLFH SURYLGHV DFRQ
WH[W WKDWFRPSOHPHQWV JUDPPDU 7KH UHFRUGLQJ DQDO\]HG LQWKLVDUWLFOH LV WKHSURGXFW RIDQ DPELWLRXV \RXQJ VLQJHU V VHOIFRQVFLRXV DQG XQUHPLWWLQJ DFTXLVLWLRQ RISHUIRUPDQFH VW\OHV'\ODQ V YRFDO WHFKQLTXH FRPELQHV VW\OHVRI WDONLQJDQG VLQJLQJ IURPKLVQDWLYH0LGZHVW IURPDPHGLDWHG DQGFRPPRGL
ILHGYHUVLRQ RI$PHULFDQ KLOOELOO\ PXVLF IURPEDOODGV FROOHFWHG DQG UHFRUGHG IURPDQ DFDGHPLF DQG LGHDOL]DWLRQ RI$IULFDQ$PHULFDQ EOXHV IRONORULVWV E\ :LWKRXW WDNLQJRQ WKHRYHUZKHOPLQJ WDVNRI VRUWLQJRXW WKH LQIOXHQFHV RQ ZH FDQ EULHIO\QRWH WKDW'\ODQ DGPLUHG DQG OHDUQHG IURPVLQJHUV KLV VLQJLQJ
VXFK DV+DQN:LOOLDPV :RRG\ *XWKULH DQG'DYH 9DQ 5RQN:LOOLDPV V VWULN LQJQDVDOLW\ DQG*XWKULH V PHWULFDO IOH[LELOLW\DUHPRGHOV '\ODQ FRQVFLRXVO\ LPLWDWHGDQG9DQ 5RQN SURYLGHG DPRGHO IRUVW\OLVWLFIOXLGLW\'\ODQ
ZHUH PRGHOV IRU %DOODG DQGEOXHV VRQJ IRUPV '\ODQ V HDUO\FRPSRVLWLRQV DQG KLVSURYRFDWLYH DQGXQIRUJLYLQJ VLQJLQJVW\OL]HGYRFDO WURSHVDOUHDG\ IDPLOLDU LQ WKHVH
,Q D HQYLURQPHQW
JHQUHV
VDWXUDWHG
ZLWK
FRXQWU\
IRON DQG EOXHV
'\ODQ V RUDO FRQVWULFWLRQ LVQRW RQO\ XQJUDPPDWLFDO LWLVDOVR LQWHUWH[WXDO DQG '\ODQ V YRFDO SHUIRUPDQFH LVDVPXFK D FRPSOH[ DQG FKDQJLQJ LQGH[ RI JHQUHV PDWLFDO
RI$PHULFDQ H[SHFWDWLRQV
YHUQDFXODU
E\'\ODQ V O\ULFVFRPSOHPHQWV VLQJLQJ
*HQUH
DQG JUDPPDU
DV LW LV DQ HOHJDQW
PXVLF
RI 6WDQGDUG
(QJOLVK
7KH
SOD\ DQG
FKDUDFWHU
RQ WKH JUDP VFHQH
HYRNHG
WKHSHUIRUPDQFH WUDGLWLRQV HYRNHG E\ KLV
WKHUHIRUH
GHPDQG
PXWXDO
XQGHUVWDQGLQJ
DQG
D UHFRJQLWLRQ RI WKH UROHRIYHUEDO JUDPPDU LQVLQJLQJ UHTXLUHV FROODSVLQJ VRPH RIWKHVWULFWERXQGDULHV WKDWVHSDUDWH XQGHUO\LQJ OLQJXLVWLF VWUXFWXUHV IURP FRQWH[WXDOL]HG
DQG
UHVSRQVLYH
SHUIRUPDQFH
:KLOH LWLV LPSRUWDQW WR LGHQWLI\WKH VRFLDO KLVWRULFDO DQG LQWHUWH[WXDO FRQWH[WV WKDWJLYH ULVH WRD VSHFLILF SHUIRUPDQFH LWLVHTXDOO\ LPSRUWDQW WR
QRWH WKDWLQDPXVLFDO FXOWXUH WKDWGHSHQGV XSRQ UHFRUGLQJ DQG FLUFXOD WLRQRIFRPPRGLILHG VRQJV WKHVLWHVRI OLVWHQLQJ DQG FRQVXPSWLRQ DUHSR WHQWLDOO\ LQGHSHQGHQW RI WKHVRFLDO DQG KLVWRULFDO FRQWH[WV WKDWJLYH ULVH WR SHUIRUPDQFHV $ FRPSHOOLQJ H[DPSOH RI VXFKPHGLDWHG UHFHSWLRQ FRPHV IURPP\ H[SHULHQFH ZRUNLQJ DV DQ HOHPHQWDU\ DQGPLGGOH VFKRRO WHDFKHU LQDUXUDOVFKRRO LQVRXWKHUQ9HUPRQW (DUO\ LQWKHWHUPLQWKHIDOORI SUHVHQWHG 'RZQ WKH+LJKZD\ DV WKHVXEMHFW RID OHVVRQ WKDWH[SORUHG WKH
UHODWLRQVKLS EHWZHHQ WH[WDQG SHUIRUPDQFH DQG EHWZHHQ SRHWU\ DQG VRQJ ,DVNHG ILIWKWRHLJKWKJUDGH VWXGHQWV WRH[DPLQH D VKHHWZLWK WKH O\ULFVWR 'RZQ WKH+LJKZD\ RQ LW DQG ,LQVWUXFWHG WKHP WRGHWHUPLQHZKHWKHU WKH
ZRUGV
UHSUHVHQWHG
D SRHP
RU D VRQJ 0\
VWXGHQWV
UHVSRQGHG
HQWKXVLDVWLFDOO\
RIIHULQJSODXVLEOH H[SODQDWLRQV IRUHLWKHUGHVLJQDWLRQ EDVHG RQPHWHU UK\PH WKH OHQJWKRI OLQHVDQG RI WKHHQWLUH SLHFH DQG WKH VRQJ V FRQWHQW ,W V D
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
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
$V WKHVWXGHQWV ILQDOO\ WLUHGRIGHEDWLQJ WKHSRLQW DQG DVNHGPH WRJLYH WKHPWKHDQVZHU ,SXW RQ WKH&' $IWHUWKHILUVWYHUVH RI 'RZQ WKH+LJKZD\ LWWRRNILYHPLQXWHV WREULQJ WKHFODVV EDFN WRRUGHU0\ VWXGHQWV LPPHGLDWHO\
IRUJRWWKHPRWLYDWLQJ SUREOHP RIJHQUH DQG EHJDQ WRVQDUOJURDQDQGZKLQH DORQJZLWK WKHUHFRUGLQJV7KH\ZHUH FRPSHOOHG WRJHWRXWRIWKHLUVHDWVDQG UXQDURXQG WROLIWWKHLUKHDGV DQGKRZO VHYHUDO LQSURWHVW DWKDYLQJ WROLVWHQ WRWKLVWHUULEOH PXVLF '\ODQ V JUXQWV DQG VQDUOVZHUH VR IDUUHPRYHG IURP
WKHH[SHFWDWLRQV RIWKHSDJH IURPDQ\RIP\ VWXGHQWV DWWHPSWV DWWUDQVODWLQJ WKHSULQWHGZRUGV LQWRVRQJWKDWWKHVRXQGV UHTXLUHGQRWLFH DQGSDUWLFLSDWLRQ (QJDJHG LQDFKDOOHQJLQJ LIWUDGLWLRQDOO\VWUXFWXUHGH[HUFLVH LQWH[WXDODQDO\VLV WKHFODVV DQWLFLSDWHG WKHVRUWRI ORJLFDO UHVROXWLRQ RI WKHZULWWHQ ZRUG DQG LWVSUREOHPV WKDWWKHLUVFKRRO H[SHULHQFH KDG WDXJKWWKHPWRH[SHFW ,QVWHDG WKH\HQFRXQWHUHG ZKDW WKH\PXVW KDYH KHDUG DV LQFRKHUHQWZDLOLQJ"EDUHO\
ODQJXDJH"WKDW LQYHUWHGDQG WUDQVIRUPHGWKHLUIRXQGDWLRQDO DQGGDLO\SURFHVV RI WUDQVODWLQJIURPSDJH WRVSHHFK )RU WKHUHVWRI WKHWHUPVWXGHQWVZRXOG DVNPH WRSOD\ WKLVVRQJDQGHDFK WLPH,GLG WKH\ ZRXOG H[FLWHGO\ UHHQDFW WKH SDQGHPRQLXP
