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www.sec.gov), :>B>@K9 >15A?5G8205B 4>ABC? : 0@E82C - 1075 40==KE EDGAR (Electronic Data Gathering, Analysis, and Retrieval System), A>45@60I8< @538AB@0F8>==K5 70O2;5=8O 2A5E ?C1;8G=KE :><?0=89. !;54CNI85 ?>:070B5;8 O2;ONBAO >B;8G=K< 8=48:0B>@>< A>AB>O=8O :><?0=88-M<8B5=B0 8 ?@82;5:0B5;L=>AB8 55 0:F89 2 :0G5AB25 >1J5:B0 8=25AB8@>20=8O. =8 @53C;O@=> ?C1;8:CNBAO 2 D8=0=A>2>9 ?5@8>48:5, A>45@60BAO =0 web-A09B0E 8 <>3CB 1KBL ?>;CG5=K C 1@>:5@>2. 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transfer and ship" ("?5@52>4 8 4>AB02:0") >7=0G05B, GB> F5==K5 1C<038 1C4CB @538AB@8@>20BLAO =0 20H5 8<O 8 4>AB02;OBLAO 20< ?> ?>GB5. =AB@C:F8O "transfer and hold" ("?5@52>4 8 E@0=5=85") >7=0G05B, GB> F5==K5 1C<038 1C4CB 70@538AB@8@>20=K =0 20H5 8<O 8 >AB0=CBAO =0 E@0=5=88 2 1@>:5@A:>9 :><?0=88. #A;>285 "register in street name" ("C;8G=0O @538AB@0F8O") >7=0G05B, GB> F5==K5 1C<038 @538AB@8@CNBAO =0 8<O 1@>:5@0/48;5@0 8 45@60BAO C =53> =0 E@0=5=88 2 M;5:B@>==>< 2845. @><5 B>3>, 8=25AB>@ <>65B A45;0BL 2K1>@ 2 >B=>H5=88 ?>@O4:0 8A?>;L7>20=8O ?>ABC?;5=89 >B 70:@KB8O ?>78F88: A@54AB20 <>3CB 1KBL 2KA;0=K G5:><, 8;8 >AB0BLAO =0 AG5B5 2 :0G5AB25 :@548B>2>3> A0;L4>. > 2B>@>< A;CG05 >=8 ?><5I0NBAO 2 D>=4K 45=56=>3> @K=:0. A;8 2K :0: :;85=B E>B8B5, GB>1K 8=>5 ;8F>, =5 ?>8<5=>20==>5 2 20H5< AG5B5, 8<5;> ?@02> =0 >ACI5AB2;5=85 G5@57 =53> B>@3>2KE >?5@0F89, 2K 4>;6=K ?@54AB028BL ?8AL<5==>5 @07@5H5=85. !CI5AB2C5B B@8 2840 @07@5H5=89: 3@0=8G5==>5 @07@5H5=85 (Limited authorization) ?@54>AB02;O5B ?@02> =0 8A?>;L7>20=85 AG5B0 B>;L:> 4;O 8=8F80;870F88 A45;>:; ;8F> A >3@0=8G5==K<8 ?>;=><>G8O<8 =5 <>65B A=8<0BL A> AG5B0 =8 45=56=K5 A@54AB20, =8 F5==K5 1C<038. >;=>5 @07@5H5=85 (Full authorization) >7=0G05B, GB> C?>;=><>G5==>5 ;8F> <>65B =5 B>;L:> 8=8F88@>20BL A45;:8, => 8 A=8<0BL A> AG5B0 45=56=K5 A@54AB20 8 F5==K5 1C<038. 8A:@5F8>==>5 @07@5H5=85 (Discretionary authorization) 8A?>;L7C5BAO ?@8 >B:@KB88 48A:@5F8>==>3> AG5B0 A>2<5AB=> A 1@>:5@></48;5@><. > CA;>28O< 48A:@5F8>==>3> AG5B0 2K ?@54>AB02;O5B5 A2>5<C 1@>:5@C/48;5@C ?@02> 459AB2>20BL ?> A2>5<C CA<>B@5=8N ?@8 >ACI5AB2;5=88 >?5@0F89 ?> AG5BC 157 ?@5420@8B5;L=>9 :>=AC;LB0F88 A 20<8. =25AB>@ <>65B A>E@0=OBL 0=>=8<=>ABL =0 A2>5< AG5B5 8 845=B8D8F8@>20BLAO 8A:;NG8B5;L=> ?> =><5@C. -B> 2>7<>6=> B>;L:> 2 A;CG05, 5A;8 1@>:5@A:0O :><?0=8O O2;O5BAO G;5=>< $. 4=0:> 8=25AB>@ 4>;65= ?>4?8A0BL 70O2;5=85 A C:070=85< A2>53> ?>;=>3> 8<5=8, ?>4B25@645=85< A2>59 ;8G=>AB8 8 ?@020 A>1AB25==>AB8 =0 40==K9 AG5B. 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F5=:0 53> C@>2=O ?@>872>48BAO =0 >A=>25 0=0;870 D8=0=A>2>9 >BG5B=>AB8, 8 2 G0AB=>AB8, A>AB>O=8O ACI5AB2CNI59 704>;65==>AB8: :0: 87<5=8;>AL 4>;3>2>5 1@5<O :><?0=88 70 ?@>H54H89 3>4, :0:>2K 8AB>G=8:8 708<AB2>20==KE @5AC@A>2 8 :0: :><?0=8O =0<5@5=0 8E 2>72@0I0BL. 0:>=5F, <>6=> >B<5B8BL 8=D>@<0F8>==K9 @8A:, A2O70==K9 A >1=0@>4>20=85< =5;8F5?@8OB=>9 8=D>@<0F88 > :><?0=88, GB> <>65B 2K720BL @57:>5 ?045=85 :>B8@>2>:. !( 8<5NB A0<>5 @0728B>5 70:>=>40B5;LAB2> > F5==KE 1C<030E 8 A0<K5 65AB:85 B@51>20=8O : M<8B5=B0< 2 >B=>H5=88 >BG5B=>AB8 8 ?>;=>3> @0A:@KB8O 8=D>@<0F88 ?5@54 45@60B5;O<8 8E 0:F89. ;02=>9 F5;LN 3>AC40@AB25==>3> @53C;8@>20=8O 2 MB>9 >1;0AB8 O2;O5BAO ?>445@60=85 4>25@8O 8=25AB>@>2, 254L @K=>: F5==KE 1C<03 - @K=>: 4>25@8O, 345 4>1@>A>25AB=>ABL 8 G5AB=>ABL M<8B5=B>2 8 ?>A@54=8:>2 AG8B0NBAO 2KAH8<8 F5==>ABO<8. >8A: 0=45@@09B5@0 5@20O M<8AA8O 0:F89 :><?0=88, :>B>@K5 1C4CB ?@54;>65=K H8@>:><C :@C3C 8=25AB>@>2, ?>;CG8;0 =0720=85 ?5@28G=>3> ?C1;8G=>3> @07<5I5=8O (Initial Public Offering, IPO). ><?0=8O, :>B>@0O @5H05B AB0BL ?C1;8G=>9, 4>;6=0 =0G8=0BL 459AB2>20BL :0: 0:F8>=5@=>5 >1I5AB2> >B:@KB>3> B8?0 ?> :@09=59 <5@5 70 420 3>40 4> D0:B8G5A:>3> >ACI5AB2;5=8O IPO, GB> ?@5645 2A53> ?>4@07C<5205B 2545=85 =0 ?>AB>O==>9 >A=>25 D8=0=A>2>9 >BG5B=>AB8 8 @07@01>B:C 187=5A-?;0=0. 5@2K< H03>< =0 ?CB8 >ACI5AB2;5=8O IPO >1KG=> O2;O5BAO ?>8A: :><?0=859-M<8B5=B>< 8=25AB8F8>==>3> 10=:0, :>B>@K9 1C45B 8A?>;=OBL @>;L :>=AC;LB0=B0 8 48AB@81LNB>@0 - 0=45@@09B5@0 (Underwriter). 4=0:> :><?0=8O, =0<5@520NI0OAO >ACI5AB28BL ?@82;5G5=85 :0?8B0;0 G5@57 2K?CA: 0:F89, A>2A5< =5>1O70B5;L=> 4>;6=0 ?@81530BL : CA;C30< 8=25AB8F8>==>3> 10=:0, 8 =8345 2 70:>=>40B5;LAB25 MB> >1O70B5;LAB2> =5 70:@5?;5=>. !CI5AB2C5B 2>7<>6=>ABL >ACI5AB28BL @07<5I5=85 0:F89 =0?@O<CN 8=25AB>@0<, 157 ?>A@54=8G5AB20 0=45@@09B5@0 (Direct Public Offering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irm Commitment) 8 (2) ?@8;>65=85 <0:A8<0;L=KE CA8;89 (Best Efforts agreement). "25@4>5 >1O70B5;LAB2> ?@54?>;0305B, GB> 8=25AB8F8>==K9 10=: A>3;0H05BAO =0 ?>:C?:C C :><?0=88 2A53> =>2>3> 2K?CA:0 55 0:F89 8 =0 40;L=59H55 8E @07<5I5=85 A@548 8=25AB>@>2. >4?8AK20O B0:>9 4>3>2>@, 0=45@@09B5@ 30@0=B8@C5B 2K?;0BC M<8B5=BC >?@545;5==>9 AC<<K 8 =5A5B 25AL @8A:, A>?@O65==K9 A @07<5I5=85< 2K?CA:0. 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A;8 65 ><8AA8O >B:;>=8;0 70O2:C, >=0 =0?@02;O5B M<8B5=BC ?8AL<>->B:07 (Letter of Deficiency), 2 :>B>@>< 8725I05B 53> >1> 2A5E =5OA=KE <><5=B0E 8 =5A>>B25BAB28OE.  ?5@8>4 >6840=8O @538AB@0F88 8=25AB8F8>==K9 10=: ?KB05BAO @07>3@5BL 8=B5@5A 8=25AB>@>2 : =>2><C 2K?CA:C, @0A?@>AB@0=OO ?@5420@8B5;L=K9 ?@>A?5:B M<8AA88 (Preliminary Prospectus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"8?K A>3;0H5=89 ?@8 >ACI5AB2;5=88 0=45@@09B8=30 > <=>38E A;CG0OE 8=25AB8F8>==K9 10=:-?>A@54=8: =5 65;05B 1@0BL =0 A51O 2A5 @8A:8, A2O70==K5 A @07<5I5=85< 2K?CA:0. >MB><C >= D>@<8@C5B A8=48:0B (Syndicate) - 3@C??C 8=25AB8F8>==KE 10=:>2-0=45@@09B5@>2, :>B>@K5 8<5NB 7=0G8B5;L=CN :;85=BA:CN 107C 8 1C4CB ?@8=8<0BL CG0AB85 2 ?@>4065 =>2KE F5==KE 1C<03. 1KG=> A8=48:0B 2>73;02;O5B <5=5465@ A8=48:0B0 (Syndicate Manager) 8;8 254CI89 0=45@@09B5@ (Underrating Manager), :>B>@K9 ?>4?8AK205B A :><?0=859-M<8B5=B>< ?8AL<> > =0<5@5=8OE, 70:@5?;ONI55 E0@0:B5@ 8E >B=>H5=89. 4=0:> MB>B 4>:C<5=B =5 O2;O5BAO 4;O AB>@>= A2O7K20NI8<. 0: B>;L:> & >4>1@O5B 2K?CA:, A>AB02;O5BAO =>2K9 4>3>2>@, :>B>@K9 C65 O2;O5BAO >1O70B5;L=K< 4;O AB>@>=, ?>4?8A02H8E ?8AL<> > =0<5@5=8OE. @8 >ACI5AB2;5=88 0=45@@09B8=30 ?>4?8AK20NBAO B@8 >A=>2=KE 4>3>2>@0: 1) !>3;0H5=85 <564C 0=45@@09B5@0<8 (Agreement Among Underwriters) 2) !>3;0H5=85 >1 0=45@@09B8=35 (Underwriting agreement) 3) 8;5@A:>5 A>3;0H5=85 (Dealer Agreement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nderwriters Allotment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elling Group), :064K9 CG0AB=8: :>B>@>9 45;05B 2A5 2>7<>6=>5 4;O ?@>4068 8=25AB>@0< A2>59 4>;8 F5==KE 1C<03, ?>;CG5==>9 ?> A>3;0H5=8N. @><5 B>3>, 5ABL 5I5 >4=0 >3>2>@:0, =07K205<0O "0=45@@09B8=3 ?> ?@8=F8?C 2A5 8;8 =8G53>" (All Or None Underwriting).  A>>B25BAB288 A 40==K< CA;>285< 0=45@@09B5@ A>3;0H05BAO ?@8;>68BL 2A5 CA8;8O : B><C, GB>1K ?>;=>ABLN ?@>40BL : >?@545;5==>9 40B5 25AL 2K?CA:. >ABC?;5=8O >B ?@>4068 ?><5I0NBAO =0 AG5B CA;>2=>3> 45?>=8@>20=8O (escrow account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underwriting discount) >B F5=K ?@54;>65=8O). 07<5@ A?@540 70@0=55 >3>20@8205BAO <564C M<8B5=B>< 8 254CI8< 0=45@@09B5@><. >A;54=89 ?>;CG05B D8:A8@>20==CN AC<<C A :064>9 ?@>40==>9 0:F88 (53> 2>7=03@0645=85 =07K205BAO manager fee). '0ABL A?@540 845B =0 :><?5=A0F8N G;5=0< A8=48:0B0 70 ?>=5A5==K5 @0AE>4K 8 27OBK5 =0 A51O @8A:8 (underwriting or syndicate allowance). '0ABL A?@540 845B =0 2>7=03@0645=85 CG0AB=8:0< 3@C??K ?> ?@>4065 (selling concession). Road Show @8<5@=> 70 <5AOF 4> ?>;CG5=8O >4>1@5=8O 2K?CA:0 :><?0=8O >@30=87C5B A2>53> @>40 @5:;0<=CN :><?0=8N, =07K205<CN "Road Show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road show 8 >?@545;5=8O ?5@2>=0G0;L=>3> A?@>A0 =0 1C<038 =>2>3> 2K?CA:0 C 254CI53> 0=45@@09B5@0 ?>O2;O5BAO 2>7<>6=>ABL >1J5:B82=> >1>7=0G8BL C@>25=L F5=K ?@54;>65=8O. ?@545;5=85 >?B8<0;L=>9 F5=K, ?> <=5=8N <=>38E, O2;O5BAO A:>@55 8A:CAAB2><, =565;8 =0C:>9, 254L 0=45@@09B5@C =0 >A=>25 7=0=89 > ?@5420@8B5;L=>< A?@>A5 8 B5:CI8E @K=>G=KE CA;>28OE =C6=> =09B8 :><?@><8AA=>5 @5H5=85 4;O 42CE AB>@>= A ?@>B82>?>;>6=K<8 8=B5@5A0<8. ><?0=8O-M<8B5=B 65;05B ?@82;5GL <0:A8<0;L=> 2>7<>6=K5 D8=0=A>2K5 @5AC@AK, 0 8=25AB>@K E>BOB :C?8BL =>2K5 1C<038 ?> <8=8<0;L=> 2>7<>6=>9 F5=5 8 2 ?5@2K5 65 4=8 C2845BL @>AB 8E :C@A>2>9 AB>8<>AB8. !B>8<>ABL >ACI5AB2;5=8O IPO !B>8<>ABL >ACI5AB2;5=8O ?5@2>=0G0;L=>3> ?C1;8G=>3> ?@54;>65=8O 4>AB0B>G=> 25;8:0 8 2:;NG05B: 1. 042>:0BA:85 8 1CE30;B5@A:85 @0AE>4K (8E 1N465B A>AB02;O5B >B $100,000 4> $250,000). @5645 2A53>, MB> N@848G5A:85 @0AE>4K, A2O70==K5 A ?@54AB02;5=85< 4>:C<5=B>2 2 !, 0 B0:65 A @538AB@0F859 2K?CA:0 2 A>>B25BAB288 A 70:>=0<8 > F5==KE 1C<030E B5E HB0B>2 (Blue Sky Laws), 345 :><?0=8O =0<5@5205BAO >ACI5AB2;OBL >?5@0F88 8;8 ?@>4020BL A2>8 1C<038 (40==K5 @0AE>4K, 2 7028A8<>AB8 >B :>;8G5AB20 HB0B>2, 2 :>B>@KE 1C45B ?@>2>48BLAO @538AB@0F8O, >F5=820NBAO >B $10,000 4> $50,000). @><5 B>3>, &, ! 8 @53C;8@CNI8< >@30=0< A>>B25BAB2CNI8E HB0B>2 =5>1E>48<> 70?;0B8BL @538AB@0F8>==K9 A1>@ (Registration Fee), :>B>@K9 8AG8A;O5BAO :0: ?@>F5=B >B A>2>:C?=>9 F5=K ?C1;8G=>3> ?