RI WKHLU ILUVW H[SHULHQFH
MXPSLQJ
XS VLQJLQJ
DQG
VTXHDOLQJ
FDULFDWXUHG LPSHUVRQDWLRQV VXQJ DORQJ6HYHUDO VWXGHQWVGHYHORSHG SDVVDEOH LI QRVH WKH 7KHVH HQWLUHO\WKURXJK SHUIRUPDQFHV VHHPHG QHFHVVDULO\ WRLQFOXGH DQ DZNZDUGO\ H[WHQGHG QHFN WZLVWHG VKRXOGHUV DQG DELJ VQHHUVXJJHVWLQJ DQ H[WUDRUGLQDU\ILJXUHFDOOHG WRPLQG E\'\ODQ V YRLFH
0\ VWXGHQWVGLGQRWQHHG WRKHDU WKHVWUXFWXUHRIWKHZKROH VRQJ WRH[ SHULHQFH LWDVPDUNHG WKH\UHDFWHGZLWK VXFKGLVRUGHU EHIRUH WKHUHFRUGLQJ HYHU UHDFKHG WKHFRQVWULFWHG V\OODEOHV DWWURXEOHDQG RFHDQ XSRQ ZKLFK
PXFK RIP\ DQDO\VLVGHSHQGV:KLOH IRUHGXFDWHG OLVWHQHUV'\ODQ V YRFDO VW\OH PD\ LQGH[ D FRPSOH[ QHWZRUN RIPXVLFDO LQIOXHQFH IRU P\PLGGOH VFKRRO
VWXGHQWV LWVLJQLILHGGHFRQWH[WXDOL]HG ZHLUGQHVV 6RPHWKLQJ DERXW '\ODQ V YRLFH SHUKDSV LQUHOLHIDJDLQVW WKH UHQGHULQJ WKH\ LPDJLQHG IURPWKHSDJH UHSUHVHQWHG DSURGGLQJ SRZHUIXO VWUDQJHQHVV WRZKLFK P\ VWXGHQWV IHOW FRPSHOOHG WRDGG WKHLUYRLFHV $V WKH\ LVRODWHG DQGPLPLFNHG SDUWLFXODU YRFDO WURSHV WKDWVWRRG RXW WRWKHPDV DIIHFWLYHO\SRZHUIXO DQG VW\OLVWLFDOO\FKDUDFWHULVWLF RIWKHSHUIRU
PDQFH"QDVDOLW\
FRQVWULFWLRQ
YRFDO
VWUDLQ V\QFRSDWLRQ"P\
VWXGHQWV
UHFHS
(WKQRPXVLFRORJ\
)DOO
WLRQ LVH[HPSODU\ RIZKDW $GRUQR FDOOHG DWRPLVWLF OLVWHQLQJ>@ +DELWV RI OLVWHQLQJ WKDWIRFXVRQPXVLFDO VW\OH"DUUDQJHPHQW DQGRUFKHVWUD WLRQWLPEUHWKHPHPRUDELOLW\ RIGLVFRQQHFWHG SDUWV WKDQNV WRFOLPD[HV DQG WKDQ LQWHUQDO VWUXFWXUH DUH FKDUDFWHULVWLF RI UHSHWLWLRQV LELGO "UDWKHU
ZKLFK VQDWFKHV WKHUHLILHGELWVDQGSLHFHV RXWRIWKHLU FRPPRGLW\ OLVWHQLQJ FRQWH[W DQG VHWV WKHPXS DV DSRWSRXUUL ,WGHVWUR\V WKHPXOWLOHYHO XQLW\RI WKHZKROH ZRUN DQG EULQJV IRUZDUGRQO\ LVRODWHG SRSXODU SDVVDJHV LELG
,H[SORUH ZKDW PLJKW EH FDOOHG WKH PXOWLOHYHO XQLW\ RI WKHZKROH ZRUN RI 'RZQ WKH+LJKZD\ ,DP DZDUH WKDWWKLVVRUWRIFRKHUHQWPXVLFDO
:KLOH
QRW QHFHVVDULO\
IRUP PD\
LQIRUP
UHFHSWLRQ
IRUP QRU
1HLWKHU
JUDPPDU
LVLQGHSHQGHQWO\ FDSDEOH RI DFFRXQWLQJ IRUWKHVH UHDOZRUOG UHVSRQVHV WRD UHFRUGLQJ DQG QHLWKHU FDWHJRU\ KDV WKHFDSDFLW\ WRUHSUHVHQW WKHEUHDGWK DQG FRPSOH[LW\ RI WKLVPXVLF V KLVWRULFDOO\ ULFK LQWHUWH[WXDOLW\ LQVW\OHDQG FRQWHQW %XW LQUHDFWLQJ WR'\ODQ V QDVDOLW\ DQG V\QFRSDWLRQ P\ VWXGHQWV
UHVSRQGHG WRVRPH RI WKHVDPH WURSHV RIYRFDO SHUIRUPDQFH WKDWSRVLWLRQ '\ODQ V VW\OHLQLWVFXOWXUDO DQGPXVLFDO FRQWH[WV DQG WKDWVWUHWFKWKHERXQGV RISKRQRORJ\ DQGSKUDVLQJ 6W\OHHJDFXOWXUDOO\VLJQLILFDQWSURFOLYLW\ WRRUDO FRQVWULFWLRQ FDQPRWLYDWH VWUXFWXUH WKH SDUDPHWUL]DWLRQ RIRUDO FRQVWULF YLFH YHUVD 7KH ERXQGDULHV WLRQWRGHYHORS DSHUIRUPDQFH V VKDSH "DQG
RI JUDPPDU
PXVLF
SRHWU\
JHQUH
DQG
VW\OH
DUH
LQYDULDEO\
EOXUUHG
LQ
SUDFWLFH EXW WRJHWKHUWKH\FRQWULEXWH WRDYRFDO JHVWDOW WKDWFDQKDYH SUDFWLFDO VRFLDO
SRZHU
WR SURGXFH
PRYHPHQW
LQWHUDFWLRQ
DQG HYHQ PRUH
H[SUHVVLYH
YRFDOL]DWLRQ
&RQFOXVLRQ /DQJXDJH V UROH LQVLQJLQJ UHPDLQV D ODUJHO\XQH[SORUHG EXW QHFHVVDU\ ZH DUH WRXQGHUVWDQG WKHUHODWLRQVKLSV EHWZHHQ GLVFXUVLYH VLWHRIDQDO\VLV LI PXVLF DQG ODQJXDJH DQG WKHLUHPEHGGHGQHVV LQFXOWXUDOSUDFWLFHV ILHOGV OLNH
$Q\ YRFDO PXVLF LVEXLOW XSRQ IHDWXUHVVHJPHQWV V\OODEOHV DQG IHHW"IRUPV WKDWDUWLFXODWH ERWK VWUXFWXUH DQG VW\OH7KH SUHVHQFH RI ODQJXDJH VRXQGV LQPXVLF
LQWHJUDWHV
YHUVH
DQG
VRQJ
LQZD\V
WKDW FXW DFURVV
WKH QHDUWRWDOLW\
RI HDFK H[SRVLQJ DVVXPSWLRQV DQG \LHOGLQJ LQVLJKWVDERXW WKHERXQGDULHV EHWZHHQ VSHHFK DQG VRQJ ,IVLQJLQJ LVLWVHOID OD\HURIGLVFRXUVH EXLOWRQ WRS RI ODQJXDJH WKLVDQDO\VLV GHYHORSV K\SRWKHVHV DERXW WKH LQWHUUHODWLRQV RI
WKHVH OHYHOVFRQVLVWHQWZLWK WKHILQGLQJVRISUHYLRXV VFKRODUV RIH[SUHVVLYLW\ DQG GLVFRXUVH ,QWKHHVVD\ WKDW LQVSLUHV WKLVDUWLFOH V WLWOH-DNREVRQ >,@ H[SORUHV WKHUROHRIJUDPPDU LQSRHWLF IRUPVQRWLQJ WKH LQWHJUDWLRQ RIKLHUDUFKLFDOO\ VHSDUDWHG OLQJXLVWLF OHYHOV LQSRHWU\ JUDPPDWLFDO SDUDOOHOLVP DQG SRHWLF SDUDOOHOLVP RFFXU VLPXOWDQHRXVO\ DQG LQFRPSOHPHQWDU\ ZD\V $QWKRQ\:RRGEXU\ XSGDWHV -DNREVRQ VDSSURDFK WR LQWHUDFWLQJ OHYHOV RI OLQJXLVWLFKLHUDUFKLHV ILQGLQJ LQ&HQWUDO$ODVNDQ <XSLN WDONWKDWWKHUKHWRUL