@54;>65=8O. ;NA, 2 7028A8<>AB8 >B N@8A48:F88, M<8B5=B 4>;65= 70?;0B8BL =0;>38: B@0=AD5@B=K9, =0 0:F8>=5@=K9 :0?8B0; 8 4@.; 2. B8?>3@0DA:85 8 ?>GB>2K5 @0AE>4K, :>B>@K5 <>3CB A>AB028BL >B $50,000 4> $200,000; 3. 70B@0BK =0 =0;06820=85 A2O759 A 1@>:5@0<8, 48;5@0<8, 0=0;8B8:0<8, :>B>@K5 1C4CB A;548BL 70 AC4L1>9 :><?0=88 (>B $30,000 4> $50,000). @><5 B>3>, :064K9 3>4 :><?0=88 ?@845BAO =5AB8 @0AE>4K, A2O70==K5 A N@848G5A:8< 8 0C48B>@A:8< >1A;C6820=85<, A>AB02;5=85< @07;8G=KE >BG5B>2, 2>7=03@0645=85< B@0=AD5@B=><C 035=BC , 8=D>@<0F8>==K< >1A;C6820=85< 0:F8>=5@>2 8 ?@>G85 70B@0BK, A>?@O65==K5 A ?C1;8G=K< AB0BCA>< :><?0=88. &5=>2>9 0=0;87 IPO 48= 87 >A=>2=KE 2>?@>A>2 ?@8 >ACI5AB2;5=88 IPO - A:>;L:> A@54AB2 <>65B ?@82;5GL :><?0=8O. -BC F8D@C >?@545;ONB :><?0=8O-M<8B5=B, :>=AC;LB0=BK 8 0=45@@09B5@. >:@KBL 70 AG5B ?C1;8G=>3> @07<5I5=8O 2A5 D8=0=A>2K5 ?>B@51=>AB8 =5 ?@54AB02;O5BAO 2>7<>6=K<. @82;5G5==KE @5AC@A>2 4>;6=> E20B8BL =0 ?@5B2>@5=85 2 687=L ?;0=>2 M:A?0=A88 8 702>520=8O =>2KE @K=:>2 8;8 ?>30H5=85 AB0@>9 704>;65==>AB8. 7 AC<<K 2K?CA:0 @0AAG8BK205BAO F5=0 ?@54;>65=8O 2 @0AG5B5 =0 >4=C 0:F8N 8 A0<> :>;8G5AB2> 0:F89. >A;54=89 ?0@0<5B@ 2K?CA:0 1C45B >?@545;OBL ;8:284=>ABL =>2KE 0:F89. 5>1E>48<> 8<5BL 4>AB0B>G=K9 >1J5< >1@0I0NI8EAO =0 @K=:5 F5==KE 1C<03, =5 ?@8=04;560I8E 8=A0945@0< (Float). 5;0B5;L=>, GB>1K ?5@2>=0G0;L=0O F5=0 0:F89 =5 1K;0 =865 $6 ($5 - <8=8<0;L=0O F5=0, ?> :>B>@>9 0:F88 <>3CB B>@3>20BLAO, 8 =0 =8E 1C4CB @0A?@>AB@0=OBLAO >?5@0F88 A <0@659; 0:F88 A F5=>9 =865 $3 AG8B0NBAO ":>?55G=K<8"). 0:;NG8B5;L=0O G0ABL F5=>2>3> 0=0;870 IPO - A@02=5=85 D8=0=A>2>3> ?>;>65=8O 8 CAB>9G82>AB8 :><?0=88 A 55 :>=:C@5=B0<8 2 B>9 65 >B@0A;8. @><5 B>3>, 87CG5=8N ?>4;560B 2=5H=85 D0:B>@K, B0:85 :0: ?>;8B8:0 $ !, C@>25=L 4>25@8O 8=25AB>@>2, =081>;55 ?@82;5:0B5;L=K5 4;O :0?8B0;>2;>65=89 >B@0A;8 8 B.?. 025@H5=85 0=45@@09B8=30 025@H5=85 0=45@@09B8=30, ?@>2>48<>3> ?> ?@8=F8?C "B25@4>3> >1O70B5;LAB20" (Firm Commitment Closing). 025@H5=85 2 40==>< A;CG05 ?@>8AE>48B G5@57 1-2 =545;8 ?>A;5 =0G0;0 >?5@0F89 ?> ?C1;8G=><C @07<5I5=8N.  45=L =0G0;0 ?@54;>65=8O >:>=G0B5;L=> >?@545;ONBAO F5=0 ?@>4068 8 :>;8G5AB2> 0:F89 2 2K?CA:5. > MB>3> <><5=B0 =52>7<>6=> >?@545;8BL, :0:CN AC<<C 45=53 :><?0=8O 2 A>AB>O=88 ?@82;5GL. 4=0:> ?>43>B>2:0 : 7025@H5=8N @07<5I5=8O =0G8=05BAO 5I5 @0=LH5, GB>1K 0::C<C;8@>20BL 45=56=K5 A@54AB20 8 ?>43>B>28BL =5>1E>48<CN 4>:C<5=B0F8N. @8 70:@KB88 ?@54>AB02;ONBAO A;54CNI85 4>:C<5=BK: ?8AL<> 0=45@@09B5@0 B@0=AD5@B=><C 035=BC A> A?8A:>< 0:F8>=5@>2 8 :>;8G5AB2>< 0:F89, =0E>4OI8EAO C =8E 2> 2;045=88; A2845B5;LAB20 A> AB>@>=K "?@>40NI8E 0:F8>=5@>2" (selling shareholders); 7025@5==K5 CAB02=K5 4>:C<5=BK :><?0=88 8 4>:C<5=BK, ?>4B25@640NI85 CAB>9G82>5 D8=0=A>2>5 ?>;>65=85 8 @5?CB0F8N :><?0=88 8 55 4>G5@=8E ?>4@0745;5=89 (good standing); ?8AL<> :><?0=88 2 04@5A B@0=AD5@B=>3> 035=B0; ?8AL<> :><?0=88, ?>4B25@640NI55 A>1;N45=85 2A5E B@51>20=89 70:>=0 ?@8 ?@>2545=88 IPO; 70:;NG5=85 N@8A:>=AC;LB0 0=45@@09B5@0; 70:;NG5=85 N@8A:>=AC;LB0 :><?0=88, 04@5A>20==>5 0=45@@09B5@C; ?8AL<> > 70:>==>AB8 M<8AA88 F5==KE 1C<03, A>AB02;5==>5 :><?0=859 2 04@5A B@0=AD5@B=>3> 035=B0; ;8AB ?>ABC?;5=89; CG0AB=8:8 0=45@@09B8=30 ?>;CG0NB 2>7=03@0645=85 2 2845 10=:>2A:8E G5:>2. 025@H5=85 0=45@@09B8=30, ?@>2>48<>3> ?> ?@8=F8?C "?@8;>65=8O <0:A8<0;L=KE CA8;89" (Best Efforts Closing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Bear Put Debit Spread - <5425689 4515B>2K9 ?CB A?@M4 - <5425689 >?F8>==K9 A?@M4, A>G5B0NI89 ?>:C?:C ?CB >?F8>=0 "?>GB8 2 45=L30E" 8 ?@>406C ?CB >?F8>=0 "2=5 45=53". 0==K9 A?@M4 E0@0:B5@87C5BAO >3@0=8G5==K< @8A:><, >3@0=8G5==>9 ?>B5=F80;L=>9 ?@81K;LN 8 >BACBAB285< <0@652KE B@51>20=89. Bell Curve - :>;>:>;>>1@07=0O :@820O - 3@0D8G5A:0O 8=B5@?@5B0F8O @0A?@545;5=8O A;CG09=KE @57C;LB0B>2. Bid - ?@54;0305<0O F5=0, F5=0 ?>:C?:8 - F5=0, ?> :>B>@>9 B@5945@ 3>B>2 :C?8BL >?F8>==K9 A?@M4 8;8 8=>9 D8=0=A>2K9 8=AB@C<5=B. Break-even - C@>25=L 157C1KB>G=>AB8 - F5=0 107>2>3> 0:B820, ?@8 :>B>@>9 >?F8>==0O ?>78F8O =5 O2;O5BAO =8 ?@81K;L=>9, =8 C1KB>G=>9 ("?@8 A2>8E"). Brokerage commission - 1@>:5@A:0O :><8AA8O - 2>7=03@0645=85 1@>:5@0 70 A>25@H5=85 A45;:8. Bull Call Debit Spread - 1KG89 4515B>2K9 :>;; A?@M4 - 1KG89 >?F8>==K9 A?@M4, A>G5B0NI89 ?>:C?:C >?F8>=0 :>;; "?>GB8 2 45=L30E" 8 ?@>406C >?F8>=0 :>;; "2=5 45=53". 0==K9 A?@M4 E0@0:B5@87C5BAO >3@0=8G5==K< @8A:><, >3@0=8G5==>9 ?>B5=F80;L=>9 ?@81K;LN 8 >BACBAB285< <0@652KE B@51>20=89. Butterfly Spread - A?@M4 "101>G:0" - A;>6=0O >?F8>==0O AB@0B538O, >A=>20==0O =0 :><18=0F88 1KGL53> 8 <54256L53> A?@M4>2. @8 ?>AB@>5=88 8A?>;L7CNBAO G5BK@5 >?F8>=0 ("G5BK@5 :@K;0 101>G:8") A @07=K<8 F5=0<8 8A?>;=5=8O 8;8 @07=K<8 A@>:0<8 8AB5G5=8O. 48= >?F8>= 8<55B 1>;55 2KA>:CN F5=C AB@09:, 2B>@>9 - 1>;55 =87:CN F5=C AB@09: ?> A@02=5=8N A> A@54=8<8 F5=0<8 8A?>;=5=8O 42CE 4@C38E >?F8>=>2. Butterfly (long) - 4;8==K9 A?@M4 "101>G:0" - =59B@0;L=K9 >?F8>==K9 A?@M4, >A=>20==K9 =0 ?@>4065 42CE >?F8>=>2 ?CB/:>;; "?@8 45=L30E" 8 ?>:C?:5 ":@K;L52". A5 A?@M4K "101>G:0" E0@0:B5@87CNBAO >3@0=8G5==K< @8A:>< 8 >3@0=8G5==>9 ?>B5=F80;L=>9 ?@81K;LN. Butterfly (short) - :>@>B:89 A?@M4 "101>G:0" - >?F8>==K9 A?@M4, ?@8=>AOI89 ?@81K;L 2 A;CG05 AB018;L=>3> 42865=8O 107>2>9 F5=K 2 B>< 8;8 8=>< =0?@02;5=88. >78F8O >A=>20=0 =0 ?>:C?:5 42CE >?F8>=>2 ?CB/:>;; "?@8 45=L30E" 8 ?@>4065 ":@K;L52". Buying the Wings - ?>:C?:0 ":@K;L52" - ?>:C?:0 >?F8>=>2 A =081>;LH59 8 =08<5=LH59 F5=>9 8A?>;=5=8O 2 @0<:0E ?>AB@>5=8O 4;8==>3> A?@M40 "101>G:0" 8;8 ":>=4>@". Calendar Skew - :0;5=40@=>5 >B:;>=5=85 - A8BC0F8O, ?@8 :>B>@>9 <5AOF 8AB5G5=8O >?@545;5==>3> :>=B@0:B0 E0@0:B5@87C5BAO 7=0G8B5;L=> 1>;LH59 (8;8 <5=LH59) A@54=59 >68405<>9 2>;0B8;L=>ABLN ?> A@02=5=8N A 4@C38<8 <5AOF0<8. Calendar Spread - :0;5=40@=K9 A?@M4 - >?F8>==0O AB@0B538O, >A=>20==0O =0 >4=>2@5<5==>9 ?>:C?:5 8 ?@>4065 >?F8>=>2 >4=>3> :;0AA0, 8<5NI8E @07=K5 A@>:8 8A?>;=5=8O. A;8 F5=K AB@09: >?F8>=>2 @02=K, A?@M4 =07K205BAO 3>@87>=B0;L=K<, 5A;8 F5=K 8A?>;=5=8O @07;8G=K, A?@M4 =07K205BAO 4803>=0;L=K<. >78F8O A>7405BAO 4;O ?>;CG5=8O ?@81K;8 2 <><5=BK :0;5=40@=KE >B:;>=5=89. Call - >?F8>= :>;; - >?F8>=, ?>:C?0B5;L :>B>@>3> ?@8>1@5B05B ?@02> :C?8BL >?@545;5==>5 :>;8G5AB2> 107>2>3> 0:B820 ?> >3>2>@5==>9 F5=5 2 B5G5=85 D8:A8@>20==>3> ?5@8>40 2@5<5=8. @>4025F :>;; >?F8>=0 ?@54>AB02;O5B MB> ?@02> 2 >1<5= =0 ?>;CG5==CN ?@8 ?@>4065 >?F8>=0 ?@5<8N. Call Backspread - >1@0B=K9 :>;; A?@M4 - 1KGLO >?F8>==0O ?>78F8O, A>740==0O =0 >A=>25 ?@>4068 :>;; >?F8>=0 "?@8 45=L30E" 8;8 "2 45=L30E" 8 ?>:C?:8 42CE :>;; >?F8>=>2 A 1>;55 2KA>:>9 F5=>9 8A?>;=5=8O. 0==0O ?>78F8O E0@0:B5@87C5BAO =5>3@0=8G5==K< ?>B5=F80;>< ?@81K;8 ?@8 @>AB5 107>2>9 F5=K 8 >3@0=8G5==K< @8A:>< ?>B5@L 2 A;CG05 ?045=8O 107>2>9 F5=K. >78F8O 8<55B 7=0G8B5;L=K9 :>MDD8F85=B "2530" 8 <>65B 8A?>;L7>20BLAO 2 ?5@8>4K @>AB0 2>;0B8;L=>AB8. Call Ratio Spread - ?@>?>@F8>=0;L=K9 :>;; A?@M4 - A:>@55 1KG89 >?F8>==K9 A?@M4, >A=>20==K9 =0 ?>:C?:5 :>;; >?F8>=0 "?>GB8 2 45=L30E" 8 ?@>4065 42CE 8;8 1>;55 :>;; >?F8>=>2 "2=5 45=53". 0==0O ?>78F8O, A>740==0O A :@548B>2K< A0;L4>, 8<55B 7=0G8B5;L=K9 480?07>= ?@81K;L=>AB8, => @07<5@ 2>7<>6=>9 ?@81K;8 >3@0=8G5=, B>340 :0: ?>B5=F80;L=K5 ?>B5@8 =5B. Condor (long) - 4;8==K9 A?@M4 ":>=4>@" - =59B@0;L=K9 >?F8>==K9 A?@M4, A>740==K9 =0 >A=>25 ?@>4068 42CE >?F8>=>2 ?CB/:>;; "?>GB8 2 45=L30E", 8<5NI8E @07;8G=K5 F5=K 8A?>;=5=8O, 8 ?>:C?:8 ":@K;L52". A5 A?@M4K ":>=4>@" E0@0:B5@87CNBAO >3@0=8G5==K< @8A:>< 8 >3@0=8G5==K< ?>B5=F80;>< ?@81K;8. Condor (short) - :>@>B:89 A?@M4 ":>=4>@" - >?F8>==K9 A?@M4, ?@8=>AOI89 ?@81K;L 2 A;CG05 7=0G8B5;L=>3> 42865=8O 107>2>9 F5=K 2 B>< 8;8 8=>< =0?@02;5=88. >78F8O >A=>20=0 =0 ?>:C?:5 42CE >?F8>=>2 ?CB/:>;; "?>GB8 2 45=L30E", 8<5NI8E @07;8G=K5 F5=K 8A?>;=5=8O, 8 ?@>4065 ":@K;L52". Contract Skew - :>=B@0:B=>5 >B:;>=5=85 - A8BC0F8O, 2 :>B>@>9 >?F8>=K A >48=0:>2>9 40B>9 8AB5G5=8O 8<5NB G5B:>5 @0A?@545;5=85 C@>2=59 2>;0B8;L=>AB8. Contract Skew (positive) - ?>;>68B5;L=>5 :>=B@0:B=>5 >B:;>=5=85, ?@8 :>B>@>< >68405<0O 2>;0B8;L=>ABL >1KG=> C25;8G8205BAO A :064>9 1>;55 2KA>:>9 F5=>9 8A?>;=5=8O. Contract Skew (negative) - >B@8F0B5;L=>5 :>=B@0:B=>5 >B:;>=5=85, ?@8 :>B>@>< >68405<0O 2>;0B8;L=>ABL C25;8G8205BAO A :064>9 1>;55 =87:>9 F5=>9 8A?>;=5=8O. Delta - :>MDD8F85=B "45;LB0" - ?>:070B5;L GC2AB28B5;L=>AB8 @0AAG8BK205<>9 AB>8<>AB8 >?F8>=0 : =57=0G8B5;L=K< :>;510=8O< F5=K 107>2>3> 0:B820. '0AB> =07K205BAO "E54652K< :>MDD8F85=B><" (hedge ratio). 7<5=O5BAO 2 8=B5@20;5 >B 0 4> 1 4;O >?F8>=>2 :>;; 8 2 8=B5@20;5 >B -1 4> 0 4;O >?F8>=>2 ?CB. '5< 3;C165 >?F8>= ?CB "2 45=L30E", B5< 1;865 53> 45;LB0 : -1.  =0>1>@>B, G5< 3;C165 "2 45=L30E" >?F8>= :>;;, B5< 1;865 53> 45;LB0 : 1.. Delta Neutral - =59B@0;L=0O 45;LB0 - A>AB>O=85 <8=8<0;L=>9 F5=>2>9 CO728<>AB8, 4>AB8305<>5 ?>:C?:>9 8;8 ?@>40659 =5:>B>@>3> :>;8G5AB20 >?F8>=>2 A >?@545;5==K< :>MDD8F85=B>< "45;LB0" 4;O ?@82545=8O ?>78F88 : AC<<0@=>9 =C;52>9 45;LB5. Diagonal Spread - 4803>=0;L=K9 A?@M4 - >?F8>==0O AB@0B538O, @07=>284=>ABL :0;5=40@=>3> A?@M40, >A=>20==0O =0 >4=>2@5<5==>9 ?>:C?:5 8 ?@>4065 >48=0:>2>3> G8A;0 >?F8>=>2 >4=>3> :;0AA0, 8<5NI8E @07;8G=K5 F5=K 8 A@>:8 8A?>;=5=8O. 803>=0;L=K5 A?@M4K G0AB> ?@8<5=ONBAO 2 A8BC0F8OE, ?@8 :>B>@KE 2>7<>6=> CG5ABL 8 2>A?>;L7>20BLAO :0: >6840=8O<8 2 >B=>H5=88 42865=8O F5=K, B0: 8 :0;5=40@=K<8 >B:;>=5=8O<8. Exercise (an option) - @50;87>20BL >?F8>= - <5B>4 70:@KB8O >?F8>==>9 ?>78F88, A>AB>OI89 2 @50;870F88 ?@020 >1;040B5;O >?F8>=0 :C?8BL 8;8 ?@>40BL 107>2K9 0:B82. >:C?0B5;L >?F8>=0 O2;O5BAO 548=AB25==>9 AB>@>=>9 A45;:8, <>3CI59 @50;87>20BL >?F8>=. Expiration - 8AB5G5=85 A@>:0 459AB28O - 40B0 ?@5:@0I5=8O B>@3>2 ?> >?F8>==K< :>=B@0:B0<. Expire worthless - 8AB5G5=85 157 ?>A;54AB289 - A8BC0F8O, ?@8 :>B>@>9 >?F8>= =0 40BC 8AB5G5=8O =5 8<55B AB>8<>AB8 (=8 2=CB@5==59, =8 2@5<5==>9). Extrinsic Value - 2=5H=OO (2@5<5==0O) AB>8<>ABL - 25;8G8=0, =0 :>B>@CN ?@5<8O ?> >?F8>=C ?@52KH05B 53> 2=CB@5==NN AB>8<>ABL. $0:B8G5A:8, MB> AB>8<>AB=>5 2K@065=85 2@5<5=8, >AB0NI53>AO 4> 8AB5G5=8O >?F8>=0. @5<5==0O A>AB02;ONI0O A=8605BAO A ?@81;865=85< >:>=G0=8O A@>:0 459AB28O >?F8>=0. >340 >?F8>= ?5@5E>48B 2 A>AB>O=85 "2=5 45=53", >= B5@O5B A2>N 2=CB@5==NN AB>8<>ABL, 8 53> F5=0 AB0=>28BAO @02=>9 2@5<5==>9 A>AB02;ONI59. Fees - A1>@K - 40==K9 B5@<8= G0AB> 8A?>;L7C5BAO 4;O >?@545;5=8O 2A5E 70B@0B, A2O70==KE A >ACI5AB2;5=85< >?F8>==KE A45;>:, 2:;NG0O 2 B>< G8A;5 8 1@>:5@A:CN :><8AA8N. Follow-up - ?>A;54CNI0O AB@0B538O - 87<5=5=8O, 2=>A8<K5 2 ?5@2>=0G0;L=CN AB@0B538N A F5;LN C;CGH5=8O E0@0:B5@8AB8: ?>78F88. 0ABC?0B5;L=K5 ?>A;54CNI85 AB@0B5388 ?@54?@8=8<0NBAO, :>340 ?5@2>=0G0;L=0O ?>78F8O ?@8=>A8B ?@81K;L. 0I8B=K5 ?>A;54CNI85 AB@0B5388 8A?>;L7CNBAO, :>340 ?>78F8O C1KB>G=0. Free Trade - A2>1>4=0O A45;:0 - AB@0B538O, ?@8 :>B>@>9 8=25AB>@ ?>:C?05B >?F8>=, 0 70B5< >68405B 1;03>?@8OB=>3> 87<5=5=8O 107>2>9 F5=K, GB>1K ?@>40BL >?F8>= "2=5 45=53" (70 BC 65 ?@5<8N, GB> 1K;0 ?5@2>=0G0;L=> C?;0G5=0 70 >?F8>= "?>GB8 2 45=L30E") 2 @0<:0E A>740=8O 25@B8:0;L=>3> A?@M40. 025@H5==0O A2>1>4=0O A45;:0 8<55B >3@0=8G5==K9 ?>B5=F80; ?@81K;8, =C;52>9 @8A: 8 =C;52K5 70B@0BK ?> A45;:5. Futures Contract - DLNG5@A=K9 :>=B@0:B - C=8D8F8@>20==K9 :>=B@0:B, 70:@5?;ONI89 B25@4>5 >1O70B5;LAB2> :C?8BL 8;8 ?@>40BL 2 1C4CI5< AB0=40@B=>5 :>;8G5AB2> =5:>B>@>3> 0:B820 ?> A>3;0A>20==>9 <564C AB>@>=0<8 F5=5. Futures Spread - DLNG5@A=K9 A?@M4 - @07=8F0 <564C F5=0<8 42CE DLNG5@A=KE :>=B@0:B>2 =0 >48= 8 B>B 65 107>2K9 0:B82. $LNG5@A=K5 A?@M4K A>740NB 4>?>;=8B5;L=K9 @8A: 4;O =5?5@8>48G5A:8E :0;5=40@=KE A?@M4>2. Gamma - :>MDD8F85=B "30<<0" - ?>:070B5;L A:>@>AB8 87<5=5=8O 45;LBK 2 @57C;LB0B5 =57=0G8B5;L=KE :>;510=89 F5=K 107>2KE 0:F89. 0<<0 ?@8=8<05B <0:A8<0;L=>5 7=0G5=85, :>340 F5=0 ;560I8E 2 >A=>25 >?F8>=0 0:F89 ?@81;8605BAO : F5=5 AB@09:, 8 AB@5<8BAO : =C;N, A2>5<C <8=8<C<C, :>340 F5=0 107>2KE 0:F89 =0G8=05B C40;OBLAO >B F5=K 8A?>;=5=8O >?F8>=0 2 BC 8;8 8=CN AB>@>=C. "0:8< >1@07><, >?F8>=K "3;C1>:> 2 45=L30E" 8;8 "3;C1>:> 2=5 45=53" 8<5NB 30<<C, 1;87:CN : 0. =0G8B5;L=>5 2;8O=85 =0 30<<C >:07K205B 2@5<O.  B5G5=85 ?>A;54=53> <5AOF0 A@>:0 687=8 >?F8>=0 30<<0 >?F8>=>2 "?@8 45=L30E" ?>GB8 AE>48B =0 =5B. !;54>20B5;L=>, @8A: 2;045=8O >?F8>=>2 "?@8 45=L30E" 2 ?>A;54=85 30 4=59 B>@3>2 C25;8G8205BAO M:A?>=5=F80;L=>. ?F8>=K 3;C1>:> "2 45=L30E" 8;8 "2=5 45=53" 8<5NB 1>;55 AB018;L=CN 30<<C. Greeks - "3@5:8" - :>MDD8F85=BK, =0720=85 :>B>@K< 40;8 1C:2K 3@5G5A:>3> 0;D028B0. /2;ONBAO ?@><56CB>G=K<8 @57C;LB0B0<8 @0AG5B>2 ?> <>45;8 ;M:0-(>C;70 8 8A?>;L7CNBAO 4;O >F5=:8 @07;8G=KE @8A:>2 >?F8>==KE A45;>:. Historical volatility - 8AB>@8G5A:0O 2>;0B8;L=>ABL - E0@0:B5@8AB8:0 ?>2545=8O 8 0<?;8BC4K :>;510=89 @K=>G=>9 F5=K 2 ?@>H;><. Implied volatility - >68405<0O 2>;0B8;L=>ABL - ?@>3=>7 2 >B=>H5=88 AB5?5=8 =5CAB>9G82>AB8 @K=>G=>9 F5=K 2 1C4CI5<. In-the-money - "2 45=L30E" - B5@<8=, 8A?>;L7C5<K9 4;O >?8A0=8O AB0BCA0 >?F8>=0, ?@5<8O ?> :>B>@><C 8<55B 2=CB@5==NN AB>8<>ABL, B.5. B5:CI0O @K=>G=0O F5=0 107>2>3> 0:B820 ?@52KH05B F5=C AB@09: 4;O >?F8>=0 ":>;;" 8 >1@0B=> 4;O >?F8>=0 "?CB". Intrinsic value - "2=CB@5==OO AB>8<>ABL" - ?@54AB02;O5B A>1>9 @07=8FC <564C B5:CI59 @K=>G=>9 F5=>9 107>2>3> 0:B820 8 F5=>9 8A?>;=5=8O >?F8>=0. =CB@5==OO AB>8<>ABL ?>O2;O5BAO, :>340 >?F8>= ?5@5E>48B 2 A>AB>O=85 "2 45=L30E" (4;O >F5=:8 ?@5<88 >?F8>=>2 "2=5 45=53" 8A?>;L7C5BAO B5@<8= "?>B5@O==0O AB>8<>ABL", lost value). Leg into a Spread - >4=0 AB>@>=0 A?@M40 - >ACI5AB2;5=85 >4=>9 AB>@>=K A45;:8 A?@M4, 0 =5 >158E AB>@>= A?@M40 >4=>2@5<5==>. Leverage - "MDD5:B @KG030" - A8BC0F8O, ?@8 :>B>@>9 >B=>A8B5;L=> =51>;LH>5 87<5=5=85 F5=K <>65B ?@825AB8 : >3@><=K< :>;510=8O< 2 AB>8<>AB8 0:B82>2 =0 AG5B5. >7<>6=>ABL ?>;CG5=8O 1>;55 2KA>:>9 ?@81K;8 157 C25;8G5=8O :0?8B0;>2;>65=89. Liquidate a position - 70:@K20BL ?>78F8N - @50;87>20BL ?@81K;L 8;8 C1KB>:, =5 >AB02;OO ?> ?>78F88 =8:0:8E >1O70B5;LAB2, @8A:>2 8;8 2>7<>6=>AB8 ?>;CG5=8O ?@81K;8. Long - 4;8==0O ?>78F8O - ?>:C?:0 D8=0=A>2>3> 8=AB@C<5=B0. Major Event (volatility trend) - 7=0G8B5;L=>5 A>1KB85 (B@5=4 2>;0B8;L=>AB8) - ?@>4>;68B5;L=>5 C25;8G5=85 8;8 A=865=85 >68405<>9 2>;0B8;L=>AB8, 2K720==>5 2=5H=8< =5A57>==K< D0:B>@><. Margin - <0@60 - 2 B>@3>2;5 DLNG5@A0<8 8 >?F8>=0<8 30@0=B89=K9 27=>A, ?>4B25@640NI89 3>B>2=>ABL 8=25AB>@0 ?@>B82>AB>OBL =51;03>?@8OB=><C 87<5=5=8N @K=>G=>9 F5=K. Margin call - B@51>20=85 > ?>?>;=5=88 <0@68 - B@51>20=85 2=5AB8 =0 AG5B 4>?>;=8B5;L=K5 45=56=K5 A@54AB20 4;O 2>AAB0=>2;5=8O ?5@2>=0G0;L=>3> C@>2=O <0@68 8;8 :><?5=A0F88 C1KB:>2. Market bias - @K=>G=K5 >6840=8O - >6840=8O 8=25AB>@0 2 >B=>H5=88 42865=8O @K=>G=>9 F5=K 2 1C4CI5<. Offset - A>25@H5=85 >DDA5B=>9 A45;:8 - <5B>4 70:@KB8O ?>78F88 ?CB5< >1@0B=>9 ?>:C?:8 8;8 ?@>4068 B0:>3> 65 :>=B@0:B0, B.5. ?CB5< A>25@H5=8O ?@>B82>?>;>6=>9 A45;:8. 081>;55 G0ABK9 A?>A>1 70:@KB8O >?F8>==>9 ?>78F88. Open outcry - ">B:@KBK9 2K:@8:" - <5B>4 18@652>3> B>@30, ?@8 :>B>@>< A45;:8 ?> DLNG5@A=K< 8 >?F8>==K< :>=B@0:B0< 70:;NG0NBAO 3>;>A>< 8 65AB0<8 2 B>@3>2>< 70;5 18@68. Option - >?F8>= - :>=B@0:B, 40NI89 A2>5<C >1;040B5;N ?@02>, =5 ?>@>640O >1O70B5;LAB20, :C?8BL 8;8 ?@>40BL =5:>B>@K9 0:B82 ?> >?@545;5==>9 F5=5 2 B5G5=85 D8:A8@>20==>3> ?5@8>40 2@5<5=8. Option Spread - >?F8>==K9 A?@M4 - B>@3>20O AB@0B538O, A>AB>OI0O 2 >4=>2@5<5==>9 ?>:C?:5/?@>4065 >?F8>=>2 >4=>3> :;0AA0 2 F5;OE A>:@0I5=8O @0AE>4>2 ?> A45;:5, A>:@0I5=8O @8A:0 8 C25;8G5=8O 381:>AB8 ?>78F88. Out-of-the-money - "2=5 45=53" - B5@<8=, 8A?>;L7C5<K9 4;O >?8A0=8O AB0BCA0 >?F8>=0, ?@5<8O ?> :>B>@><C A>AB>8B 8A:;NG8B5;L=> 87 2=5H=59 (2@5<5==>9) AB>8<>AB8, B.5. B5:CI0O @K=>G=0O F5=0 107>2>3> 0:B820 =865 F5=K 8A?>;=5=8O 4;O >?F8>=0 ":>;;" 8 2KH5 4;O >?F8>=0 "?CB". Premium - ?@5<8O - AB>8<>ABL >?F8>=0, C?;0G8205<0O ?@>402FC 70 ?@02> :C?8BL 8;8 ?@>40BL 107>2K9 0:B82 ?> >?@545;5==>9 F5=5 2 B5G5=85 D8:A8@>20==>3> ?5@8>40 2@5<5=8. Put - >?F8>= ?CB - :>=B@0:B, 40NI89 A2>5<C >1;040B5;N ?@02>, =5 ?>@>640O >1O70B5;LAB20, ?@>40BL ;560I89 2 53> >A=>25 0:B82 ?> >?@545;5==>9 F5=5 2 B5G5=85 D8:A8@>20==>3> ?5@8>40 2@5<5=8 2 >1<5= =0 C?;0G5==CN ?@>402FC ?@5<8N. Put Backspread - >1@0B=K9 ?CB A?@M4 - <54256LO >?F8>==0O AB@0B538O, >A=>20==0O =0 ?@>4065 ?CB >?F8>=0 "?@8 45=L30E" 8;8 "2 45=L30E" 8 ?>:C?:5 42CE ?CB >?F8>=>2 A 1>;55 =87:>9 F5=>9 AB@09:. 1@0B=K9 ?CB A?@M4 E0@0:B5@87C5BAO =5>3@0=8G5==K< ?>B5=F80;>< ?@81K;8 2 A;CG05 ?045=8O 107>2>9 F5=K 8 >3@0=8G5==K< @8A:>< 2 A;CG05 @>AB0 107>2>9 F5=K. >78F8O 8<55B 2KA>:89 :>MDD8F85=B "2530" 8 <>65B 8A?>;L7>20BLAO 2 A;CG05 @>AB0 2>;0B8;L=>AB8. Put Ratio Spread - ?@>?>@F8>=0;L=K9 ?CB A?@M4 - A:>@55 1KG89 >?F8>==K9 A?@M4, >A=>20==K9 =0 ?>:C?:5 ?CB >?F8>=0 "?>GB8 2 45=L30E" 8 ?@>4065 42CE 8;8 1>;55 ?CB >?F8>=>2 "2=5 45=53". @8 A>740=88 40==>9 ?>78F88 A :@548B>< >=0 8<55B H8@>:89 480?07>= ?@81K;L=>AB8, => @07<5@ ?@81K;8 >3@0=8G5=, B>340 :0: ?>B5=F80;L=K5 ?>B5@8 =5B. Ratio Spreads - ?@>?>@F8>=0;L=K9 A?@M4 - >?F8>==K9 A?@M4, >A=>20==K9 =0 ?>:C?:5 >?F8>=0 "?>GB8 2 45=L30E" 8 ?@>4065 42CE 8;8 1>;55 >?F8>=>2 "2=5 45=53". @8 A>740=88 40==>9 ?>78F88 A :@548B>< >=0 8<55B H8@>:89 480?07>= ?@81K;L=>AB8, => @07<5@ ?@81K;8 >3@0=8G5=, B>340 :0: ?>B5=F80;L=K5 C1KB:8 =5B. @>?>@F8>=0;L=K5 A?@M4K ?@8<5=ONBAO 2 A8BC0F88, :>340 2>7<>6=> AK3@0BL =0 7=0G8B5;L=>9 @07=8F5 2 F5=0E 8A?>;=5=8O >?F8>=>2. Seasonal Volatility Trend - A57>==K9 B@5=4 2>;0B8;L=>AB8 - E0@0:B5@87CNI55AO F8:;8G=>ABLN 4;8B5;L=>5 C25;8G5=85 8;8 A=865=85 >68405<>9 2>;0B8;L=>AB8. >7=8:=>25=85 40==>3> B@5=40 >1KG=> A2O70=> A ?>3>4=K<8 O2;5=8O<8 8;8 A57>==K<8 D0:B>@0<8. Selling an Option (offset) - ?@>4060 >?F8>=0 :0: A>25@H5=85 >DDA5B=>9 A45;:8 - 70:@KB85 4;8==>9 ?>78F88 ?CB5< >1@0B=>9 ?@>4068 :>=B@0:B0, 0=0;>38G=>3> :C?;5==><C. Selling an Option (outright) - ?@>4060 >?F8>=0 - ?@54>AB02;5=85 ?@020 :C?8BL 8;8 ?@>40BL ;560I89 2 >A=>25 >?F8>=0 0:B82 2 >1<5= =0 C?;0BC ?@5<88. "0:65 8A?>;L7C5BAO B5@<8= "2K?8AK20=85 >?F8>=0" (writing an option). Selling short - :>@>B:0O ?@>4060 - ?@>4060 8=25AB>@>< :>=B@0:B>2, :>B>@KE >= =5 8<55B 2 =0;8G88 (70=8<05B C 1@>:5@0), 2 =045645 =0 ?045=85 @K=:0 8 A>25@H5=85 >1@0B=>9 ?>:C?:8 ?> 1>;55 =87:>9 F5=5. Serial Option - A5@89=K9 >?F8>= - >?F8>= =0 DLNG5@A=K9 :>=B@0:B, 4;O :>B>@>3> =5 ACI5AB2C5B A>>B25BAB2CNI53> DLNG5@A=>3> :>=B@0:B0, 8AB5:0NI53> 2 B>B 65 <5AOF. 07>2K< DLNG5@A=K< :>=B@0:B>< AG8B05BAO :>=B@0:B A 1;8609H8< A@>:>< 8AB5G5=8O. 0?