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
FDO VWUXFWXUHRI ODUJHVHJPHQWV RIGLVFRXUVH EULQJV WRJHWKHU VHSDUDWH EXW VWURQJO\ LQWHUDFWLQJ FRPSRQHQWV YL] DSURVRGLH FRPSRQHQW D V\QWDFWLF
FRPSRQHQW DQGRWKHUV DV UHTXLUHG E\ WKH ODQJXDJH LQTXHVWLRQ VXFK WKDWZKHQ V\QWD[ DQG LQWRQDWLRQ SDWWHUQ WRJHWKHUWKHLU LQWHUUHODWLRQ
SURYLGHV LPSRUWDQWPDUNHUV IRUWKHVWUXFWXUHRIGLVFRXUVH DERYH WKH OHYHO RI WKH XWWHUDQFH
:RRGEXU\ DUJXHV WKDWE\UHJDUGLQJSURVRG\ DQG V\QWDFWLFFRQVWLWXHQF\ DV LQWHUDFWLQJFRPSRQHQWV RID ODUJHUUKHWRULFDO VWUXFWXUH LWLVSRVVLEOH WR DFFXUDWHO\ UHIOHFW WKHH[DFW GHJUHH RI IRUPDODQG IXQFWLRQDO RYHUODS WKH\ GLVSOD\ 7KH UHOHYDQFH RIVXFK D IUDPHZRUN IRUWKHUHODWLRQV RI
PXVLF DQG ODQJXDJH DUHFOHDU E\UHJDUGLQJPXVLFDO DQGSRHWLF FRQVWLWXHQF\ DV LQWHUDFWLQJFRPSRQHQWV RID ODUJHUVRQJ VWUXFWXUH WKH LQWHUVHFWLRQV DQG ERXQGDULHV EHWZHHQ WKHWZRFRPSRQHQWV DUH UHYHDOHG 7KHVH LQWHUVHFWLRQV
DSSHDU WRLQYROYH WKH LQWXLWLYHUHODWLRQVKLSV EHWZHHQ PXVLFDO DQG SURVRGLH UK\WKPWKHVRXQG TXDOLW\ RIQRWHV DQG V\OODEOHV DV DQ LQWHJUDWLRQRIWLPEUH DQG DVVRQDQFH DQG D WHQVLRQ EHWZHHQ JUDGLHQW DQG FDWHJRULFDO UHODWLRQV LQ WKHVWUXFWXUHVRIDUWLVWLFIRUP3RHWLF DQGPXVLFDO VWUXFWXUHV VKRXOG EH XQ
GHUVWRRG LQSDUDOOHOZLWK UKHWRULFDO VWUXFWXUHDV ODUJHVFDOH IRUPVWKDWKDYH WRSGRZQ HIIHFWVRQ WKHXWWHUDQFHV WKH\FRPSULVH 2SWLRQDO RU H[SUHVVLYH
IUDPHZRUNV LQWRZKLFK ODQJXDJH DQGPXVLF DUHILWWHGPXVW EH XQGHUVWRRG LQWHUPVRI ODUJHVFDOH KLHUDUFKLHV RIYHUEDO GLVFRXUVH 7KH VHQVH RIWKHWHUPFRPSHWHQFH DV LWLVXVHG E\DQWKURSRORJLVWV DQG IRONORULVWVLQUHIHUHQFH WRWKHVRFLDO DQGSUDJPDWLF XVHV RI ODQJXDJH LQSHUIRU
PDQFH +\PHV D %DXPDQ >@ %ULJJV FDQ EH UHFRQFLOHG LQSDUWZLWK WKH WHUP V IRUPDO OLQJXLVWLF &KRPVNLDQ XVDJH DJDLQVWZKLFK +\PHV
DQG RWKHUV
SXVK
$ VXEVWDQWLDO
DPRXQW
RI FRPSHWHQFH
LQ H[SUHVVLYH
SHUIRUPDQFH OLHV LQWKH DELOLW\ WRZRUN ZLWKLQ IRUPV"WR OLPLWSRVVLEOH XW WHUDQFHV WR WKRVH WKDWDUH DFFHSWDEOH ZLWKLQ WKHYHUVH IRUPVDQGPXVLFDO IUDPHZRUNV LQ ZKLFK YHUEDO DUWRIWHQ LVIRXQG :KHWKHU WKHVH IRUPVPLJKW EH IXOO\LQFRUSRUDWHG LQWRD V\VWHPDWLF JUDPPDU LVDQ RSHQ TXHVWLRQ , DP LQFOLQHG WRGRXEW LW DQG LWLVFOHDU WKDW PXFK SHUIRUPDWLYH FRPSHWHQFH OLHV
LQWKHDELOLW\ WRFRPPXQLFDWH HIIHFWLYHO\ LQSDUWLFXODU VLWXDWLRQVZLWK SDU D IXQFWLRQRIJUDPPDU%XWYHUEDO DUWLV WLFXODUSHRSOH"QRW H[FHSW WULYLDOO\ DOVR DOZD\V HQJDJHG ZLWK JUDPPDU ZKHWKHU E\VWUHWFKLQJ OLPLWVRUHQIRUFLQJ QHZ SDWWHUQV DQG MXGJPHQWV ,Q WKLVZD\ FRPPXQLFDWLYH FRPSHWHQFH LVD
PDWWHU RIERWK SHUIRUPDQFH DQG JUDPPDWLFDOLW\ VLQJHUVVSHDNHUV PXVW ILW WKHLUXWWHUDQFHV LQWRH[SUHVVLYH IUDPHZRUNV WKDW PD\ EH GHYHORSHG RQ WKH DUHQRQHWKHOHVV EXW WKDW IRUPDOLQWKDWWKH\FRQVWUDLQ WKRVHXWWHUDQFHV VSRW WR E\PDNLQJ UHIHUHQFH ZRUG RUGHUSURVRG\ VHJPHQWDO TXDOLW\ DQG RWKHU OLQJXLVWLFFRQVWLWXHQWV ,QWKHHQGDQ\DQDO\VLVPXVW EH DFFRXQWDEOH WRH[SHULHQFH WRKLVWRULHV RI UHFHSWLRQ WR WKH MXGJPHQWV RI DXGLHQFHV DQG WRSK"QRP"QRORJLHV RI
(WKQRPXVLFRORJ\
)DOO
OLVWHQLQJ"WKH VRFLDOO\PHGLDWHG EXW LQGLYLGXDOO\ IHOWH[SHULHQFHV RID VRQJ DSHUIRUPDQFH RU D UHFRUGLQJ LQWLPHDQG LQ PHPRU\ ,QSDUWP\ DSSHDO WR DQHHG WRKROG IRUPDO DQDO\VLV DF LQWKLVDUWLFOH LV P RWLYDWHG JUDPPDU E\ FRXQWDEOH
WR H[SHULHQFH
*UDPPDU
KDV
DQ LQKHUHQW
SKHQRPHQDO
UHVRQDQFH
LQGLVFRXUVH DQGSUDFWLFH 7KRXJK SURIHVVLRQDO OLQJXLVWV PLJKW REMHFW WKDWWKH VWUXFWXUHVRIJUDPPDU DUH XQFRQVFLRXV WKHLUGLVFLSOLQH KDV DW LWVHPSLULFDO
DQG WKHRUHWLFDO IRXQGDWLRQ DIHHGEDFN ORRS WKDWUXQV WKURXJKH[SOLFLW MXGJ PHQWV E\ VSHDNHUV RI WKHJUDPPDWLFDOLW\RIXWWHUDQFHV 6RZKLOH WKHJUDP PDWLFDO VWUXFWXUHV RI HYHU\GD\ ODQJXDJHPD\ UDUHO\FRPH WRWKHVXUIDFH RI FODLPXQGHUPLQHG E\ WKHFRQVWDQW SUHVHQFH LQGLVFRXUVH RI ZRUG SOD\DQG OLQHVRIVRQJ DQGSRHWU\ .LUVKHQEODWW*LPEOHWW DQG6KHU MRNHV ]HU "OLQJXLVWLFV QHFHVVDULO\ DVVXPHV WKDWWKHXQJUDPPDWLFDOLW\RI DQ XWWHUDQFHZLOO DOZD\V EH LPPHGLDWHO\SHUFHSWLEOH WRDFRPSHWHQW VSHDNHU 7KHUHIRUH PDUNHGQHVV MXGJPHQWV DERXWZKLFK PHGLDWH HYDOXDWLRQV RI JUDPPDWLFDOLW\ DQG XQJUDPPDWLFDOLW\ LVFUXFLDO WRWKHSKHQRPHQRORJLFDO VD FRQVFLRXVQHVV"D