@8<5@, =5 ACI5AB2C5B <0@B>2A:>3> DLNG5@A=>3> :>=B@0:B0 =0 7>;>B>, => 5ABL :>=B@0:B, 8AB5:0NI89 2 0?@5;5, ?>MB><C <0@B>2A:89 >?F8>= =0 7>;>B> - :>B>@K9 O2;O5BAO A5@89=K< - @0AA<0B@8205BAO :0: >?F8>= =0 0?@5;LA:85 DLNG5@A=K5 :>=B@0:BK. Short - :>@>B:0O ?>78F8O - ?@>4060 D8=0=A>2>3> 8=AB@C<5=B0. Skew - >B:;>=5=85 - ?@>3=>7 2 >B=>H5=88 48=0<8:8 2>;0B8;L=>AB8 107>2>3> 0:B820. B:;>=5=85< <>6=> AG8B0BL @07=8FC 2 >68405<>9 2>;0B8;L=>AB8 4;O >?F8>=>2 A @07;8G=K<8 F5=0<8 8A?>;=5=8O 8;8 A@>:0<8 8AB5G5=8O. Spread Order - >@45@ "A?@M4" - 8=AB@C:F8O 1@>:5@C >4=>2@5<5==> 70:;NG8BL 425 A45;:8 2 @0<:0E >?F8>==>3> A?@M40 2 >B;8G85 >B ?@8:070 2K?>;=8BL A=0G0;0 >4=C AB>@>=C A?@M40, 0 ?>B>< 2B>@CN. Straddle (long) - 4;8==K9 AB@M44; - >?F8>==K9 A?@M4, ?@8=>AOI89 ?@81K;L 2 A;CG05 CAB>9G82>3> 42865=8O 107>2>9 F5=K 2 B>< 8;8 8=>< =0?@02;5=88. >78F8O A>7405BAO =0 >A=>25 ?>:C?:8 >?F8>=>2 ?CB 8 :>;; A >48=0:>2>9 F5=>9 8A?>;=5=8O. >65B 8A?>;L7>20BLAO 2 A8BC0F88 @>AB0 ?>B5=F80;L=>9 2>;0B8;L=>AB8. Strangle (long) - 4;8==K9 AB@M=3; - >?F8>==K9 A?@M4, ?@8=>AOI89 ?@81K;L 2 A;CG05 CAB>9G82>3> 42865=8O 107>2>9 F5=K 2 B>< 8;8 8=>< =0?@02;5=88. >78F8O A>7405BAO =0 >A=>25 ?>:C?:8 >?F8>=>2 ?CB 8 :>;; "?>GB8 2 45=L30E" A @07;8G=K<8 F5=0<8 8A?>;=5=8O. >65B 8A?>;L7>20BLAO 2 A8BC0F88 @>AB0 ?>B5=F80;L=>9 2>;0B8;L=>AB8. Straddle (short) - :>@>B:89 AB@M44; - =59B@0;L=K9 >?F8>==K9 A?@M4, >A=>20==K9 =0 >4=>2@5<5==>9 ?@>4065 >?F8>=>2 ?CB 8 :>;; A >48=0:>2>9 F5=>9 8A?>;=5=8O. !B@M44; E0@0:B5@87C5BAO >3@0=8G5==>9 ?>B5=F80;L=>9 ?@81K;LN 8 =5>3@0=8G5==K< @8A:>< ?> >1>8< =0?@02;5=8O<. Strangle (short) - :>@>B:89 AB@M=3; - =59B@0;L=K9 >?F8>==K9 A?@M4, A>AB>OI89 2 ?@>4065 >?F8>=>2 ?CB 8 :>;; A @07;8G=K<8 F5=0<8 8A?>;=5=8O. !B@M=3; ?@8=>A8B <0:A8<0;L=CN ?@81K;L, 5A;8 107>20O F5=0 =0 40BC 8AB5G5=8O =0E>48BAO 2 8=B5@20;5 <564C 42C<O F5=0<8 AB@09:, 8 E0@0:B5@87C5BAO =5>3@0=8G5==K< @8A:>< ?> >1>8< =0?@02;5=8O<. Strike price - F5=0 AB@09:, F5=0 8A?>;=5=8O >?F8>=0 - >?@545;5==0O F5=0, ?> :>B>@>9 1C45B ?>:C?0BLAO 8;8 ?@>4020BLAO ;560I89 2 >A=>25 >?F8>=0 0:B82. Theta - :>MDD8F85=B "BMB0" - 87<5@O5B "@07@CH0NI55 2>7459AB285 2@5<5=8". @5<O @01>B05B ?@>B82 45@60B5;O >?F8>=>2 2 ?>;L7C ?@>402F0 >?F8>=>2. @8 ?@>4065 >?F8>=>2 BMB0 1C45B ?@8=8<0BL ?>;>68B5;L=K5 7=0G5=8O. @8 ?>:C?:5 >?F8>=>2, BMB0 1C45B ?@8=8<0BL >B@8F0B5;L=K5 7=0G5=8O 8 >B@060BL BC AC<<C, =0 :>B>@CN 1C45B A=860BLAO F5=0 >?F8>=0. 0?@8<5@, theta @02=0O -0.12 >7=0G05B, GB> F5=0 >?F8>=0 1C45B A=860BLAO =0 12 F5=B>2 2 45=L. @C1K9 @0AG5B BMBK <>65B 1KBL ?@>872545= ?CB5< 45;5=8O 2@5<5==>9 AB>8<>AB8 >?F8>=0 =0 G8A;> 4=59 4> 40BK 8AB5G5=8O. "MB0 4>;3>A@>G=KE >?F8>=>2 1;87:0 : 0. @0B:>A@>G=K5 >?F8>=K, >A>15==> >?F8>=K "?@8 45=L30E", 8<5NB <0:A8<0;L=K5 01A>;NB=K5 7=0G5=8O BMBK. Time decay - "@07@CH5=85 2@5<5=5<" - ?>AB5?5==>5 C<5=LH5=85 AB>8<>AB8 >?F8>=0 (?@5<88) A B5G5=85< 2@5<5=8. Underlying - 107>2K9 0:B82 - 0:B82, ;560I89 2 >A=>25 >?F8>=0. Valuation date - 40B0 >F5=:8 - 40B0, =0 :>B>@CN 0=0;878@C5BAO A>AB>O=85 ?>78F88 A F5;LN >?@545;5=8O B5>@5B8G5A:>9 ?@81K;8 8;8 C1KB:>2. Variant - @07=>284=>ABL - AB@0B538O, ?@>872>4=0O >B B8?8G=>9 >?F8>==>9 AB@0B5388, 8<5NI0O B5 65 E0@0:B5@8AB8:8 ?>B5=F80;L=>9 ?@81K;8 8 C1KB:>2, GB> 8 ?5@2>=0G0;L=0O AB@0B538O, => A>740==0O A ?><>ILN 8=KE D8=0=A>2KE 8=AB@C<5=B>2. Vega - :>MDD8F85=B "2530" - 87<5@O5B GC2AB28B5;L=>ABL @0AAG8BK205<>9 F5=K >?F8>=0 : =57=0G8B5;L=K< 87<5=5=8O< 2 AB5?5=8 F5=>2>9 =5CAB>9G82>AB8 (2>;0B8;L=>AB8). 5;8G8=0 ?@5<88 ?> >?F8>=C 8 2>;0B8;L=>ABL 107>2KE 0:F89 87<5=ONBAO 2 >4=>< =0?@02;5=88. 530 ?@8=8<05B <0:A8<0;L=>5 7=0G5=85 4;O >?F8>=>2 "?@8 45=L30E" (C :>B>@KE F5=0 AB@09: A>2?0405B A B5:CI59 F5=>9 107>2KE 0:F89) 8 AB@5<8BAO : 0 4;O >?F8>=>2 "3;C1>:> 2 45=L30E" 8;8 "3;C1>:> 2=5 45=53". Vertical Spread - 25@B8:0;L=K9 A?@M4 - >?F8>==0O AB@0B538O, >A=>20==0O =0 >4=>2@5<5==>9 ?>:C?:5 8 ?@>4065 >48=0:>2>3> G8A;0 >?F8>=>2 >4=>3> :;0AA0 A @07=K<8 F5=0<8 8 >48=0:>2>9 40B>9 8A?>;=5=8O 2 @0AG5B5 =0 ?>;CG5=85 ?@81K;8 =0 @07=8F5 2 ?@5<8OE.  25@B8:0;L=K< A?@M40< >B=>AOBAO 1KG89 4515B>2K9 :>;; A?@M4, <5425689 4515B>2K9 ?CB A?@M4 8 8E @07=>284=>AB8. Volatility - 2>;0B8;L=>ABL, AB5?5=L =5CAB>9G82>AB8 F5=K - ?>:070B5;L A:>@>AB8 8 0<?;8BC4K 87<5=5=8O @K=>G=>9 F5=K. Writing an Option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cO A?>A>1=>ABLN 705<I8:0 A2>52@5<5==> 2K?>;=OBL A2>8 >1O70B5;LAB20 ?> 2K?;0B5 ?@>F5=B>2 2 ?5@8>4 A@>:0 >1@0I5=8O >1;830F89 8 2>72@0BC >A=>2=>9 AC<<K 709<0 ?> =0ABC?;5=88 40BK ?>30H5=8O (maturity date). F5=:0 :0G5AB25==>3> C@>2=O >1;830F89 >ACI5AB2;O5BAO A?5F80;L=K<8 @59B8=3>2K<8 035=BAB20<8, A@548 :>B>@KE =081>;LHCN 8725AB=>ABL ?>;CG8;8 Standard & Poor's 8 Moody's Investors Service Inc. ;O >?@545;5=8O @59B8=30 M<8B5=B0 >=8 ?@>2>4OB A>>B25BAB2CNI85 8AA;54>20=8O, BI0B5;L=> 87CG0NB 53> D8=0=A>2>5 ?>;>65=85 8 A>AB>O=85 C65 ACI5AB2CNI59 704>;65==>AB8, >F5=820NB C@>25=L 1C4CI8E 4>E>4>2, :>B>@K5 ?>94CB =0 ?>30H5=85 >1;830F89, ?@>2>4OB A@02=5=85 45OB5;L=>AB8 M<8B5=B0 A 45OB5;L=>ABLN 53> :>=:C@5=B>2. ;02=0O 7040G0 @59B8=3>2KE A;C61 - ?@54C?@548BL 8=25AB>@0 > ?>B5=F80;L=>< @8A:5, A :>B>@K< A2O70=0 ?>:C?:0 4>;3>2KE >1O70B5;LAB2 B>3> 8;8 8=>3> 705<I8:0. PRIVATEMoody'sStandard & Poor's">;:>20=85AaaAAAKAH0O AB5?5=L =0456=>AB8, <8=8<0;L=K9 @8A:. $8=0=A>2>5 ?>;>65=85 M<8B5=B0 AB018;L=> 8 70A;C68205B 4>25@8OAaAAKA>:0O =0456=>ABL, => AB5?5=L @8A:0 2 4>;3>A@>G=>< ?5@8>45 =5A:>;L:> 1>;LH5AA0456=>ABL 2KH5 A@54=53>, D8=0=A>2>5 ?>;>65=85 M<8B5=B0 8<55B <=>3> A8;L=KE AB>@>=, => ACI5AB2C5B =5:>B>@0O CO728<>ABL ?5@54 87<5=5=8O<8 @K=>G=>9 :>=JN=:BC@KBaaBBB!@54=OO AB5?5=L =0456=>AB8, CAB>9G82>ABL M<8B5=B0 =5A><=5==0 2 =0AB>OI89 <><5=B, => <>65B AB0BL =5>G5284=>9 2 4>;3>A@>G=>< ?5@8>45BaBB@8ACBAB2C5B M;5<5=B A?5:C;OB82=>AB8, =0456=>ABL >F5=8205BAO :0: C<5@5==0O, => =5 30@0=B8@>20==0OBB-<8B5=B ?;0B565A?>A>15= 2 =0AB>OI89 <><5=B, => ACI5AB2C5B @8A: 45D>;B0 2 1C4CI5<CaaCCC87:0O =0456=>ABL, >G5284=0O >?0A=>ABL 45D>;B0Ca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high-yield bonds). @8A2>5==K9 @59B8=3 =5 5ABL =587<5==0O 40==>ABL, 8 >4=0 87 >?0A=>AB59, A :>B>@>9 <>3CB AB>;:=CBLAO 45@60B5;8 >1;830F89 - A=865=85 @59B8=3>2>9 :><?0=859 >F5=:8 =0456=>AB8 4>;3>2KE >1O70B5;LAB2. "0: ?>O2;ONBAO "?04H85 0=35;K" ("fallen angel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investment grade bonds" (=0456=K5 1C<038 8=25AB8F8>==>3> C@>2=O) 4> "junk bonds" ("<CA>@=K5 >1;830F88", M<8B5=B :>B>@KE AC;8B 7=0G8B5;L=CN 4>E>4=>ABL, => =5 <>65B 2 :0G5AB25 30@0=B88 ?@54AB028BL 4065 A2>N 8AB>@8N 8;8 @5?CB0F8N, ?>MB><C @8A: ?>B5@8, ?@8=8<05<K9 =0 A51O 8=25AB>@>< 2 MB>< A;CG05, >G5=L 25;8:).  B> 65 2@5<O 4>E>4=>ABL ?> :>@?>@0B82=K< >1;830F8O< ?@52KH05B 4>E>4=>ABL ?> 3>AC40@AB25==K< 8;8 <C=8F8?0;L=K< >1O70B5;LAB20<. ><8=0; :>@?>@0B82=KE >1;830F89 A>AB02;O5B G0I5 2A53> 1000 4>;;0@>2, 0 ?@>F5=B=K5 ?;0B568 >ACI5AB2;ONBAO @07 2 ?>;3>40. ?@545;ONI8< >1AB>OB5;LAB2>< ?@8 >F5=:5 =0456=>AB8 :>@?>@0B82=KE >1;830F89 O2;O5BAO 8E >15A?5G5==>ABL 0:B820<8 :><?0=88-M<8B5=B0. Collateral trust bonds - >1O70B5;LAB20, >15A?5G5==K5 D8=0=A>2K<8 0:B820<8 :><?0=88. Convertible bonds - :>=25@B8@C5<K5 >1;830F88, :>B>@K5 40NB A2>5<C 45@60B5;N ?@02> >1<5=OBL 8E =0 4@C385 1C<038 (G0I5 2A53> >1K:=>25==K5 0:F88) B>3> 65 M<8B5=B0. Debentures - "4515=BC@K" - 4>;3>2K5 >1O70B5;LAB20, >15A?5G5==K5 G5AB=K< A;>2>< 8 4>1@K< 8<5=5< 705<I8:0. Equipment trust certificates - 4>;3>2K5 >1O70B5;LAB20, M<8B5=B0<8 :>B>@KE 2KABC?0NB B@0=A?>@B=K5 :><?0=88, 0 >15A?5G5=85< A;C60B B@0=A?>@B=K5 A@54AB20 (A0<>;5BK, 65;57=>4>@>6=K5 203>=K 8 B.?.). Guaranteed bonds - 30@0=B8@>20==K5 >1;830F88, ?>@CG8B5;5< ?> :>B>@K< 2KABC?05B =5 M<8B5=B, 0 B@5BL5 ;8F>. Income bonds - 4>E>4=K5 >1;830F88, ?@>F5=B ?> :>B>@K< 2K?;0G8205BAO ;8HL ?@8 CA;>288, GB> :><?0=8O-M<8B5=B 8<55B 4>AB0B>G=CN ?@81K;L. Junk (high-yield bonds) - "<CA>@=K5" >1;830F88 A>G5B0NB >15I0=85 2KA>:>9 4>E>4=>AB8 A 2KA>:8< @8A:>< =5?;0B560 A> AB>@>=K 705<I8:0. Mortgage bonds - >1;830F88, >15A?5G5==K5 8?>B5:>9 =0 75<5;L=K5 CG0AB:8 8;8 740=8O. Subordinated debentures - AC1>@48=8@>20==K5 >1;830F88 - 4>;3>2K5 >1O70B5;LAB20 A 1>;55 =87:8< AB0BCA>< ?> A@02=5=8N A 4@C38<8 1C<030<8 705<I8:0 8 2 A;CG05 10=:@>BAB20 >?;0G820NBAO M<8B5=B>< 2> 2B>@CN >G5@54L. @54;>65=85 :>@?>@0B82=KE >1;830F89 G0I5 2A53> >ACI5AB2;O5BAO ?> AE5<5 ?5@28G=>3> ?C1;8G=>3> @07<5I5=8O (initial public offering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risk/reward ratio). 0AG5B 4>E>4=>AB8 "5:CI0O 4>E>4=>ABL (current yield) >1;830F88 @0AAG8BK205BAO 45;5=85< 3>4>2>3> :C?>=0 (D8:A8@>20==>3> ?@>F5=B=>3> ?;0B560) =0 B5:CICN @K=>G=CN F5=C >1;830F88. >340 >1;830F8O ?>:C?05BAO ?> A2>59 =><8=0;L=>9 AB>8<>AB8, 55 4>E>4=>ABL A>2?0405B A :C?>==>9 AB02:>9. >E>4=>ABL 8 F5=0 2A5340 4286CBAO 2 ?@>B82>?>;>6=KE =0?@02;5=8OE. &5=0 - 3;02=K9 :>@@5:B8@CNI89 8=AB@C<5=B, ?@82>4OI89 4>E>4=>ABL >1;830F88 2 A>>B25BAB285 A >1I8< C@>2=5< ?@>F5=B=KE AB02>: =0 @K=:5. >B, =0?@8<5@, :0: <5=O5BAO B5:CI0O 4>E>4=>ABL >1;830F88 =><8=0;>< 2 1000 4>;;0@>2 A :C?>==>9 AB02:>9 8%: 1.  A;CG05 ?>:C?:8 ?> =><8=0;L=>9 F5=5, B5:CI0O 4>E>4=>ABL A>AB02;O5B $80 (3>4>2>9 ?@>F5=B) / $1000 (F5=0 ?