OLHQFHRIJUDPPDU ,WLVIRUWKLVUHDVRQ WKDW PDUNHG VWUXFWXUHV OLNHPHWULFDOO\ LQYHUWHGIHHWDQGRUDOO\FRQVWULFWHG V\OODEOHVSOD\ VXFK DSURPLQHQW UROH LQWKH PXVLFRSRHWLF IRUPVRI'\ODQ V VLQJLQJ0DUNHGQHVV GRHV QRW MXVW UHO\RQ FRJQLWLYH RUSHUFHSWXDO V\VWHPVVRGLYRUFHG IURPGLVFRXUVH V FRQFUHWH ILHOGRI DFWLRQ
5DWKHU JUDPPDU
DQG PDUNHGQHVV"ZKDWHYHU
WKHLU FRJQLWLYH
EDVLV"DUH
IXQGDPHQWDOO\ VHPLRWLF DQG DV VXFK WKH\IRUPDYLWDOSDUW RIWKHFXOWXUDO DQG SKHQRPHQRORJLFDO PHGLDWLRQV RIGDLO\ OLIH0HUW] DQG3DUPHQWLHU 7KH FRQIOLFW EHWZHHQ WKH VHQVLEOH DQG VHQVXDO PDUNHGQHVV RI'\ODQ V VLQJLQJ DQG WKHSRZHUIXOO\ H[SUHVVLYH QRUPDOL]DWLRQ RI WKDWPDUNHGQHVV LQWR'\ODQ V UHFRJQL]DEOH VW\OHSURGXFHV WKHIHOW QDWXUDOQHVV )HOG RIKLVPXVLFDO DHVWKHWLFV DQG WKHPXVLFDO H[SHULHQFH RIWKHUHFRUGLQJ )HOG V SKUDVH LVLQWHQGHG WRVXJJHVW QRW WKH LQKHUHQWTXDOLWLHV RIDJLYHQ VW\OHEXW WKH FXOWXUDO
SUDFWLFHV
WKDW QHJRWLDWH
DQG
IUDPH
H[SHULHQFH
WR SURGXFH
WKH
IHHOLQJ RIDQXQPHGLDWHG LFRQLFLW\ EHWZHHQ DHVWKHWLF WKHRU\ DQG SUDFWLFH 7KH XQFRQVFLRXV DZDUHQHVV RIJUDPPDU E\ VSHDNHUV JLYHV OLQJXLVWLFYDULD WLRQLWVH[SUHVVLYH SRZHU QHYHU H[SOLFLWO\ REMHFWLILHG E\GLVFRXUVHVW\OLVWLF
LGLRV\QFUDVLHV E\VLQJHUV UHPDLQ DWRQFH SHUIHFWO\ QDWXUDODQGSKHQRPHQR ORJLFDOO\XQDYRLGDEOH 7KLV VSDFH EHWZHHQ WKHIRUPVDQG VWUXFWXUHV WKDWJRYHUQPXVLFDO RU OLQ
JXLVWLFXWWHUDQFHV DQG WKHLUQHYHUSHUIHFW UHDOL]DWLRQV LQSHUIRUPDQFH FRQVLVWV RIZKDW &KDUOHV .HLO KDV FDOOHG SDUWLFLSDWRU\ GLVFUHSDQFLHV , WKLQNLWLVDSSURSULDWH KHUH WRH[WHQG .HLO V WKHRU\EH\RQG PXVLFDO UK\WKP DQG WH[WXUH WRWKHQXDQFHV RI'\ODQ V SKRQHWLF UHDOL]DWLRQ RISKRQRORJLFDOO\
JRYHUQHG XWWHUDQFHV DQG WRWKHH[SHULHQFH RIVXFKQXDQFH E\ OLVWHQHUVZKR DUHDWWXQHG WROLQJXLVWLFYDULDELOLW\ZKLOH ODUJHO\XQDZDUH RI LW .HLO QRWHV WKDW LWLVWKLVVHPLFRQVFLRXV FKDUDFWHU RIVXFKSHUIRUPDQFH WURSHV WKDW PDUN WKHP
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
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
$SSHQGL[
*XLGH
WR V\PEROV
&KDUDFWHUV QRW LQFOXGHG LQWKLVFKDUW DUHSURQRXQFHG 9RZHOV D
IJWKHU
H
KH[ EHHW
L L D
ELW LVWDWLF DERXW
D
EXW
"
ERRN
&RQVRQDQWV M
VKDUS UHG
J
JHW
IH
"
U
MXGJH XKBRK JORWWDO VWRS ZLWK HGLWHG
'LDFULWLFV NK
DVSLUDWHG
NLWH
L
ORQJ QDVDO"
EHHW
Q
V\OODELF
" "
SULPDU\ VWUHVV VHFRQGDU\ VWUHVV V\OODEOH EUHDN
UDSSURFKHPHQW EXWWRQ VXLWFDVH VXLWFDVH SRQ\
DV LQ(QJOLVK
(WKQRPXVLFRORJ\
)DOO
'LSWKRQJV DL
W@H
HL
GD\ QRZ
DX
$FNQRZOHGJHPHQWV ,DP HVSHFLDOO\ JUDWHIXO WR0DULD *RXVNRYD IRUJHQHURXVO\ VKDULQJ KHU WLPH DQG H[SHUWLVH LQ :DOODFK IRUWKHLUJXLGDQFH SKRQRORJ\ 0DQ\ WKDQNV WR-RKQ0\HUV -DPLH+XWFKLQVRQ DQG /DUU\ LQWKH HDUO\ VWDJHV RI WKLVSURMHFW DQG WR$DURQ )R[ )UHG /HUGDKO (OOHQ *UD\ 6XVDQ %R\QWRQ .DUHQ +LOHV DQG0DULD 6RQHY\WVN\ IRUWKHLUKHOSIXO FRPPHQWV 7KH JHQHURVLW\ RIP\ WHDFKHUV
IULHQGV DQG FROOHDJXHV LVDJLIWWKH\DUH QRW UHVSRQVLEOH IRUDQ\ IDLOXUHV RU VKRUWFRPLQJV LQWKLV ZRUN 7KDQNV WR6SHFLDO 5LGHU 0XVLF IRUSHUPLVVLRQ WR UHSULQW VHFWLRQV RI WKH O\ULFV WR'RZQ WKH+LJKZD\ ZHOFRPH
FRUUHVSRQGHQFH
UHJDUGLQJ WKLVDUWLFOH WE#FROXPELDHGX
1RWHV 'HVSLWH DGHFUHDVH LQHWKQRPXVLFRORJLFDO LQWHUHVWLQYHVWLJDWLRQV RIUHODWHG LVVXHV VXFK DV WKH UHODWLRQVKLS EHWZHHQ VRXQG DQGPHDQLQJ LQYRFDO SHUIRUPDQFH FRQWLQXH WREH XQGHUWDNHQ
E\ OLQJXLVWV HJ+LQWRQ 1LFKROV DQG2KDOD 0\ XVH RI WKH WHUPGLVFRXUVH UHIHUV WR OLQJXLVWLF DQG FRPPXQLFDWLYH
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
PHWULFV VLQFH WKH V
6\OODEOH OHQJWK LVFRPPRQO\ DVVRFLDWHG ZLWK UK\WKPLF GXUDWLRQ LQPDQ\ VLQJLQJ WUDGL WLRQV VXFK DV+LOO DQG 3RGVWDYVN\ ILQG LQ+DXVD SUDLVHVLQJLQJ DQG %ULJKW DQG 3RZHUV LGHQWLI\ LQ6RXWK ,QGLDQ VRQJ 7KH FRQVWUDLQW DVVRFLDWLQJ SKUDVH HGJHV FDQ EH VHHQ DV DIRUPDO VWDWHPHQW RI+HU]RJ VFODLP WKDWLQ(XURSHDQ IRONVRQJ WH[W OLQHDQGPXVLFDO