>:C?:8) E 100% = 8%; 2.  A;CG05 ?>:C?:8 >1;830F88 A 48A:>=B>< ?> F5=5 $800, B5:CI0O 4>E>4=>ABL A>AB02;O5B $80 / $800 E 100% = 10%; 3.  A;CG05 ?>:C?:8 >1;830F88 A ?@5<859 ?> F5=5 $1200, B5:CI0O 4>E>4=>ABL A>AB02;O5B $80 / $1200 E 100% = 6 2/3%. > =081>;55 B>G=K< ?>:070B5;5< 4>E>40, :>B>@K9 ?>;CG8B 45@60B5;L >1;830F88, O2;O5BAO 4>E>4=>ABL : ?>30H5=8N (yield to maturity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unis 2K?CA:0NBAO HB0B0<8 8 <5AB=K<8 >@30=0<8 2;0AB8. 4=> 87 8E >A=>2=KE >B;8G8B5;L=KE ?@58<CI5AB2 - =0;>3>2K5 ;L3>BK: ?@>F5=B=K5 2K?;0BK ?> <C=8F8?0;L=K< >1;830F8O< =5 >1;030NBAO D545@0;L=K< ?>4>E>4=K< =0;>3><. @><5 B>3>, 5A;8 45@60B5;L >1;830F89 O2;O5BAO @57845=B>< B>3> 65 HB0B0, 345 70@538AB@8@>20= M<8B5=B >1;830F89, 53> ?@>F5=B=K9 4>E>4 >A2>1>6405BAO B0:65 >B <5AB=KE =0;>3>2. 1KG=> : ?>:C?:5 <C=8F8?0;L=KE >1;830F89 A F5;LN <8=8<870F88 =0;>3>2 ?@81530NB 8=25AB>@K, :>B>@K5 ?;0BOB ?>4>E>4=K9 =0;>3 ?> A0<>9 2KA>:>9 AB02:5. ;O 4@C38E 8=25AB>@>2 <C=8F8?0;L=K5 >1;830F88 A 8E =52KA>:>9 4>E>4=>ABLN =5 8<5NB >A>1KE ?@58<CI5AB2 2 :0G5AB25 >1J5:B0 2;>65=8O. ><8=0; <C=8F8?0;L=KE >1;830F89 >1KG=> A>AB02;O5B 5000 4>;;0@>2, 8 >1@0I0NBAO >=8 8A:;NG8B5;L=> =0 2=518@652>< @K=:5. !CI5AB2C5B 420 >A=>2=KE B8?0 <C=8F8?0;L=KE >1;830F89: 1;830F88 A >1I59 30@0=B859 (general obligation bonds), :>B>@K5 >15A?5G5=K @5?CB0F859 705<I8:0 8 53> =0;>3>2K<8 ?>;=><>G8O<8 (B.5. 30@0=B8@>20==K< 8AB>G=8:>< 4>E>4>2). 1;830F88 ?>4 4>E>4 (revenue bonds), :>B>@K5 M<8B8@CNBAO 4;O D8=0=A8@>20=8O >?@545;5==KE ?@>5:B>2 8 >15A?5G5=K ?>B5=F80;L=>9 A?>A>1=>ABLN MB8E ?@>5:B>2 ?@8=>A8BL 4>E>4 2 1C4CI5<. "0: :0: ?@>F5=B=K5 4>E>4K ?> <C=8F8?0;L=K< >1;830F8O< >A2>1>645=K >B =0;>3>2, 8E :C?>==K5 AB02:8 =0 =5A:>;L:> ?C=:B>2 =865 AB02>: A>?>AB028<KE ?> =0456=>AB8 :>@?>@0B82=KE >1;830F89. 064CN =545;N The Wall Street Journal ?C1;8:C5B =45:A <C=8F8?0;L=KE >1;830F89 (Municipal Bond Index), :>B>@K9 >B@0605B A@54=NN :C?>==CN AB02:C ?> 4>;3>A@>G=K< <C=8F8?0;L=K< >1;830F8O< 8=25AB8F8>==>3> C@>2=O. >AC40@AB25==K5 >1O70B5;LAB20 >AC40@AB25==K5 (D545@0;L=K5) F5==K5 1C<038 O2;ONBAO ?@O<K<8 >1O70B5;LAB20<8 ?@028B5;LAB20 !( 8 ?@54>AB02;ONB 8=25AB>@C <0:A8<0;L=CN A>E@0==>ABL 2;>65==>3> :0?8B0;0 8 2KA>:CN ;8:284=>ABL (H8@>:> @0728B 2B>@8G=K9 @K=>: 3>AC40@AB25==KE 1C<03, 18@652>9 8 2=518@652>9). >E>4K ?> D545@0;L=K< >1;830F8O< >A2>1>645=K >B <5AB=KE =0;>3>2 8 =0;>3>2 HB0B>2. "0: :0: 3>AC40@AB25==K5 1C<038 AG8B0NBAO A0<K<8 =0456=K<8 D8=0=A>2K<8 8=AB@C<5=B0<8, 4>E>4=>ABL ?> =8< A0<0O =87:0O 2 A@02=5=88 A 4@C38<8 4>;3>2K<8 >1O70B5;LAB20<8. @028B5;LAB2> M<8B8@C5B A;54CNI85 >1O70B5;LAB20 (A 1986 3. >=8 ACI5AB2CNB B>;L:> 2 M;5:B@>==>< 2845: 07=0G59A:85 25:A5;O (Treasury bills, T-bills) - :@0B:>A@>G=K5 48A:>=B=K5 1C<038, ?@>40205<K5 =0 :>=:C@A=>9 >A=>25 (4;O 3-E 8 6-B8 <5AOG=KE 25:A5;59 0C:F8>=K ?@>2>4OBAO :064CN =545;N, 4;O 25:A5;59 A> A@>:>< ?>30H5=8O G5@57 1 3>4 - @07 2 <5AOF.) 8=8<0;L=K9 =><8=0; - 1000 4>;;0@>2. 07=0G59A:85 18;5BK (Treasury notes)- A@54=5A@>G=K5 >1O70B5;LAB20 A> A@>:0<8 ?>30H5=8O >B 1 4> 10 ;5B. 8=8<0;L=K9 =><8=0; - 1000 4>;;0@>2. @>F5=B=K5 ?;0B568 >ACI5AB2;ONBAO @07 2 ?>;3>40. @028B5;LAB25==K5 >1;830F88 (Treasury bonds) - 4>;3>A@>G=K5 1C<038 A> A@>:0<8 ?>30H5=8O >B 10 4> 30 ;5B. "@84F0B8;5B=85 >1;830F88 O2;ONBAO >4=8< 87 206=59H8E >@85=B8@>2 D>=4>2>3> @K=:0 (benchmark or bellwether bonds) 8 2K?CA:0NBAO B@864K 2 3>4, 2 D52@0;5, 023CAB5 8 =>O1@5. =25AB>@K, :>B>@K5 =5 65;0NB B@0B8BLAO =0 :><8AA8>==K5 1@>:5@0< 8;8 8=K< ?>A@54=8:0<, <>3CB :C?8BL 3>AC40@AB25==K5 >1O70B5;LAB20 =0?@O<CN C 07=0G59AB20 G5@57 A8AB5<C Treasury Direct. ;O MB>3> =5>1E>48<> 70?>;=8BL 70O2:C =0 >B:@KB85 ?5@A>=0;L=>3> AG5B0 2 07=0G59AB25, :>B>@CN <>6=> ?>;CG8BL 2 @538>=0;L=>< @575@2=>< 10=:5. 07=0G59AB2> @538AB@8@C5B 2A5 A45;:8 ?> AG5BC 8 70G8A;O5B =0 =53> ?@>F5=BK 8 >A=>2=CN AC<<C 709<0 ?> =0ABC?;5=88 40BK ?>30H5=8O. ACI5AB2;5=85 B@0=70:F89 2>7<>6=> ?> B5;5D>=C 8;8 ?> ?>GB5. &5=K =0 3>AC40@AB25==K5 F5==K5 1C<038 C:07K20NBAO :0: bid 8 asked. ><8=0; 2 1000 4>;;0@>2 ?@8=8<05BAO 70 100 ?C=:B>2, <8=8<0;L=>5 87<5=5=85 F5=K A>AB02;O5B 1/32 ?C=:B0 8;8 31.25 F5=B>2. 0?@8<5@, 5A;8 >1;830F8O =><8=0;>< 1000 4>;;0@>2 ?@>405BAO ?> 100:02 (8;8 100+2/32), F5=0 ?@>4068 A>AB02;O5B 1,000.62 4>;;0@>2.  B01;8F0E > @57C;LB0B>2 B>@3>2 ?> :07=0G59A:8< 25:A5;O< F5=K A?@>A0 8 ?@54;>65=8O C:07K20NBAO 2 2845 AB02>: 48A:>=B0. 5:>B>@K<8 >B;8G8O<8 >B 2KH5?5@5G8A;5==KE ?@O<KE ?@028B5;LAB25==KE >1O70B5;LAB2 >1;040NB A15@530B5;L=K5 >1;830F88 (savings bonds) - >1;830F88 =0 ?@54JO28B5;O, :>B>@K5 =5 >1@0I0NBAO =0 @K=:5 8 @50;87CNBAO 07=0G59AB2>< =0?@O<CN 8=25AB>@0<. 5@60B5;8 A15@530B5;L=KE >1;830F89 <>3CB A>E@0=OBL 8E 4> :>=F0 A@>:0 >1@0I5=8O 8;8 2>A?>;L7>20BLAO ?@02>< 4>A@>G=>3> ?>30H5=8O, ?@>4060 A15@530B5;L=KE >1;830F89 4@C38< 8=25AB>@0< =52>7<>6=0. !15@530B5;L=K5 >1;830F88 A5@88  ?@>40NBAO 07=0G59AB2>< A 50%-==K< 48A:>=B><, 8 ?> =8< 2K?;0G8205BAO ?@>F5=B, :>B>@K9 ?>;CG05BAO 8=25AB>@>< 2 <><5=B ?>30H5=8O 2<5AB5 A =><8=0;><. 0==K5 >1;830F88 ?>:C?0NBAO >1KG=> A5<LO<8 A 45BL<8 4>H:>;L=>3> 2>7@0AB0 A F5;LN ?@8>1@5B5=8O @07;8G=KE =0;>3>2KE ;L3>B (2 2845 >B;>65==KE =0;>3>2KE ?;0B5659). !5@8O  ?>;L7C5BAO <5=LH59 8725AB=>ABLN 8 ?>?C;O@=>ABLN. 1;830F88 40==>9 A5@88 ?@>40NBAO ?> =><8=0;C 8 ?@54;030NB ?>;C3>4>2K5 ?@>F5=B=K5 2K?;0BK. 48=AB25==K9 A?>A>1 8E ?@8>1@5B5=8O - >1<5= =0 A15@530B5;L=K5 >1;830F88 A5@88 . 0==0O >?5@0F8O ?>72>;O5B 8=25AB>@0< >B;>68BL A2>N =0;>3>2CN >B25BAB25==>ABL =0 5I5 1>;55 ?>74=89 A@>:. !15@530B5;L=K5 >1;830F88 >A2>1>645=K >B 2A5E <5AB=KE =0;>3>2. -<8B5=B>< >1;830F89 <>3CB 2KABC?0BL B0:65 ?@028B5;LAB25==K5 035=BAB20 8 3>AC40@AB25==K5 >@30=870F88. !@548 A0<KE 8725AB=KE 4>;3>2KE >1O70B5;LAB2 D545@0;L=KE 035=BAB2 (agency bonds) - >1;830F88, >15A?5G5==K5 70:;04=K<8 (mortgage-backed bonds), :>B>@K5 ?@54AB02;ONB A>1>9 CG0AB85 2 8?>B5G=>< ?C;5. @81K;L ?> 70:;04=K<, A;C60I8< >15A?5G5=85< 2K?CA:0, 8A?>;L7C5BAO 4;O >ACI5AB2;5=8O 2K?;0B 8=25AB>@0< ?@>F5=B>2 8 >A=>2=>9 AC<<K 709<0 Ginnie Maes (GNMAs) - >1;830F88, M<8B5=B>< :>B>@KE 2KABC?05B @028B5;LAB25==0O =0F8>=0;L=0O 8?>B5G=0O 0AA>F80F8O (Government National Mortgage Association). Freddie Macs (FHLMCs) - >1;830F88, M<8B8@>20==K5 $545@0;L=>9 :>@?>@0F859 68;8I=>3> 8?>B5G=>3> :@548B>20=8O (Federal Home Loan Mortgage Corporation). Fannie Maes (FNMAs) - 4>;3>2K5 >1O70B5;LAB20 $545@0;L=>9 =0F8>=0;L=>9 8?>B5G=>9 0AA>F80F88 (Federal National Mortgage Association). > >1;830F8O< ?@028B5;LAB25==KE 035=BAB2 2K?;0G8205BAO 1>;55 2KA>:89 ?@>F5=B ?> A@02=5=8N A ?@O<K<8 >1O70B5;LAB20<8 ?@028B5;LAB20 (Treasuries), E>BO 8E =0456=>ABL ?>GB8 =8 2 G5< =5 CABC?05B ?>A;54=8<. @820O 4>E>4=>AB8 B0:, >1;830F88 A @07;8G=K<8 A@>:0<8 ?>30H5=8O 8<5NB @07=K5 4>E>4=>AB8. =25AB>@K 8A?>;L7CNB 3@0D8G5A:CN 8=B5@?@5B0F8N 7028A8<>AB8 C@>2=O ?@>F5=B=KE AB02>: >B D0:B>@0 2@5<5=8 4;O ?@>3=>78@>20=8O M:>=><8G5A:>9 :>=JN=:BC@K 8 1C4CI53> ?>2545=8O D>=4>2>3> @K=:0. 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Balanced funds - A10;0=A8@>20==K5 D>=4K - 2708<=K5 D>=4K, ?>@BD5;L :>B>@KE 4825@A8D8F8@>20= 70 AG5B 2;>65=89 2 >?@545;5==KE ?@>?>@F8OE 2 @07;8G=K5 D8=0=A>2K5 8=AB@C<5=BK. Bankers Acceptance (BA) - 10=:>2A:89 0:F5?B - 2KA>:>;8:284=K9 8=AB@C<5=B 45=56=>3> @K=:0, ?@54AB02;ONI89 A>1>9 0:F5?B>20==K9 10=:>< 25:A5;L, 2KAB02;5==K9 =0 10=: 8<?>@B5@><. '0AB> 8A?>;L7C5BAO 2 D8=0=A8@>20=88 2=5H=59 B>@3>2;8. Beta value - :>MDD8F85=B "15B0", E0@0:B5@87CNI89 2>;0B8;L=>ABL D>=40. '5< =865 15B0, B5< <5=LH89 @8A: =5ACB 2 A515 8=25AB8F88 2> 2708<=K9 D>=4. Blue-chip stocks - "3>;C1K5 D8H:8" - ?5@2>:;0AA=K5 0:F88 A>;84=KE :><?0=89, ?> :>B>@K< ?5@8>48G5A:8 2K?;0G820NBAO 482845=4K. Bond - >1;830F8O - 4>;3>2>5 >1O70B5;LAB2>, M<8B8@>20==>5 =0 >?@545;5==KE CA;>28OE 2 F5;OE ?@82;5G5=8O 4>?>;=8B5;L=KE D8=0=A>2KE @5AC@A>2. Callable - 4>A@>G=> ?>30H05<>5 4>;3>2>5 >1O70B5;LAB2>. Capital appreciation funds - D>=4K ?@8@0I5=8O :0?8B0;0 - 2708<=K5 D>=4K, >@85=B8@>20==K5 =0 <0:A8<0;L=K9 @>AB. "> 65, GB> 8 D>=4K 03@5AA82=>3> @>AB0. Capital gains -?@8@>AB :0?8B0;0 - ?@81K;L, @50;87>20==0O ?@8 ?@>4065 F5==KE 1C<03. Certificates of Deposit (CDs) - 45?>78B=K5 A5@B8D8:0BK - 8=AB@C<5=B 45=56=>3> @K=:0, ?@54AB02;ONI89 A>1>9 >1@0I0NICNAO F5==CN 1C<03C =0 ?@54JO28B5;O, A2845B5;LAB2CNICN > =0;8G88 A@>G=>3> 10=:>2A:>3> 45?>78B0 =0 =5:>B>@CN AC<<C. -<8B8@CNBAO 10=:0<8. Certified Financial Planner (CFP) - 48?;><8@>20==K9 A?5F80;8AB ?> D8=0=A>2><C ?;0=8@>20=8N (1N465B8@>20=85, =0;>3>>1;>65=85, A15@565=8O, AB@0E>20=85). Check-a-month plan - ?@>3@0<<0, ?> :>B>@>9 45=L38 02B><0B8G5A:8 A=8<0NBAO A B5:CI53> AG5B0 8 8=25AB8@CNBAO 2> 2708<=K9 D>=4 ?> 20H5<C 2K1>@C. Closed-end funds - 70:@KBK5 D>=4K - D>=4K, 1C<038 :>B>@KE B>@3CNBAO =0 18@65 :0: >1KG=K5 0:F88. &5=0 0:F88 D>=40 >1KG=> =5 @02=0 G8AB>9 AB>8<>AB8 0:B82>2 =0 0:F8N. Commercial paper -:><<5@G5A:0O 1C<030 - =5>15A?5G5==K5 A2>1>4=> >1@0I0NI85AO >1O70B5;LAB20, 8A?>;L7C5<K5 :>@?>@0F8O<8 8 10=:0<8 4;O :@0B:>A@>G=KE 708<AB2>20=89 8;8 8=25AB8F89 2@5<5==> A2>1>4=KE 45=56=KE A@54AB2. Common stock - >1K:=>25==0O 0:F8O - F5==0O 1C<030, ?>4B25@640NI0O 4>;52>5 CG0AB85 A2>53> 45@60B5;O 2 :0?8B0;5 0:F8>=5@=>9 :><?0=88 8 40NI0O 5<C ?