OLQHDOPRVW LQYDULDEO\ FRLQFLGH 7KLV LVQRW WRVD\ WKDWJUDGLHQFH RU SURJUHVVLYH IRUPVDUHQHYHU SUHVHQW LQYHUEDO DUWDQG PXVLF RIFRXUVH LVQRW MXVWSLWFK WLPEUHUK\WKPDQG G\QDPLFV QRUGR FUHVFHQGRDFFHOHUDQGR
DQG VHTXHQFLQJ QHFHVVDULO\ UHSUHVHQW XQLYHUVDOO\ VDOLHQW IRUPV0\ DUJXPHQW LVWKDWWKHSRHWLF IXQFWLRQ RI ODQJXDJH VSHFLILFDOO\"WKH IURP WKH SURMHFW >LRQ@ RI WKHSULQFLSOH RI HTXLYDOHQFH D[LV RI VHOHFWLRQ LQWRWKHD[LV RIFRPELQDWLRQ -DNREVRQ "IROORZV SKRQRORJ\ LQQRW
PDNLQJ JUDGLHQW GLVWLQFWLRQV ,QSKRQRORJ\ DQ2SWLPDOLW\ 7KHRUHWLF 3ULQFH DQG 6PROHQVN\ >@ DSSURDFK WKDWIRUPDOL]HV FRQVWUDLQWV RQ WH[WVHWWLQJVZRXOG DFFRXQW IRUVXFK REVHUYDWLRQV ZLWK VRPH HDVH
MXVW DV WRSGRZQ HIIHFWV DUH VHHQ LQXWWHUDQFHOHYHO SKRQRORJ\ DOO WKH WLPH VXFK WKDWSKUDVH VWUXFWXUH DIIHFWV V\OODEOH RU IRRW VWUXFWXUH LWLVD VLPSOHPDWWHU WRH[SUHVV DQRWLRQ RI ODUJHVFDOH SRHWLF RUPXVLFDO ZHOOIRUPHGQHVV DV D FRQVWUDLQW RQ ODUJHVFDOH VWUXFWXUHV WKDWGRPLQDWHV
FRQVWUDLQWV RQ VPDOOHUVFDOH VWUXFWXUHV 7KH SUREOHP LVWKDWSRHWLF DQGPXVLFDO IRUPV WHQG WR EH FRQWH[W VSHFLILF ,WLVQRW FOHDU WKDWDW WKH VXSHUXWWHUDQFH OHYHO WKHUH DUH UHJXODU SRHWLF RU PXVLFDO IRUPVZLWK FRQVLVWHQW FRQVWLWXHQWV ,OHDYH WKHTXHVWLRQ RI WKHXQLYHUVDOLW\ RIH[SUHVVLYH ZLOO PHUHO\ QRWH WKH VSHFLILFZD\V VXFK IRUPV VWUXFWXUH IRUPV WRIXUWKHUUHVHDUFK DQG IRUQRZ ,
XWWHUDQFHV
LQWKLV VRQJ
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
'RZQ WKH+LJKZD\ E\ %RE '\ODQ " &RS\ULJKW UHQHZHG E\ 6SHFLDO 5LGHU 0XVLF 5HSULQWHG ZLWK SHUPLVVLRQ 'LVWLQFW JULGV IRUSHULRGLF PXVLFDO UK\WKPDQG UHODWLYHPHWULFDO VWUHVVRQ V\OODEOHVZRXOG EHPRUH SUHFLVH EXW LQWKLVFDVH PRVWO\ UHGXQGDQW *ULG QRWDWLRQ LWVHOILVSURSHUO\ DWWULEXWHG WR /LEHUPDQ DQG /HUGDKO DQG -DFNHQGRII 7KH V\QFRSDWLRQ RI VXLWFDVH KHUH LVSUREDEO\ EHWWHU UHSUHVHQWHG DV D GRWWHG HLJKWK IROORZHG E\ D VL[WHHQWKQRWHHDUO\ DWWDFN IRUFDVH7KH PHWULFDO IOH[LELOLW\ RI WKHSHUIRUPDQFH
VXFK SUHFLVH GLVWLQFWLRQV GLIILFXOW WRDVFHUWDLQ &DVH VHF LVILIW\SHUFHQW ORQJHU WKDQ VXLW VHF QRW WKUHH WLPHV DV ORQJ 7KH GLSKWKRQJ >HL@ LQFDVHKRZHYHU LVQHDUO\ WKUHH WLPHV DV ORQJ DV WKH >X@ LQVXLWEHFDXVH WKH >V@ LV ZHLUGO\ OHQJWKHQHG LQWKHILUVWV\OODEOH
PDNHV
7KH ODUJHU YDOXHV DUH MXVWLILHG E\ WKH DEVROXWH GXUDWLRQV WKH WRWDO GXUDWLRQ RI VXLWFDVH VHF LVEDVLFDOO\ HTXDO WR WKDWRI ZLWKP\ VHF SOXV LQP\ DSSUR[ VHF GHSHQGLQJ RQZKHUH WKH >]@ DW WKHHQG RI FDVH DVVRFLDWHV ,Q WKHFRQFOXVLRQ WR WKLVDUWLFOH ,DSSHDO WR .HLO V WKHRU\ RI SDUWLFLSDWRU\ GLVFUHSDQFLHV LQZKLFK VPDOO YDULDWLRQV VXFK DV WKHVHQRW VR VXEVWDQWLDO DV WRDOWHU WKH VWUXFWXUDO UHSUHVHQWDWLRQ EXW VWLOOSKHQRPHQDOO\ DUH VHHQ DV FHQWUDO WRPXVLF V SURFHVVXDO SRZHU
VDOLHQW
1RWH GHVLJQDWHV DPXFK OHVVSUHFLVH GRPDLQ WKDQ V\OODEOH 7KH FRPELQDWLRQ RISLWFK DQG GXUDWLRQ LQWRERXQGHG FRQVWLWXHQWV QRWHV LVQRW DQ HQWLUHO\ UHJXODU RFFXUUHQFH DQG LQ
PDQ\ FDVHV GHSHQGV
XSRQ LQIOHFWLRQDO DUWLFXODWLRQ RI UK\WKPLF ERXQGDULHV DQG UHODWLYHO\ LP LQ VHJPHQWDWLRQV RISLWFK VFDOHV )RU LQVWDQFH RQH RI WKH FXHV RIPHORGLF PRYHPHQW :LWKRXW '\ODQ V PHOLVPDWLF SHUIRUPDQFH RI EDE\ LVWKHFKDQJH LQYRZHO TXDOLW\ IURP >H@ WR >L@ WKH LQGHWHUPLQDF\ RIPXVLFDO FRQVWLWXHQWV LWLV ZRUWK WDNLQJ DFFRXQW RI WKHLU RYHUHPSKDVL]LQJ :HVWHUQ IUHTXHQW QRQLUUHGXFLELOLW\ 7KH DSSDUHQW SV\FKRORJLFDO UHDOLW\RI WKHPXVLFDO QRWH WR SUHFLVH
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
VRXQGV $OVR UHOHYDQW LVWKHH[WHQVLYH HWKQRPXVLFRORJLFDO OLWHUDWXUH RQ YRFDEOHV HVSHFLDOO\ LQ 1DWLYH $PHULFDQ PXVLF PHDQLQJOHVV V\OODEOHV WKDWDUHPXVLFDOO\ VLJQLILFDQW DQG SKRQRORJLFDOO\ FRQYHQWLRQDO HJ1HWWO +\PHV )ULVELH +LQWRQ
:HDNILQDO DQG VWURQJILQDO LQWKLVXVDJH UHIHUWRSRHWLF IHHWUDWKHU WKDQSKRQRORJLFDO VWUHVVDQG VRGR QRW GLVWLQJXLVK EHWZHHQ WKH VWUHVV RI KLJKZD\ DQG WKDWRI EDE\ 1RWH WKH UHOHYDQFH RI WKLVDUJXPHQW WRWKHPXVLFWKHRUHWLF FRQFHSW RI SURORQJDWLRQ 0HWULFDO PHORGLF DQG SRHWLF UHODWLRQVKLSV DWWKH OHYHORI WKHYHUVH VHWDSDUW DQG GUDZ FRQQHFWLRQV