@02> 3>;>A0 =0 A>1@0=88 0:F8>=5@>2 8 ?@02> =0 ?>;CG5=85 G0AB8 4>E>40 2 2845 482845=4>2.  H:0;5 >G5@54=>AB8 2K?;0B ?@8 ;8:2840F88 :><?0=88 >1K:=>25==K5 0:F88 CABC?0NB ?@828;538@>20==K< 0:F8O< 8 >1;830F8O<. Constant dollar investing - 8=25AB8F8>==0O AB@0B538O, ?@54CA<0B@820NI0O A>E@0=5=85 ?@81K;8 G5@57 ?5@8>48G5A:CN >F5=:C 8 :>@@5:B8@>2:C ?>@BD5;O. K ?>445@68205B5 >?@545;5==K9 @07<5@ AC<<K, 8=25AB8@>20==>9 2 D>=4 0:F89, ?CB5< 2;>65=8O 8;8 87K<0=8O A@54AB2 2/87 D>=4>2 >1;830F89 8;8 D>=4>2 45=56=>3> @K=:0. Convertible bond funds - D>=4K :>=25@B8@C5<KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 >1;830F88, :>B>@K5 <>3CB 1KBL :>=25@B8@>20=K 2 0:F88 B>3> 65 M<8B5=B0. Custodian - D8=0=A>2K9 035=B-E@0=8B5;L - 10=: 8;8 8=>5 D8=0=A>2>5 CG@5645=85, ?@8=8<0NI55 =0 E@0=5=85 F5==K5 1C<038 2708<=>3> D>=40. Distributions - @0A?@545;5=85 4>E>40 (482845=4>2 8 ?@8@>AB0 :0?8B0;0) 2708<=>3> D>=40 <564C ?09I8:0<8. Diversification - 4825@A8D8:0F8O - 8=25AB8@>20=85 2 @07;8G=K5 D8=0=A>2K5 8=AB@C<5=BK 2 F5;OE A=865=8O @8A:0. Dollar cost averaging - 8=25AB8F8>==0O AB@0B538O, ?@54CA<0B@820NI0O =0@0I820=85 2;>65=89 ?CB5< 8=25AB8@>20=8O =0 @53C;O@=>9 >A=>25 D8:A8@>20==>9 AC<<K.  4>;3>A@>G=>< ?5@8>45 40==K9 <5B>4 CA@54=5=8O F5=K ?>:C?:8/?@>4068 <>65B >:070BLAO MDD5:B82=K<. Equity income funds - D>=4K 4>E>40 ?> 0:F8O< - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 0:F88, ?> :>B>@K< 2K?;0G820NBAO @53C;O@=K5 8 AB018;L=K5 482845=4K. 0==K5 D>=4K <5=55 @8A:>20==K ?> A@02=5=8N A 4@C38<8 D>=40<8 0:F89. Ex-dividend date - 40B0 "8A:;NG0O 482845=4" - 40B0, :>340 0:F8O 2708<=>3> D>=40 B5@O5B ?@02> =0 ?>;CG5=85 G0AB8 4>E>40 2 2845 482845=40 8 4>;8 ?@8@0I5==>3> :0?8B0;0. >A;5 MB>9 40BK =>2K9 45@60B5;L 0:F88 =5 1C45B CG0AB2>20BL 2 @0A?@545;5=88 4>E>40. First In-First Out (FIFO) - <5B>4 >F5=:8 (4;O F5;59 =0;>3>>1;>65=8O) ?>@BD5;O F5==KE 1C<03 2 ?>@O4:5 8E ?>ABC?;5=8O, B.5. ?>4@07C<5205BAO, GB> :C?;5==K5 @0=LH5 1C<038 ?@>40NBAO ?5@2K<8. Fixed-income fund - D>=4 D8:A8@>20==>3> 4>E>40 - B> 65, GB> 8 2708<=K9 D>=4 >1;830F89. Front-end loads - @07>2K9 :><8AA8>==K9 A1>@, 278<05<K9 8=25AB>@>< ?@8 ?>:C?:5 0:F89 2708<=>3> D>=40. General purpose money funds - >1I5F5;52K5 45=56=K5 D>=4K - 2708<=K5 D>=4K, 8=25AB8@CNI85 A2>8 0:B82K 2 >A=>2=>< 2 45?>78B=K5 A5@B8D8:0BK 8 :@0B:>A@>G=K5 :><<5@G5A:85 1C<038. Global funds - 3;>10;L=K5 D>=4K - 2708<=K5 D>=4K, 8=25AB8@CNI85 :0: 2 0<5@8:0=A:85, B0: 8 8=>AB@0==K5 F5==K5 1C<038. "> 65, GB> 8 <8@>2K5 D>=4K. Government-only money funds - ?@028B5;LAB25==K5 45=56=K5 D>=4K - 2708<=K5 D>=4K, 2:;04K20NI85 A2>8 0:B82K 2 :07=0G59A:85 25:A5;O 8 :@0B:>A@>G=K5 >1O70B5;LAB20 ?@028B5;LAB20 !(. 5ACB =08<5=LH89 @8A: A@548 45=56=KE D>=4>2, ?>B><C GB> 8E 2;>65=8O >15A?5G5=K 30@0=B859 ?@028B5;LAB20. Growth funds - D>=4K @>AB0 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 0:F88 ?5@A?5:B82=KE A B>G:8 7@5=8O @>AB0 8 ?@81K;L=>AB8 :><?0=89. Growth and income funds - D>=4K @>AB0 8 4>E>40 - 2708<=K5 D>=4K, >@85=B8@CNI85AO 3;02=K< >1@07>< =0 0:F88 ?5@2>:;0AA=KE :><?0=89, :>B>@K5 2K?;0G820NB A2>8< 0:F8>=5@0< E>@>H85 482845=4K. >@BD5;8 40==KE D>=4>2 >1KG=> A10;0=A8@>20=K <564C ?>B5=F80;>< ?@8@0I5=8O :0?8B0;0 8 ?>B5=F80;>< 482845=4=>3> 4>E>40. High-quality corporate bond funds - D>=4K 2KA>:>:;0AA=KE :>@?>@0B82=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 :>@?>@0B82=K5 >1;830F88, 8<5NI85 @59B8=3 8=25AB8F8>==>3> C@>2=O. High-yield bond funds - D>=4K 2KA>:>4>E>4=KE >1;830F89 - @8A:>2K5 2708<=K5 D>=4K >1;830F89, 8=25AB8@CNI85 2 2KA>:>4>E>4=K5 ("<CA>@=K5") >1;830F88 :><?0=89 A =87:8< :@548B=K< @59B8=3><. Income funds - D>=4K 4>E>40 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 0:F88, 40NI85 ?>AB>O==K9 482845=4=K9 4>E>4, 8 8=>340 2 >1;830F88. Inflation hedge - 8=D;OF8>==K9 E546 - D8=0=A>2K9 8=AB@C<5=B, 8A?>;L7C5<K9 4;O 70I8BK >B ?>B5@L 2 @57C;LB0B5 8=D;OF8>==>3> >15AF5=5=8O. Installment investment strategy - 8=25AB8F8>==0O AB@0B538O, ?@54CA<0B@820NI0O @0A?@545;5=85 2;>65=89 <564C =5A:>;L:8<8 2708<=K<8 D>=40<8 8 A>25@H5=85 =>2KE 2;>65=89 2 D>=4K, ?>:07K20NI85 =08;CGH85 @57C;LB0BK. Insured municipal bond funds - D>=4K 30@0=B8@>20==KE <C=8F8?0;L=KE >1;830F89. @>F5=B=K9 4>E>4 >A2>1>6405BAO >B =0;>3>2, 0 A0<8 >1;830F88 70AB@0E>20=K >B 45D>;B0 :@C?=59H8<8 AB@0E>2K<8 :><?0=8O<8, B0:8<8 :0: American Municipal Pond Assurance Corp. (AMRAC) 8 Municipal Bond Insurance Association (MBIA). Intermediate-term bond funds -D>=4K A@54=5A@>G=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 >1;830F88 A> A@>:>< ?>30H5=8O 5 - 10 ;5B. International funds - <564C=0@>4=K5 D>=4K - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 0:F88 8 >1;830F88 70@C156=KE :><?0=89. Investment company - 8=25AB8F8>==0O :><?0=8O - :><?0=8O, :>B>@0O 70 2>7=03@0645=85 8=25AB8@C5B 2 F5==K5 1C<038 >1J548=5==K5 2 ?C; A@54AB20 <5;:8E 8=25AB>@>2 2 A>>B25BAB288 A 70O2;5==>9 8=25AB8F8>==>9 F5;LN. Investment objective - 8=25AB8F8>==0O F5;L - F5;L, =0 4>AB865=85 :>B>@>9 =0?@02;5=0 8=25AB8F8>==0O AB@0B538O 2708<=>3> D>=40. Junk bond funds - B> 65, GB> 8 high-yield bond funds. Long-term bond funds - D>=4K 4>;3>A@>G=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 >1;830F88 A> A@>:>< ?>30H5=8O 1>;55 G5< 10 ;5B. Management fee - :><8AA8O 70 C?@02;5=85 - ?;0B0, 278<05<0O 2708<=K< D>=4>< 70 C?@02;5=85 8=25AB8F8O<8. Market timing - ?>?KB:0 >?@545;8BL >?B8<0;L=K9 <><5=B 4;O ?>:C?:8 8 ?@>4068 D8=0=A>2KE 8=AB@C<5=B>2 =0 >A=>25 0=0;870 @K=>G=KE CA;>289. Maturity date - 40B0 ?>30H5=8O. Money market mutual fund - D>=4K 45=56=>3> @K=:0 - 2708<=K5 D>=4K, 8=25AB8@CNI85 3;02=K< >1@07>< 2 :@0B:>A@>G=K5 3>AC40@AB25==K5 8 :>@?>@0B82=K5 >1O70B5;LAB20 8 45?>78B=K5 A5@B8D8:0BK. 0==K5 D>=4K E0@0:B5@87CNBAO <5=LH8< 4>E>4><, => 8 <5=LH8< @8A:>< ?> A@02=5=8N A 4@C38<8 B8?0<8 2708<=KE D>=4>2. "> 65, GB> 8 money funds (45=56=K5 D>=4K). Municipal bond funds - 2708<=K5 D>=4K <C=8F8?0;L=KE >1;830F89. Net asset value - G8AB0O AB>8<>ABL 0:B82>2 - AB>8<>ABL 8=25AB8F89 D>=40 2 @0AG5B5 =0 >4=C 0:F8N. "> 65, GB> 8 F5=0 0:F88. No-load mutual fund - 2708<=K9 D>=4 "157 =03@C7:8"- >B:@KBK9 2708<=K9 D>=4, ?@>40NI89 A2>8 0:F88 =0?@O<CN 8=25AB>@0< 157 278<0=8O :><8AA88. Note - A@54=5A@>G=0O >1;830F8O. No-transaction fee account - AG5B 157 :><8AA88 - AG5B, ?> :>B>@><C 1@>:5@A:0O D8@<0 =5 278<05B A :;85=B0 :><8AA8>==>5 2>7=03@0645=85 ?@8 ?>:C?:5 =5:>B>@KE 2708<=KE D>=4>2 8;8 278<05B ?>=865==CN :><8AA8N. Open-end funds - >B:@KBK9 2708<=K9 D>=4 - 2708<=K9 D>=4, :>B>@K9 <>65B ?>AB>O==> 2K?CA:0BL =>2K5 0:F88, ?@>4020BL 8E 8=25AB>@0< ?> F5=5 G8AB>9 AB>8<>AB8 0:B82>2 8 2K:C?0BL >1@0B=> (?>30H0BL). Over-the-counter (OTC) market - 2=518@652>9 @K=>: - @K=>: F5==KE 1C<03, =5 :>B8@CNI8EAO =0 18@65. !45;:8 70:;NG0NBAO ?> B5;5D>=C, :><?LNB5@=K< A5BO< 8 B5;5:AC. Portfolio manager - ?>@BD5;L=K9 <5=5465@ - ;8F>, >B25BAB25==>5 70 8=25AB8F88 2708<=>3> D>=40. Precious metals mutual fund - D>=4 4@03>F5==KE <5B0;;>2 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 4@03>F5==K5 <5B0;;K 8 1C<038 4>1K20NI8E :><?0=89. Preferred stock - ?@828;538@>20==K5 0:F88 - 0:F88, :>B>@K5 >1;040NB ?@58<CI5AB2>< ?5@54 >1K:=>25==K<8 0:F8O<8 ?@8 2K?;0B5 482845=4>2 8 ?@8 ;8:2840F88 :><?0=88. Principal - 1) >A=>2=0O AC<<0 4>;30; 2) ?5@2>=0G0;L=>5 2;>65=85. Prospectus - ?@>A?5:B - 4>:C<5=B, @0A:@K20NI89 >A=>2=CN 8=D>@<0F8N > :><?0=88 8 CA;>28O ?@54;>65=8O F5==KE 1C<03, :>B>@K9 =5>1E>48<> ?@54AB028BL =0 @0AA<>B@5=85 2 ><8AA8N ?> F5==K< 1C<030< 8 18@60<. Rebalancing - ?>2B>@=0O 10;0=A8@>2:0 - 8=25AB8F8>==0O AB@0B538O, ?@54CA<0B@820NI0O ?5@8>48G5A:CN ?5@5AB@>9:C ?>@BD5;O 2 F5;OE ?@82545=8O 53> A>AB02;ONI8E : ?5@2>=0G0;L=>9 ?@>?>@F88. Regional funds - @538>=0;L=K5 D>=4K - 2708<=K5 D>=4K, A?5F80;878@CNI85AO =0 8=25AB8F8OE 2 >?@545;5==K9 @538>=. Registered representative - 70@538AB@8@>20==K9 ?@54AB028B5;L - A>B@C4=8: 1@>:5@A:>9 D8@<K, 8<5NI89 ;8F5=78N =0 >?5@0F88 A F5==K<8 1C<030<8. Risk tolerance - A:;>==>ABL : @8A:C - 2 <0B5@80;L=>< 2K@065=88 AC<<0, :>B>@CN 2K <>65B5 A515 ?>72>;8BL 1571>;57=5==> ?>B5@OBL. Salary reduction plan or 401(k) plan - ?;0= A>:@0I5=8O 70@01>B=>9 ?;0BK - ?5=A8>==K9 ?;0=, 2 @0<:0E :>B>@>3> 87 70@01>B=>9 ?;0BK @01>B=8:0 4> =0;>3>>1;>65=8O C45@68205BAO >?@545;5==K9 ?@>F5=B 4;O 8=25AB8@>20=8O 2> 2708<=K5 D>=4K. 02=>7=0G=> 8=25AB8@>20=8N A >BA@>G:>9 C?;0BK =0;>3>2. Secondary market - 2B>@8G=K9 @K=>: - @K=>:, =0 :>B>@>< >1@0I0NBAO C65 M<8B8@>20==K5 F5==K5 1C<038. Short-term bond funds - D>=4K :@0B:>A@>G=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 >1;830F88 A> A@>:>< ?>30H5=8O <5=55 3 3>40. Simplified Employee Pension Plan (SEP) - C?@>I5==K9 ?5=A8>==K9 ?;0= - ?5=A8>==0O ?@>3@0<<0, ?@54CA<0B@820NI0O 8=25AB8F88 A >B;>65==K<8 =0;>3>2K<8 ?;0B560<8 4;O A0<>70=OBKE ;N459. Single-country funds - AB@0=>2K5 D>=4K - 2708<=K5 D>=4K, A?5F80;878@CNI85AO =0 >4=>9 AB@0=5. Single-state municipal bond funds - D>=4K <C=8F8?0;L=KE >1;830F89 >4=>3> HB0B0. E 8=25AB>@K >A2>1>640NBAO >B C?;0BK 8 D545@0;L=KE 8 <5AB=KE =0;>3>2 =0 4>E>4. Small company stock funds - D>=4 0:F89 :><?0=89 A <0;>9 :0?8B0;870F859 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 0:F88 <>;>6KE :><?0=89, :>B>@K5 G0AB> :>B8@CNBAO B>;L:> =0 2=518@652>< @K=:5. Socially responsible funds - A>F80;L=> >B25BAB25==K5 D>=4K - 2708<=K5 D>=4K, >A>7=0NI85 >B25BAB25==>ABL ?5@54 >1I5AB2>< 8 =5 AB02OI85 A2>59 548=AB25==>9 F5;LN 4>AB865=85 ?@81K;8. "0:8 D>=4K =5 8=25AB8@CNB 2 1C<038 :><?0=89. :>B>@K5 703@O7=ONB >:@C60NICN A@54C 8;8 ?@>872>4OB >@C685, B010G=K5 8 0;:>3>;L=K5 :><?0=88. Specialty funds - A?5F80;878@>20==K5 D>=4K - 2708<=K5 D>=4K, A?5F80;878@CNI85AO =0 2;>65=8OE 2 >48= A5:B>@ 8;8 >B@0A;L. Stockbroker - D>=4>2K9 1@>:5@ - ;8F>, 8<5NI55 ;8F5=78N =0 >?5@0F88 A F5==K<8 1C<030<8. "> 65, GB> 8 registered representative. Stock fund builder - 8=25AB8F8>==0O AB@0B538O, ?@54CA<0B@820NI0O 8=25AB8@>20=85 4>E>4>2 >B 2708<=KE D>=4>2 >1;830F89 2 D>=4K 0:F89 2 F5;OE C;CGH5=8O 1;03>A>AB>O=8O. Swap - >?5@0F88 ?> >1<5=C >1O70B5;LAB20<8 8;8 0:B820<8 4;O C;CGH5=8O 8E AB@C:BC@K ?> A@>:0< 8 :@548B=><C :0G5AB2C, 4;O A=865=8O @8A:0 8 8745@65:, ?>;CG5=8O ?@81K;8. Taxable bond funds - D>=4K =0;>3>>1;0305<KE >1;830F89 - D>=4K, 8=25AB8@CNI85 2 >1;830F88, 4>E>4 ?> :>B>@K< ?>4;568B =0;>3>>1;>65=8N. Tax-deferred investment - 8=25AB8F88 A >B;>65==K<8 =0;>3>2K<8 ?;0B560<8 - 8=25AB8F88, 4>E>4K ?> :>B>@K< >1;030NBAO =0;>3>< B>;L:> ?>A;5 B>3>, :0: 40==K9 D8=0=A>2K9 8=AB@C<5=B ?@>40=, 8;8 A@54AB20 87JOBK 87 40==>3> D8=0=A>2>3> CG@5645=8O. @8<5@>< B0:8E 8=AB@C<5=B>2 O2;ONBAO =5:>B>@K5 A15@530B5;L=K5 >1;830F88, 8=48284C0;L=K5 ?5=A8>==K5 AG5B0, @5=B=K5 :>=B@0:BK. Tax-free bond funds - D>=4K >1;830F89, =5 ?>4;560I8E =0;>3>>1;>65=8N - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 <C=8F8?0;L=K5 >1;830F88. Total return - AC<<0@=K9 4>E>4 =0 8=25AB8F88, CG8BK20NI89 @58=25AB8@>20==K9 @0A?@545;5==K9 4>E>4. Transfer agent - B@0=AD5@B=K9 035=B - >@30=870F8O, :>B>@>9 ?>@CG05BAO 2545=85 @55AB@0 0:F8>=5@>2, >D>@<;5=85 8 ?5@5>D>@<;5=85 0:F8>=5@=KE A5@B8D8:0B>2, CG5B >?5@0F89 A F5==K<8 1C<030<8. Treasury bills - :07=0G59A:85 25:A5;O - :@0B:>A@>G=K5 >1O70B5;LAB20 ?@028B5;LAB20 !(. 12b-1 fee - :><8AA8>==K5, 2KG8B05<K5 87 4>E>4>2 ?> 2708<=K< D>=40<, :>B>@K5 84CB =0 ?>:@KB85 <0@:5B8=3>2KE 8 ?@>G8E @0AE>4>2 C?@02;ONI8E D>=40. Uninsured high-quality municipal bond funds - D>=4K =530@0=B8@>20==KE ?5@2>:;0AA=KE <C=8F8?0;L=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 =08<5=55 @8A:>20==K5 <C=8F8?0;L=K5 >1;830F88. =8 8<5NB 4>AB0B>G=> 2KA>:89 :@548B=K9 @59B8=3, => =5 30@0=B8@>20==K :0:8<-;81> >1@07><. Uninsured high-yield municipal bond funds - D>=4K =530@0=B8@>20==KE 2KA>:>4>E>4=KE <C=8F8?0;L=KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 <C=8F8?0;L=K5 >1;830F88 A =52KA>:8< :@548B=K< @59B8=3><, >15I0NI85 2KA>:89 4>E>4. U.S. government agency bonds - >1;830F88 ?@028B5;LAB25==KE 035=BAB2 !( - F5==K5 1C<038 C?>;=><>G5==KE D545@0;L=KE 035=BAB2 !(, A>740==KE ?@8 CG0AB88 (A?>=A>@AB25) ?@028B5;LAB20 4;O A=865=8O AB>8<>AB8 708<AB2>20=8O. U.S. Treasury bond funds - D>=4K ?@028B5;LAB25==KE >1;830F89 - 2708<=K5 D>=4K, 8=25AB8@CNI85 2 4>;3>A@>G=K5 8 A@54=5A@>G=K5 ?@028B5;LAB25==K5 >1;830F88. U.S. Treasury bonds - 4>;3>A@>G=K5 ?@028B5;LAB25==K5 >1;830F88. U.S. Treasury-only money funds - 45=56=K5 2708<=K5 D>=4K, 8=25AB8@CNI85 8A:;NG8B5;L=> 2 :07=0G59A:85 25:A5;O. 0==K5 D>=4K 2K?;0G820NB =08<5=LH89 4>E>4, => AG8B0NBAO A0<K<8 157>?0A=K<8 A@548 45=56=KE D>=4>2. U.S. Treasury securities - ?@028B5;LAB25==K5 >1O70B5;LAB20 - :07=0G59A:85 25:A5;O, A@54=5A@>G=K5 8 4>;3>A@>G=K5 ?@028B5;LAB25==K5 >1;830F88. Value averaging investing - 8=25AB8F8>==0O AB@0B538O, =0?@02;5==0O =0 ?>AB>O==>5 C25;8G5=85 AB>8<>AB8 D>=40 =0 >?@545;5==CN AC<<C 70 >?@545;5==K9 ?5@8>4 2@5<5=8. Variable annuities - ?5@5<5==K9 0==C8B5B (@5=B0) - ?@>3@0<<0 AB@0E>20=8O, G0I5 2A53> :>=B@0:B AB@0E>20=8O 687=8, AB>8<>ABL :>B>@>3> 7028A8B >B :>;510=8O AB>8<>AB8 :C?;5==KE F5==KE 1C<03. >65B ?@8=>A8BL ?>687=5==K9 @53C;O@=K9 8;8 D8:A8@>20==K9 ?5=A8>==K9 4>E>4. ;045;5F ?5@5<5==>3> 0==C8B5B0 ?>;CG05B 2>7<>6=>ABL >B;>68BL =0;>3>2K5 ?;0B568 ?> A2>8< 4>E>40< 8 30@0=B8N 2K?;0B ?> A<5@B8 (death benefit guarantee). Wash sale - ">B<K2>G=0O ?@>4060" - AB@0B538O, ?@54CA<0B@820NI0O >1@0B=CN ?>:C?:C F5==>9 1C<038 2 B5G5=85 31 4=O ?>A;5 B>3>, :0: >=0 1K;0 ?@>40=0 (A C1KB:><), 2 F5;OE A=865=8O =0;>3>>1;0305<>9 ?@81K;8. World funds - <8@>2K5 8;8 3;>10;L=K5 D>=4K - 2708<=K5 D>=4K, 8=25AB8@CNI85 :0: 2 0<5@8:0=A:85, B0: 8 2 8=>AB@0==K5 F5==KE 1C<038. Yankee dollar CDs - 4>;;0@>2K5 45?>78B=K5 A5@B8D8:0BK "O=:8" - 4>;3>2K5 8=AB@C<5=BK, M<8B8@C5<K5 :@C?=59H8<8 8=>AB@0==K<8 10=:0<8 =0 2=CB@5==5< @K=:5 !(. '0AB> 8<5NB GCBL 1>;LHCN 4>E>4=>ABL ?> A@02=5=8N A 45?>78B=K<8 A5@B8D8:0B0<8 0<5@8:0=A:8E 10=:>2. 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SOES ?>72>;O5B 8=48284C0;L=K< 8=25AB>@0< M;5:B@>==K< A?>A>1>< >ACI5AB2;OBL A45;:8 ?> 0:F8O< Nasdaq A 8=AB8BCF8>=0;L=K<8 8=25AB>@0<8, :>B>@K5 ?>AB>O==> 2KAB02;ONB ?> MB8< 0:F8O< A2>8 :>B8@>2:8 =0 ?>:C?:C/?@>406C. 4=0:> 4;O B@5945@>2, 8A?>;L7CNI8E SOES, ACI5AB2CNB =5:>B>@K5 >3@0=8G5=8O: B SOES 8A?>;=ONBAO >@45@0 =0 :>;8G5AB2> 0:F89, =5 ?@52KH0NI55 1000.  A45;:0E A 0:F8O<8, >1J5<K B>@3>2 ?> :>B>@K< =87:8, MB> :>;8G5AB2> <>65B 1KBL >3@0=8G5=> 200 0:F8O<8. >A;5 8A?>;=5=8O >@45@0 =0 :064CN AB>@>=C A45;:8 =0;0305BAO 5-<8=CB=>5 >3@0=8G5=85 =0 A>25@H5=85 =>2>9 A45;:8 A B5<8 65 0:F8O<8. 0?@8<5@, B@5945@, :C?82H89 G5@57 SOES 1000 0:F89 Intel, 4>;65= ?>4>640BL 5 <8=CB, ?@5645 G5< 5<C 1C45B 2=>2L ?>72>;5=> 2>A?>;L7>20BLAO SOES 4;O ?>:C?:8 5I5 1000 0:F89 Intel. 4=0:> MB> 2@5<5==>5 >3@0=8G5=85 =5 70?@5I05B B@5945@C :C?8BL 4>?>;=8B5;L=K5 0:F88 Intel G5@57 SelectNet 8;8 ECN. 0@538AB@8@>20==K5 ?@54AB028B5;8 8 1@>:5@K-48;5@K, O2;ONI85AO G;5=0<8 NASD, =5 <>3CB >ACI5AB2;OBL 2 SOES A45;:8 ?> A2>8< A>1AB25==K< B>@3>2K< AG5B0<. >@>B:85 ?@>4068 2 SOES 4>;6=K >ACI5AB2;OBLAO ?> F5=5 bid "?;NA B8:" (plus-tick bid), 2 A>>B25BAB288 A ?@028;0<8, @53C;8@CNI8<8 >B:@KB85 :>@>B:8E ?>78F89. SOES - A8AB5<0 >1O70B5;L=>3> 8A?>;=5=8O. -B> >7=0G05B, GB> <0@:5B-<59:5@, 2KAB0282H89 :>B8@>2:C (B.5. >1JO282H89 > A2>5< 65;0=88 :C?8BL 8;8 ?@>40BL ?> MB>9 F5=5), 4>;65= 2K?>;=8BL >@45@ E>BO 1K =0 70O2;5==>5 :>;8G5AB2> 0:F89. :F88 :><?0=89 A <0;>9 :0?8B0;870F859 O2;ONBAO 8A:;NG5=85< 87 ?C=:B>2 4. 8 5.  :>@>B:8< ?@>4060< B0:8E 0:F89 =5 ?@8<5=O5BAO ?@028;> > F5=5 bid "?;NA B8:", 8 8A?>;=5=85 >@45@>2 G5@57 SOES 2 MB>< A;CG05 =5 =>A8B >1O70B5;L=>3> E0@0:B5@0. #G0AB85 <0@:5B-<59:5@>2 2 SOES ?> 2A5< 0:F8O< Nasdaq AB0;> >1O70B5;L=K< 2 19883, GB> O28;>AL @50:F859 @53C;8@CNI8E >@30=>2 =0 60;>1K <5;:8E :;85=B>2 > =52>7<>6=>AB8 ?>;CG8BL 4>ABC? : :>B8@>2:0< <0@:5B-<59:5@>2 2> 2@5<O 18@652>3> :@878A0 2 >:BO1@5 19873. > MB>3> 2@5<5=8 1@>:5@0< 4;O 8A?>;=5=8O :;85=BA:8E >@45@>2 ?@8E>48;>AL 72>=8BL <0@:5B-<59:5@0< ?> B5;5D>=C. > 2@5<O 18@652>3> :@878A0 4>72>=8BLAO 4> <0@:5B-<59:5@>2 1K;> ?@0:B8G5A:8 =52>7<>6=>, 8 2 @57C;LB0B5 <=>385 :;85=BA:85 >@45@0 >AB0;8AL 157 8A?>;=5=8O. !8AB5<0 SOES 4>;6=0 1K;0 >15A?5G8BL 4;O 8=48284C0;L=KE :;85=B>2 4>ABC? =0 @K=>: Nasdaq 8 C:@5?8BL : =5<C 4>25@85 A> AB>@>=K :;85=B>2. 0@:5B-<59:5@0< ?@54>AB02;5=K <=>3>G8A;5==K5 ?@828;5388, 8 70 MB> >=8 =5ACB >B25BAB25==>ABL 70 3;C18=C, ;8:284=>ABL 8 AB018;L=>ABL @K=:0. 4=0:> <0@:5B-<59:5@K A=0G0;0 @0AA<0B@820;8 ?>O2;5=85 SOES :0: C3@>7C A2>8< 4>E>40< 8 ?5@2>5 2@5<O 0:B82=> ?@>B82>AB>O;8 55 @0728B8N.  MB> 2@5<O <8=8AB5@AB2> NAB8F88 ?@54?@8=O;> >B:@KBCN :@8B8:C ?>2545=8O CG0AB=8:>2 @K=:0 Nasdaq 8 ?@>25;> @0AA;54>20=85, :>B>@>5 ?>4B25@48;> D0:BK 8A:CAAB25==>3> C45@60=8O H8@>:8E A?@M4>2 <0@:5B-<59:5@0<8 70 AG5B :;85=B>2. > @57C;LB0B0< @0AA;54>20=8O MB> 254><AB2> 2 19963. 2K428=C;> ?@>B82 <=>38E <0@:5B-<59:5@>2 Nasdaq >128=5=8O 2 =0@CH5=88 0=B8<>=>?>;L=>3> 70:>=>40B5;LAB20. 'B>1K >A?>@8BL 2K428=CBK5 >128=5=8O > B><, GB> <0@:5B-<59:5@>2 70AB02;ONB 8=25AB>@>2 >?;0G820BL 702KH5==K5 A?@M4K, NASD 8 55 G;5=K ?@54?@8=O;8 :>=B@0B0:C. =8 70O28;8, GB> 4>ABC? =0 @K=>: 4;O <5;:8E 8=25AB>@>2 1>;55 G5< >1;53G5=, 8 1>;LHCN @>;L 2 2>AAB0=>2;5=88 A?@0254;82>3> 4>ABC?0 =0 @K=>: 4;O 8=48284C0;L=KE 8=25AB>@>2 AK3@0;0 8<5==> SOES. =8 70O28;8, GB> <0@:5B-<59:5@K Nasdaq 1K;8 7020;5=K ?>B>:>< :;85=BA:8E >@45@>2 G5@57 SOES, GB> ?>1C48;> 8E B>@3>20BL 2 @0<:0E >1JO2;5==KE 8<8 ;8<8B>2.  @57C;LB0B5 @K=>: Nasdaq >15A?5G820; 1>;55 G5< A>>B25BAB2CNICN ;8:284=>ABL 4;O A2>8E :;85=B>2, 8 <0@:5B-<59:5@0< 1K;> @07@5H5=> CAB0=02;820BL ?> MB8< A45;:0< A?@M4K. =8 =5 B>;L:> 2K?>;=O;8 A2>N @01>BC, => 8 AB0;8 65@B20<8 3@C??K B@5945@>2, ?>;CG82H8E =0720=85 "SOES bandits". -B8E B@5945@>2 NASD 8 <0@:5B-<59:5@K >128=8;8 2 7;>C?>B@51;5=88 8 8A?>;L7>20=88 CAB0@52H8E :>B8@>2>:, :>B>@K5 "SOES bandits" 70AB02;O;8 <0@:5B-<59:5@>2 A>1;N40BL, >1>A=>2K20O A2>5 B@51>20=85 >1O70B5;L=K< E0@0:B5@>< A;54>20=8O 70O2;5==K< F5=0<. 0 A0<>< 45;5 MB> 1K;> 40;5:> >B 8AB8=K, 8 2 459AB28B5;L=>AB8 =0 @K=:5 Nasdaq ACI5AB2C5B ?@028;>, =5 ?>72>;ONI55 B@5945@0< SOES ?>;L7>20BLAO 4;O 872;5G5=8O 2K3>4K =5?@028;L=K<8 :>B8@>2:0<8 8 CAB0@52H8<8 40==K<8. 0==>5 ?@028;> ?>72>;O5B @0AB>@30BL A45;:8, ?@87=0==K5 "O2=> >H81>G=K<8" (E>BO MB>B B5@<8= B>G=> =8345 =5 >?@545;5=). Nasdaq >1KG=> @0AB>@305B 2A5 A45;:8, A>25@H5==K5 ?