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
WKDW , LGHQWLI\ LQWKLVVHFWLRQ
/RZ YRZHOV >D@PLG YRZHOV YRLFHG IULFDWLYHV >]@ >Y@ XQYRLFHG >Q@
>H@ >R@KLJK YRZHOV >L@ >X@ OLTXLGV >@>U@QDVDOV >P@ YRLFHG VWRSV >E@ >G@ IULFDWLYHV >V@ >I@ XQYRLFHG VWRSV
>S@>W@ ,QIDFW+LQWRQ V VWXG\ LGHQWLILHV SKRQRORJLFDO UHVWULFWLRQV RQ VLQJLQJ WKDWDUH LQGHSHQ GHQW RI WKRVH RQ QRUPDO VSHHFK )RU H[DPSOH +LQWRQ QRWHV WKDWZKLOH WKH WRWDOYRZHO H LR X"WKH UHODWLYH IUHTXHQF\ LQYHQWRU\ RI+DYDVXSDL VSHHFK DQG VLQJLQJ DUH WKH VDPH"D RIPLG DQG KLJK YRZHOV LVUHYHUVHG ,Q VSHHFK WKHYRZHOV D LDQG X RFFXU PRUH WKDQ WZLFH DV
(WKQRPXVLFRORJ\
)DOO
IUHTXHQWO\ FRQVLVWHQW ZLWK DFRPPRQ FURVVOLQJXLVWLF SUHYDOHQFH RI SHULSKHUDO YRZHOV %XW LQ +DYDVXSDL VLQJLQJ WKHIUHTXHQFLHV DUH UHYHUVHG DOPRVW H[DFWO\ VXFK WKDWHDQG R UHSODFH DQG X ,QFUHDVHG VRQRULW\ LVDSSDUHQWO\ RIJUHDWHU LPSRUWDQFH LQ+DYDVXSDL VLQJLQJ WKDQSHULSKHUDOLW\ 6XQGEHUJ VLPLODUO\ ILQGV LQD ODERUDWRU\ FRQWH[W WKDWVXQJ YRZHOV DUH FRQVLVWHQWO\ ORZHU WKDQ VSRNHQ YRZHOV $PHULFDQ
ERWWOH
+HULWDJH
'LFWLRQDU\
WK HG VZ ZRPDQRFHDQWURXEOHEXWWRQ
7KLV DUJXPHQW LVPRUH RU OHVV FRQVLVWHQW ZLWK %HWV\ %RZGHQ V >@ HPSKDVLV RQ '\ODQ V VLQJLQJ SHUIRUPDQFH LQKHU OLWHUDU\DQDO\VHV 3HWHU 0DQXHO FRPPHQWV WKDW IRUPDO VWUXFWXUHV VHHNLQJ GHYHORSPHQW FORVXUH DUH GLVWLQFWLYHO\ PRGHUQ ERXUJHRLV FUHDWLRQV
HDUO\ FOLPD[ DQG
FRQ )R[ FRQWULEXWHV VXFK DQ DQDO\VLV )HOG )R[ 3RUFHOOR DQG 6DPXHOV YLQFLQJO\ FRUUHODWLQJ PXVLFDO DQG SHUIRUPDWLYH JHVWXUHV ZLWK WKHQDUUDWLYH RI D VRQJ WH[W :KHWKHU PXVLFDO UHFRUGLQJ DQG FRPPHUFLDO FLUFXODWLRQ FRQVWLWXWH VFKL]RSKRQLD )HOG RU VLPSO\ UHSUHVHQW DQRWKHUPRGH RIGH DQG UHFRQWH[WXDOL]DWLRQ RIPXVLFDO SHUIRUPDQFH
DQG WKHSHUIRUPDQFH RI OLVWHQLQJ %DXPDQ DQG %ULJJV 6LOYHUVWHLQ DQG 8UEDQ DQ\ DFFRXQW RI D UHFRUGHG PXVLF V FRQWH[W FDQQRW H[FOXGH FRPPHUFH DQG WHFKQRORJ\ 0\ RZQ LQWHUHVW LQWKLVPXVLF
LVDV GLVFRQQHFWHG
ZLOO GHVFULEH KHUH
IURP'\ODQ V FXOWXUDO PLOLHX DV WKDWRI WKHFKLOGUHQ ,
FRQFOXVLRQV DUH LQDJUHHPHQW ZLWK WKRVH GUDZQ E\ /HUGDKO ZKR WKDWWKHDUHDV RI VLPLODULW\ DQG GLIIHUHQFH LQPXVLFDO DQG OLQJXLVWLF VWUXFWXUHV VXJJHVW RYHUODSSLQJ FRJQLWLYH DQG EUDLQ IXQFWLRQV 7KHVH
SURSRVHV
5HIHUHQFHV $GRUQR 7KHRGRU : >@ 2Q WKH)HWLVK &KDUDFWHU RI0XVLF DQG WKH5HJUHVVLRQ RI /LVWHQLQJ ,Q7KH &XOWXUH ,QGXVWU\ 6HOHFWHG (VVD\V RQ0DVV &XOWXUH HGLWHG E\ -0 %HUVWHLQ 1HZ @ 'LVFRXUVH LQ WKH1RYHO ,Q7KH 'LDORJLF ,PDJLQDWLRQ )RXU (VVD\V E\0 0 %DNKWLQ HGLWHG E\0LFKDHO +ROTXLVW 7UDQVODWHG E\&DU\O (PHUVRQ DQG0LFKDHO +ROTXLVW $XVWLQ 8QLYHUVLW\ RI7H[DV 3UHVV
%DUILHOG 2ZHQ
6DYLQJ
-RYDQRYLFK %DXPDQ 5LFKDUG 3UHVV
>@
WKH$SSHDUDQFHV
$ 6WXG\ LQ,GRODWU\ 1HZ
9HUEDO $UW DV 3HUIRUPDQFH
:DYHODQG 3URVSHFW +HLJKWV
'LVFLSOLQDULW\ 5HIOH[LYLW\ DQG 3RZHU LQ9HUEDO $UW DV 3HUIRUPDQFH $ 5HVSRQVH IRXUQDO RI$PHULFDQ )RONORUH %DXPDQ 5LFKDUG DQG &KDUOHV /%ULJJV 3RHWLFV DQG 3HUIRUPDQFH DV&ULWLFDO 3HUVSHFWLYHV RQ /DQJXDJH DQG 6RFLDO /LIH$QQXDO 5HYLHZ RI$QWKURSRORJ\
%DXPDQ 5LFKDUG DQG -RHO 6KHU]HU 7KH (WKQRJUDSK\ RI 6SHDNLQJ $QQXDO 5HYLHZ RI $QWKURSRORJ\ 7KH 3UREOHP RI WKH 6RQJ 7H[W %ODFNLQJ -RKQ 7KH 6WUXFWXUH RI0XVLFDO 'LVFRXUVH
$UW RI%RE '\ODQ
%RZGHQ %HWV\ >@ 3HUIRUPHG /LWHUDWXUH :RUGV DQG 0XVLF 0G 8QLYHUVLW\ 3UHVV RI$PHULFD
1HZ
E\%RE '\ODQ
LQ3HUIRUPDQFH 7KH &UHDWLYLW\ RI7UDGLWLRQ %ULJJV&KDUOHV / &RPSHWHQFH 9HUEDO $UW 3KLODGHOSKLD 8QLYHUVLW\ RI3HQQV\OYDQLD 3UHVV
/DQKDP
LQ 0H[LFDQR
:DUDR :RPHQ V 5LWXDO:DLOLQJ 3HUVRQDO 6HQWLPHQWV DQG 3RO\SKRQLF 9RLFHV LQ 0XVLF DQG 3RHWLFV LQD&ULWLFDO DQG &ROOHFWLYH 'LVFRXUVH $PHULFDQ $QWKURSRORJLVW
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ
%ULJKW:LOOLDP 6LQJLQJ LQ/XVKDL ,QGLDQ /LQJXLVWLFV /DQJXDJH DQG0XVLF $UHDV IRU&RRSHUDWLRQ(WKQRPXVLFRORJ\ &DWRQ 6WHYHQ & &RQWULEXWLRQV RI5RPDQ -DNREVRQ $QQXDO 5HYLHZ
O RI$QWKURSRORJ\
GH &HUWHDX 0LFKHO 7KH3UDFWLFH RI(YHU\GD\ /LIH7UDQVODWHG E\ 6WHYHQ 5HQGDOO %HUNHOH\ 8QLYHUVLW\ RI&DOLIRUQLD 3UHVV
&RUFRUDQ 1HLO HG 'R
%RE '\ODQ
ZLWK WKH3RHWV DQG 3URIHVVRUV
'\ODQ %RE &KURQLFOHV 9ROXPH 2QH 1HZ
)HOG 6WHYHQ /LQJXLVWLF 0RGHOV LQ(WKQRPXVLFRORJ\ (WKQRPXVLFRORJ\ 6RXQG 6WUXFWXUH DV 6RFLDO 6WUXFWXUH(WKQRPXVLFRORJ\
$HVWKHWLFV $V ,FRQLFLW\ RI 6W\OHRU /LIWXSRYHU 6RXQGLQJ *HWWLQJ ,QWR WKH.DOXOL *URRYH
3UDFWLFHV RI :RUOG0XVLF DQG :RUOG%HDW ,Q 0XVLF *URRYHV (VVD\V DQG 'LDORJXHV E\ &KDUOHV .HLO DQG 6WHYHQ )HOG &KLFDJR 8QLYHUVLW\ RI&KLFDJR 3UHVV )HOG 6WHYHQ DQG$DURQ $ )R[ 0XVLF DQG /DQJXDJH $QQXDO 5HYLHZ RI$QWKURSRORJ\ )HOG 6WHYHQ $DURQ $ )R[7KRPDV )URP WKH0XVLF RI /DQJXDJH
3RUFHOOR DQG 'DYLG 6DPXHOV 9RFDO $QWKURSRORJ\ WR WKH /DQJXDJH RI 6RQJ ,Q$ &RPSDQLRQ WR/LQJXLVWLF $QWKURSRORJ\ HGLWHG E\$OHVVDQGUR 'XUDQWL 0DLGHQ 0DVV %ODFNZHOO )R[ $DURQ $ 7KH -XNHER[ RI+LVWRU\ 1DUUDWLYHV RI/RVV DQG'HVLUH LQWKH'LVFRXUVH RI &RXQWU\ 0XVLF 3RSXODU 0XVLF OOO
LQ:RUNLQJ&ODVV &XOWXUH 'XUKDP 1& 5HDO &RXQWU\ 0XVLF DQG /DQJXDJH 'XNH 8QLYHUVLW\ 3UHVV )ULVELH&KDUORWWH - 9RFDEOHV LQ1DYDMR &HUHPRQLDO 0XVLF(WKQRPXVLFRORJ\ , $*UDPPDU RI*HVWXUDO &RRUGLQDWLRQ 1DWXUDO /DQJXDJH DQG *DIRV $GDPDQWLRV /LQJXLVWLF 7KHRU\ *LOO $QG\ 'RQ W 7KLQN 7ZLFH ,W V$OO 5LJKW %RE '\ODQ 7KXQGHU V 0RXWK 3UHVV
7KH (DUO\
*UDKDP /DXUD 6HPDQWLFLW\ DQG0HORG\ 3DUDPHWHUV RI&RQWUDVW LQ6KDYDQWH 9RFDO ([SUHV VLRQ/DWLQ $PHULFDQ 0XVLF 5HYLHZ 7KUHH0RGHV RI6KDYDQWH 9RFDO ([SUHVVLRQ :DLOLQJ &ROOHFWLYH 6LQJLQJ DQG 3ROLWL FDO2UDWRU\ ,Q 1DWLYH 6RXWK $PHULFDQ 'LVFRXUVH HGLWHG E\-RHO 6KHU]HU DQG*UHJ 8UEDQ %HUOLQ 1HZ
*UD\0LFKDHO 6RQJ DQG 'DQFH &RQWLQXXP
0DQ
,,, 7KH $UW RI%RE '\ODQ
/RQGRQ 1HZ
+DMGX 'DYLG 3RVLWLYHO\ WK 6WUHHW 7KH /LYHV DQG 7LPHV RIIRDQ %DH] %RE '\ODQ 0LPL %DH] )DUL"D DQG 5LFKDUG )DUL"D 1HZ
8QL
7H[WVHWWLQJ 0RGHO &XUUHQW 0XVLFRORJ\
+DOOH 0RUULV DQG 6DPXHO -D\.H\VHU &KDXFHU DQG WKH 6WXG\ RI3URVRG\ &ROOHJH (QJOLVK ? ,(QJOLVK 6WUHVV ,WV)RUP ,WV*URZWK DQG ,WV5ROH LQ9HUVH 1HZ
(WKQRPXVLFRORJ\
)DOO
LQ0HWULFV ,Q7KH1DWXUH RI +D\HV %UXFH )RUWKFRPLQJ D )DLWKIXOQHVV DQG &RPSRQHQWLDOLW\ WKH:RUG (VVD\V LQ+RQRU RI3DXO .LSDUVN\ HGLWHG E\.DUHQ +DQVRQ DQG 6KDURQ ,QNHODV &DPEULGJH 0DVV 0,7 3UHVV
)RUWKFRPLQJ E 7H[WVHWWLQJ DV &RQVWUDLQW &RQIOLFW ,Q7RZDUGV D 7\SRORJ\ RI3RHWLF )RUPV HGLWHG E\-HDQ/RXLV $URXL DQG$QG\ $UOHR $PVWHUGDP (OVHYLHU +D\HV %UXFH DQG$ELJDLO .DXQ 7KH 5ROH RI3KRQRORJLFDO 3KUDVLQJ LQ6XQJ DQG &KDQWHG 9HUVH 7KH /LQJXLVWLF 5HYLHZ +HU]RJ *HRUJH
6SHHFK 0HORG\
7H[W DQG 0HORG\
DQG 3ULPLWLYH 0XVLF 0XVLFDO
LQ3ULPLWLYH 0XVLF %XOOHWLQ
4XDUWHUO\
RI WKH$PHULFDQ 0XVLFRORJLFDO
6RFLHW\ 6RQJ ,Q)XQN DQG :DJQDOOV 6WDQGDUG 'LFWLRQDU\ RI)RONORUH 0\WKRORJ\ DQG /HJHQG 9RO HGLWHG E\0DULD /HDFK 1HZ
3UDLVH6LQJLQJ(WKQRPXVLFRORJ\ +LQWRQ /HDQQH 9RFDEOHV LQ+DYDVXSDL 6RQJ ,Q6RXWKZHVWHUQ ,QGLDQ 5LWXDO 'UDPD HGLWHG E\&KDUORWWH -)ULVELH $OEHTXHUTXH 8QLYHUVLW\ RI1HZ 0H[LFR 3UHVV
+DYDVXSDL 6RQJV $ /LQJXLVWLF 3HUVSHFWLYH 7XUELQJHQ *XQWHU 1DUU 9HUODJ +LQWRQ /HDQQH -RKDQQD 1LFKROV DQG -RKQ - 2KDOD HGV 6RXQG 6\PEROLVP &DPEULGJH 1HZ
6RPH 1RUWK 3DFLILF &RDVW 3RHPV $ 3UREOHP LQ $QWKURSRORJLFDO 3KLORORJ\$PHUL ,Q6RFLROLQJXLVWLFV 6HOHFWHG 5HDGLQJV HGLWHG D 2Q&RPPXQLFDWLYH &RPSHWHQFH
FDQ $QWKURSRORJLVW
E\-%3ULGH DQG -DQHW+ROPHV +DUPRQGVZRUWK 8. 3HQJXLQ %RRNV E 7KH &RQWULEXWLRQ RI )RONORUH WR 6RFLROLQJLVWLF 5HVHDUFK ,Q7RZDUG 1HZ 3HU
VSHFWLYHV LQ)RONORUH HGLWHG E\$P"ULFR 3DUHGHV DQG 5LFKDUG %DXPDQ $XVWLQ 8QLYHUVLW\ RI7H[DV 3UHVV $PHULFDQ ,QGLDQ1DUUDWLYH 'LVFRYHULQJ 2UDO 3HUIRUPDQFH DQG0HDVXUHG 9HUVH LQ
1HZ /LWHUDU\ +LVWRU\ :DVFR7H[W 9HUVH$QDO\VLV RID RI$PHULFDQ /LQJXLVWLFV
+LUDP 6PLWK V $W 8QDTD ,QWHUQDWLRQDOIRXUQDO
,QYDLQ , WULHG WRWHOO \RX (VVD\V LQ1DWLYH $PHULFDQ (WKQRSRHWLFV 3KLODGHOSKLD 8QLYHUVLW\ RI3HQQV\OYDQLD 3UHVV ,QNHODV 6KDURQ DQG 'UDJD =HH 6\QWD[3KRQRORJ\ ,QWHUIDFH ,Q 7KH+DQGERRN RI3KR QRORJLFDO 7KHRU\ HGLWHG E\-RKQ$*ROGVPLWK &DPEULGJH 0DVV %ODFNZHOO -DNREVRQ 5RPDQ , &ORVLQJ 6WDWHPHQW /LQJXLVWLFV DQG 3RHWLFV,Q 6W\OH LQ/DQJXDJH HGLWHG
E\7KRPDV $ 6HEHRN 1HZ @ 3RHWU\ RI*UDPPDU DQG *UDPPDU RI 3RHWU\ ,Q/DQJXDJH HGLWHG E\.U\VW\QD 3RPRUVND DQG 6WHSKHQ 5XG\ &DPEULGJH0DVV %HONQDS 3UHVV
RI+DUYDUG 8QLYHUVLW\ 3UHVV LQ/LWHUDWXUH HGLWHG >@ 6XEOLPLQDO 9HUEDO 3DWWHUQLQJ LQ3RHWU\ ,Q/DQJXDJH E\.U\VW\QD 3RPRUVND DQG 6WHSKHQ 5XG\ &DPEULGJH 0DVV %HONQDS 3UHVV RI
+DUYDUG 8QLYHUVLW\ 3UHVV 6L[ /HFWXUHV RQ 6RXQG DQG 0HDQLQJ 0DVV 0,7 3UHVV
7UDQVODWHG E\ -RKQ0HSKDP
&DPEULGJH
DQG WKH3RZHU RI0XVLF &XOWXUDO $QWKURSRO .HLO &KDUOHV 3DUWLFLSDWRU\ 'LVFUHSDQFLHV RJ\ $ 3URJUHVV 5HSRUW (WKQRPXVLFRO 7KH 7KHRU\ RI 3DUWLFLSDWRU\ 'LVFUHSDQFLHV RJ\ .LUVKHQEODWW*LPEOHWW %DUEDUD DQG -RHO 6KHU]HU ,QWURGXFWLRQ ,Q6SHHFK 3OD\ HGLWHG
%LFNIRUG 0XVLF RI3RHWU\ DQG 3RHWU\ RI6RQJ E\%DUEDUD .LUVKHQEODWW*LPEOHWW V\OYDQLD 3UHVV
DQG -RHO 6KHU]HU 3KLODGHOSKLD
8QLYHUVLW\ RI3HQQ
/DF\ 3DXO GH 7KH )RUPDO ([SUHVVLRQ RI0DUNHGQHVV 3K' GLVVHUWDWLRQ 8QLYHUVLW\ RI 0DVVDFKXVHWWV $PKHUVW /HUGDKO )UHG 7KH 6RXQGV RI3RHWU\9LHZHG DV0XVLF $QQDOV RI WKH1HZ
/HUGDKO )UHG DQG 5D\ -DFNHQGRII 7RZDUG D )RUPDO 7KHRU\ RI7RQDO 0XVLF " -RXUQDO 0XVLF 7KHRU\
RI
$ *HQHUDWLYH 7KHRU\ RI7RQDO 0XVLF &DPEULGJH 0DVV 0,7 3UHVV /LEHUPDQ 0DUN 7KH ,QWRQDWLRQDO 6\VWHPV RI(QJOLVK 3K' GLVVHUWDWLRQ 0,7 /LVW*HRUJH 7KH %RXQGDULHV RI 6SHHFK DQG 6RQJ(WKQRPXVLFRORJ\ 0DUFXV *UHLO ,QYLVLEOH 5HSXEOLF %RE '\ODQ V %DVHPHQW 7DSHV 1HZ
0DQXHO 3HWHU )ODPHQFR LQ)RFXV $Q$QDO\VLV RID3HUIRUPDQFH RI6ROHDUHV ,Q$QDO\WLFDO 6WXGLHV LQ:RUOG 0XVLF HGLWHG E\0LFKDHO 7HQ]HU 1HZ
0HUW] (OL]DEHWK DQG 5LFKDUG -3DUPHQWLHU HGV 6HPLRWLF 0HGLDWLRQ 3V\FKRORJLFDO 3HUVSHFWLYHV 2UODQGR )OD $FDGHPLF 3UHVV
6RFLRFXOWXUDO
DQG
1DWWLH] -HDQ-DFTXHV /LQJXLVWLFV $ 1HZ $SSURDFK IRU0XVLF $QDO\VLV" ,QWHUQDWLRQDO 5HYLHZ RI WKH$HVWKHWLFV DQG 6RFLRORJ\ RI0XVLF O
0XVLF 7UDQVODWHG E\&DURO\Q $EEDWH 0XVLF DQG 'LVFRXUVH 7RZDUG D 6HPLRORJ\ RI 3ULQFHWRQ 1- 3ULQFHWRQ 8QLYHUVLW\ 3UHVV ,QXLW7KURDW*DPHV DQG 6LEHULDQ 7KURDW 6LQJLQJ $ &RPSDUDWLYH +LVWRULFDO DQG 6HPLRORJLFDO $SSURDFK (WKQRPXVLFRORJ\ 1HWWO %UXQR 2EVHUYDWLRQV RQ 0HDQLQJOHVV 3H\RWH 6RQJ 7H[WV-RXUQDO RI$PHULFDQ
)RONORUH 7H[W0XVLF 5HODWLRQVKLSV
LQ$UDSDKR 6RQJV6RXWKZHVWHUQ -RXUQDO RM$QWKURSRO RJ\ 1LHW]VFKH )ULHGULFK >@ 7KH %LUWK RI7UDJHG\ 7UDQVODWHG E\&OLIWRQ 3)DGLPDQ 1HZ @ 2SWLPDOLW\ 7KHRU\ &RQVWUDLQW ,QWHUDFWLRQ LQ *HQHUDWLYH *UDPPDU 52$ 5XWJHUV 2SWLPDOLW\ $UFKLYH KWWSURDUXWJHUVHGX 5LFNV &KULVWRSKHU '\ODQ V 9LVLRQV RI6LQ /RQGRQ 9LNLQJ 6HHJHU &KDUOHV 6LQJLQJ 6W\OH:HVWHUQ )RONORUH 6HONLUN(OLVDEHWK 6HQWHQFH 3URVRG\ ,QWRQDWLRQ 6WUHVVDQG 3KUDVLQJ ,Q7KH+DQGERRN RI 3KRQRORJLFDO 7KHRU\ HGLWHG E\-RKQ$*ROGVPLWK &DPEULGJH 0DVV %ODFNZHOO
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
RI&KLFDJR 3UHVV 6XQGEHUJ -RKDQ $UWLFXODWRU\ 'LIIHUHQFHV %HWZHHQ 6SRNHQ DQG 6XQJ 9RZHOV LQ6LQJ HUV ,Q6SHHFK 7UDQVPLVVLRQ /DERUDWRU\ 4XDUWHUO\ 3URJUHVV DQG 6WDWXV 5HSRUW 6WRFNKROP 5R\DO ,QVWLWXWH RI7HFKQRORJ\
7HGORFN 'HQQLV 7KH 6SRNHQ :RUG DQG WKH:RUN RI,QWHUSUHWDWLRQ YHUVLW\ RI3HQQV\OYDQLD 3UHVV
3KLODGHOSKLD
8QL
(WKQRPXVLFRORJ\
)DOO
7UDXEH &DUROLQH $Q ,QWHUGLVFLSOLQDU\ 6WXG\ RI WKH7LPEUH RI WKH&ODVVLFDO *XLWDU 3K' GLVVHUWDWLRQ 0F*LOO 8QLYHUVLW\
8UEDQ *UHJ 7KH 6HPLRWLFV RI7ZR 6SHHFK 6W\OHV LQ6KRNOHQJ,Q 6HPLRWLF 0HGLDWLRQ 6RFLRFXOWXUDO DQG 3V\FKRORJLFDO 3HUVSHFWLYHV HGLWHG E\ (OL]DEHWK 0HUW] DQG 5LFKDUG - 3DUPHQWLHU 2UODQGR )OD $FDGHPLF 3UHVV $'LVFRXUVH&HQWHUHG $SSURDFK WR&XOWXUH 1DWLYH 6RXWK $PHULFDQ 0\WKV DQG 5LWXDOV $XVWLQ 8QLYHUVLW\ RI7H[DV 3UHVV 9DO"U\ 3DXO 7KH $UW RI3RHWU\ 7UDQVODWHG E\ 'HQLVH )ROOLRW9RO RI&ROOHFWHG :RUNV HGLWHG E\-DFNVRQ 0DWWKHZV 1HZ
:HLVVPDQ 'LFN :KLFK 6LGH $UH
LQ
:RRGEXU\ $QWKRQ\ & 7KH )XQFWLRQV RI5KHWRULFDO 6WUXFWXUH $ 6WXG\ RI&HQWUDO $ODVNDQ LQ6RFLHW\ <XSLN (VNLPR 'LVFRXUVH /DQJXDJH
'LVFRJUDSK\ '\ODQ %RE >@ 7KH )UHHZKHHOLQ %RE GLVF
'\ODQ
&ROXPELD/HJDF\
&RPSDFW