> F5=0<, =5 A>>B25BAB2CNI8< B5:CI8< @K=>G=K< :>B8@>2:0<, =0 B>< >A=>20=88, GB> >=8 "O2=> >H81>G=K". @><5 B>3>, A45;:0 <>65B 1KBL >B<5=5=0 2 ;N1>9 <><5=B ?>A;5 55 A>25@H5=8O, 4065 A?CABO =5A:>;L:> =545;L. ;O ?@87=0=8O A45;:8 "O2=> >H81>G=>9" =5 ACI5AB2C5B =8:0:8E :>;8G5AB25==KE :@8B5@852 8 2@5<5==KE @0<>:. 0 ?@>BO65=88 <=>38E ;5B NASD 8 1@>:5@K-48;5@K, O2;ONI85AO G;5=0<8 AA>F80F88, ?KB0;8AL A>:@0B8BL >1J5< B>@3>2 G5@57 SOES. =8 874020;8 ?@028;0, A>3;0A=> :>B>@K< B@5945@K SOES, >ACI5AB2;ONI85 1>;55 42CE A45;>: 2 45=L 8;8 A45;:C =0 :>;8G5AB2> 1>;55 500 0:F89, ?@87=020;8AL ?@>D5AA8>=0;L=K<8 B@5945@0<8, :>B>@K5 =5 8<5NB ?@020 ?>;L7>20BLAO A8AB5<>9 SOES.  =5:>B>@KE A;CG0OE NASD ?@5?OBAB2>20;0 2 ?>;CG5=88 4>ABC?0 : SOES =>2K< D8@<0<. =>385 87 MB8E ?>?KB>: 70B>@<>78BL @0728B85 SOES >:>=G8;8AL =8G5<, >4=0:> =5:>B>@K5 >3@0=8G5=8O 2A5 5I5 459AB2CNB. Small Order Execution System (SOES) After-hours trading - >ACI5AB2;5=85 A45;>: A F5==K<8 1C<030<8 ?>A;5 70:@KB8O 18@652>9 A5AA88. 0=LH5 B0:8< 284>< B>@3>2;8 A ?><>ILN A?5F80;L=KE :><?LNB5@=KE A8AB5< 70=8<0;8AL, 3;02=K< >1@07><, 8=AB8BCF8>=0;L=K5 B@5945@K. !53>4=O <=>385 >=;09=>2K5 1@>:5@K ?@54;030NB 4>ABC? : "?>A;54=52=K< B>@30<" H8@>:><C :@C3C 8=25AB>@>2. Ask (asked price) - F5=0 ?@>4068 - 70?@0H8205<0O ?@>402F>< F5=0, B.5. A0<0O =87:0O F5=0, ?> :>B>@>9 >= 3>B>2 >ACI5AB28BL ?@>406C. At-the-opening order - ?@8:07 1@>:5@C > 70:;NG5=88 A45;:8 ?> ;CGH59 F5=5 =0 >B:@KB85 18@68 (=0 =0G0;> CB@5==59 A5AA88). ATS (Alternative Trading Systems) - 0;LB5@=0B82=K5 B>@3>2K5 A8AB5<K O2;ONBAO =081>;55 48=0<8G=> @072820NI8<AO A@54AB2>< M;5:B@>==>9 B>@3>2;8. =8 >15A?5G820NB A2>8< CG0AB=8:0<-?>4?8AG8:0< 4>ABC? : 8=D>@<0F88 8 B>@30< =0 @07;8G=KE ?;>I04:0E G5@57 A?5F80;L=>5 ?@>3@0<<=>5 >15A?5G5=85. > A@02=5=8N A >=;09=>2K<8 1@>:5@0<8 @01>B0 "! >B;8G05BAO 1>;LH59 A:>@>ABLN 8 1>;LH59 =0456=>ABLN 2 B><, GB> :0A05BAO >1@01>B:8 8 8A?>;=5=8O >@45@>2.  ?@028;0E SEC B5@<8= ATS >?@545;5= :0: ";N10O >@30=870F8O, 0AA>F80F8O, ;8F>, 3@C??0 ;8F 8;8 A8AB5<0, :>B>@0O: O2;O5BAO <5AB>< 4;O ?@>2545=8O @K=>G=KE B>@3>2 8;8 ?@54>AB02;O5B CA;>28O 4;O A2545=8O 2<5AB5 ?>:C?0B5;59 8 ?@>402F>2 F5==KE 1C<03 8;8 4;O >ACI5AB2;5=8O 2 >B=>H5=88 F5==KE 1C<03 8=KE DC=:F89, B@048F8>==> 2K?>;=O5<KE D>=4>2>9 18@659; 8 =5 CAB0=02;8205B ?@028;0, >?@545;ONI85 ?>2545=85 CG0AB=8:>2-?>4?8AG8:>2, =5 A2O70==>5 A 8E B>@3>2>9 0:B82=>ABLN G5@57 MBC >@30=870F8N, 0AA>F80F8N, 3@C??C ;8F 8;8 A8AB5<C; 8 =5 ?@8<5=O5B : A2>8< CG0AB=8:0<-?>4?8AG8:0< =0:070=85, 8=>5, G5< ;8H5=85 8E 4>ABC?0 : B>@30<". Backtesting - ?@>F5AA >?B8<870F88 B>@3>2>9 AB@0B5388 =0 >A=>25 8A?>;L7>20=8O 8AB>@8G5A:8E 40==KE 8 70B5< 55 ?@>25@:0 =0 045:20B=>ABL ?>;CG05<KE @57C;LB0B>2 G5@57 8A?>;L7>20=88 A>2@5<5==KE 40==KE. Bid/Bid Into - F5=0 ?>:C?:8 - F5=0, ?> :>B>@>9 <0@:5B-<59:5@ >ACI5AB2;O5B ?>:C?:C D8=0=A>2KE 8=AB@C<5=B>2 C >1KG=KE 8=25AB>@>2. Bid Into 8A?>;L7C5BAO 4;O ?>:C?:8 0:F89 8;8 >B:@KB8O 4;8==>9 ?>78F88 G5@57 SelectNet 8;8 ECN. Block Trade - A45;:0 A B0:8< >1J5<>< F5==KE 1C<03, :>B>@0O =0 >1KG=>< @K=:5 0C:F8>==>3> B8?0 =5 <>65B 1KBL 8A?>;=5=0 2 @07C<=>5 2@5<O 8 ?> @07C<=>9 F5=5. 1KG=> >1J5< "1;>:8@CNI59 A45;:8" ?@52KH05B 10,000 0:F89, 8;8 55 AC<<0 1>;LH5 $200,000. Buy Stop Order - >@45@ =0 ?>:C?:C :>B8@C5<>9 =0 18@65 (listed) F5==>9 1C<038 ?> F5=5, ?@52KH0NI59 B5:CICN F5=C ?@54;>65=8O. @45@ 8A?>;=O5BAO, :>340 @K=>G=0O F5=0 4>AB8305B 8;8 ?@5>4>;5205B CAB0=>2;5==K9 >@85=B8@ (AB>?-F5=C). >340 MB> ?@>8AE>48B, buy stop >@45@ ?@52@0I05BAO 2 @K=>G=K9 (market order) 8 8A?>;=O5BAO ?> =08;CGH59 4>ABC?=>9 F5=5. Cancel order - ?>@CG5=85 =0 >B<5=C >@45@0, :>B>@K9 1K; 22545=, => ?>:0 =5 8A?>;=5= (= to make void, to kill). Capping - "70:C?>@820=85" - 0:B82=K5 ?@>4068 >?@545;5==>9 F5==>9 1C<038 A F5;LN C45@60=8O 55 F5=K =0 =87:>< C@>2=5 8;8 A F5;LN A=865=8O 55 :C@A0. "0:85 459AB28O O2;ONBAO =0@CH5=85< @028; NASD > G5AB=>9 ?@0:B8:5 B>@3>2;8 (Rules of Fair Practice). Churning - "A1820=85 <0A;0" - =54>1@>A>25AB=>5 ?>2545=85 1@>:5@>2, A2O70==>5 A C25;8G5=85< 8E :><8AA8>==KE 70 AG5B G0AB>3> >B:@KB8O 8 70:@KB8O ?>78F89 =0 :;85=BA:8E AG5B0E. /2;O5BAO =0@CH5=85< @028; NASD > G5AB=>9 ?@0:B8:5 B>@3>2;8 (Rules of Fair Practice). Contrarian - 8=25AB>@, ?>2545=85 :>B>@>3> 2A5340 845B 2@07@57 A =0AB@>5=85< 1>;LH8=AB20 CG0AB=8:>2 @K=:0. @C38<8 A;>20<8, 5A;8 1>;LH8=AB2> 8=25AB>@>2 ?>:C?0NB, "=5A>3;0A=K9" 8=25AB>@ ?@>405B 8 =0>1>@>B. "5A>3;0A=K9" 8=25AB>@ AG8B05B, GB>, :>340 @K=>: 845B =025@E, 1>;LH8=AB2> CG0AB=8:>2 C65 ?>;=>ABLN 8;8 ?>GB8 ?>;=>ABLN "70:C?8;8AL" 8 =5 8<5NB 1>;LH5 A@54AB2 =0 >ACI5AB2;5=85 =>2KE ?>:C?>:. "0:8< >1@07><, 5A;8 @K=>: ?>:0 8 =5 4>AB83 A2>53> ?8:0, >= A45;05B MB> 2 1;8609H5< 1C4CI5<.  >1@0B=>, :>340 4@C385 8=25AB>@K C25@5=K, GB> @K=>: =0G8=05B 42865=85 2=87, >=8 C65 70:@K;8 A2>8 ?>78F88. "0:8< >1@07><, =0 @K=:5 A>2A5< 8;8 ?>GB8 A>2A5< =5 >AB0;>AL ?@>402F>2, 8 >= <>65B 42830BLAO B>;L:> =025@E. Cornering the Market - "703>=OBL 2 C3>;" - =570:>==0O ?@0:B8:0, A>AB>OI0O 2 ?>:C?:5 7=0G8B5;L=>3> :>;8G5AB20 F5==KE 1C<03 4;O ?>;CG5=8O 2>7<>6=>AB8 <0=8?C;8@>20BL 8E F5=0<8. Day Order - >@45@ =0 ?>:C?:C 8;8 ?@>406C F5==>9 1C<038, :>B>@K9 02B><0B8G5A:8 8AB5:05B, 5A;8 >= =5 1K; 8A?>;=5= 4> :>=F0 B>@3>2>3> 4=O, 2 B5G5=85 :>B>@>3> >= 1K; @07<5I5=. Datafeed - ?>B>: 8=D>@<0F88 (: ?@8<5@C, @K=>G=KE :>B8@>2>: 8 =>2>AB59). Data vendors - "?>AB02I8:8 8=D>@<0F88" - A?5F80;878@>20==K5 :><?0=88, ?@54>AB02;ONI85 @07=>>1@07=K5 A2545=8O 4;O 0=0;870 8 ?@8=OB8O 8=25AB8F8>==KE @5H5=89. Day trading - "2=CB@84=52=0O B>@3>2;O" - AB@0B538O 0:B82=>9 B>@3>2;8, A>AB>OI0O 2 >B:@KB88 8 70:@KB88 ?>78F89 2 B5G5=85 >4=>3> B>@3>2>3> 4=O 8 ?>;CG5=88 ?@81K;8 =0 <0;KE :@0B:>A@>G=KE 87<5=5=8OE F5=K. @028;0 NASD >?@545;ONB day trading :0: "@53C;O@=>5 2KAB02;5=85 2 B5G5=85 B>@3>2>3> 4=O >@45@>2 =0 ?>:C?:C 8 ?@>406C >4=8E 8 B5E 65 F5==KE 1C<03". Dealer Flip - "A:0G>: 48;5@0" - O2;5=85, :>340 <0@:5B-<59:5@ "?5@5A:0:8205B" A F5=K 184 =0 offer 8;8 A offer =0 bid ?> 0:F88, ?> :>B>@>9 >= "45;05B @K=>:". DNI (do not increase) - "=5 C25;8G820BL" - 8=AB@C:F8O :;85=B0 1@>:5@0 =5 C25;8G820BL :>;8G5AB2> F5==KE 1C<03, :>B>@K5 =04> :C?8BL 8;8 ?@>40BL 2 A;CG05 >1JO2;5=8O 4@>1;5=8O 0:F89 (split) 8;8 2K?;0BK 482845=4>2 2 D>@<5 0:F89 (stock dividend). DNR (do not reduce) - "=5 C<5=LH0BL" - 8=AB@C:F8O :;85=B0 1@>:5@C =5 A=860BL ;8<8B-F5=C 2 buy-limit 8 sell-stop >@45@0E =0 40BC @538AB@0F88 (record date) 0:F8>=5@>2, B.5. ?@8 ?>B5@5 ?@020 =0 ?>;CG5=85 B5:CI8E 482845=4>2. Down Off - A8BC0F8O, ?@8 :>B>@>9 <0@:5B-<59:5@, 70O282H89 =082KAHCN F5=C bid, 1>;LH5 =5 65;05B >ACI5AB2;OBL ?> =59 ?>:C?:C F5==KE 1C<03. 0@:5B-<59:5@ :>@@5:B8@C5B A2>N bid-F5=C 2 AB>@>=C ?>=865=8O 4> B>3> C@>2=O, =0 :>B>@>< >= <>65B 2>7>1=>28BL ?>:C?:8. @87=0: <54256L53> =0AB@>5=8O. Down to Ask - A8BC0F8O, ?@8 :>B>@>9 <0@:5B-<59:5@ A=8605B A2>N F5=C ask/offer 4> C@>2=O B5:CI59 F5=K ?@54;>65=8O 2 =045645 ?@>40BL <0:A8<0;L=> 2>7<>6=>5 :>;8G5AB2> 0:F89 4> B>3> <><5=B0, :>340 F5=0 C?045B =865 4>?CAB8<>3> C@>2=O. @87=0: <54256L53> =0AB@>5=8O. Drops Bid - A8BC0F8O, ?@8 :>B>@>9 <0@:5B-<59:5@, 70O282H89 =082KAHCN F5=C bid, 24@C3 :>@@5:B8@C5B 55 2 AB>@>=C ?>=865=8O, =5 65;0O 1>;LH5 ?;0B8BL 70 0:F88 B0:CN 2KA>:CN F5=C. ECN (electronic communications network) - M;5:B@>==K5 B>@3>2K5 A8AB5<K, ?@54=07=0G5==K5 A2545=8O ?>:C?0B5;59 8 ?@>402F>2 F5==KE 1C<03 8 02B><0B8G5A:>3> 8A?>;=5=8O :;85=BA:8E >@45@>2. @028;0 SEC >?@545;ONB ECN :0: ;N1CN M;5:B@>==CN A8AB5<C, :>B>@0O @0A?@>AB@0=O5B A@548 H8@>:>3> :@C30 ?>;L7>20B5;59 8=D>@<0F8N > 22545==KE 2 =55 18@652K<8 A?5F80;8AB0<8 8;8 <0@:5B-<59:5@0<8 2=518@652>3> @K=:0 >@45@0E, 8 ?>72>;O5B 8E 02B><0B8G5A:8 8A?>;=OBL ?>;=>ABLN 8;8 G0AB8G=>. Fill - 8A?>;=5=85 >@45@0 (partial fill - G0AB8G=>5 8A?>;=5=85). 5-minute rule - "?@028;> 5 <8=CB" - 2@5<5==>5 >3@0=8G5=85, 459AB2CNI55 4;O ?>;L7>20B5;59 A8AB5<K SOES (Small Order Execution System). @8 ?>:C?:5 1000 0:F89 XYZ G5@57 A8AB5<C SOES :;85=B, ?@5645 G5< 5<C 2=>2L 1C45B ?>72>;5=> 2>A?>;L7>20BLAO MB>9 A8AB5<>9 4;O ?>:C?:8 =>2KE 0:F89 XYZ, 4>;65= ?>4>640BL 5 <8=CB. =0;>38G=>5 B@51>20=85 ?@8<5=O5BAO 8 : A45;:5 ?> ?@>4065. 4=0:> 5A;8 :;85=B ?>:C?05B 600 0:F89 XYZ, 2 B5G5=85 ?5@2KE 5 <8=CB >= <>65B 4>:C?8BL 5I5 400 0:F89, GB>1K 4>25AB8 @07<5@ ?>78F88 4> 1000 0:F89. Floor Trader - B@5945@ 2 70;5 18@68, O2;ONI89AO 55 G;5=>< 8 =5?>A@54AB25==> CG0AB2CNI89 2 B>@30E 70 A2>9 AG5B. Free-riding - "5740 709F5<" - 1) ?@0:B8:0 1KAB@>9 :C?;8-?@>4068 F5==KE 1C<03 :;85=B>< 1@>:5@0 157 D0:B8G5A:>3> 2=5A5=8O 45=53 (?@8 ?>:C?:5) 8;8 2=5A5=8O 1C<03 (?@8 ?@>4065) 2 =0@CH5=85 @028;0 " !>25B0 #?@02;ONI8E $ ! !(; 2) 70?@5I5==0O SEC ?@0:B8:0, ?@8 :>B>@>9 >@30=870B>@K M<8AA88 "?@845@6820NB" G0ABL =>2>3> 2K?CA:0 2 =045645 ?>;CG8BL ?>2KH5==CN ?@81K;L 2 @57C;LB0B5 @50;870F88 MB8E 0:F89 ?> F5=5, ?@52KH0NI59 F5=C ?C1;8G=>3> ?@54;>65=8O. GTC (good-till-canceled) order - "459AB28B5;L=K9 4> >B<5=K" - :;85=BA:89 ?@8:07 1@>:5@C =0 ?>:C?:C 8;8 ?@>406C F5==KE 1C<03, 459AB28B5;L=K9 4> C254><;5=8O >1 >B<5=5. > <><5=B0 A2>53> 8A?>;=5=8O ?@8:07 <>65B 1KBL 2 ;N1>5 2@5<O 87<5=5= 8;8 >B<5=5=. "0:65 =07K205BAO ">B:@KBK< ?@8:07><" (open order). He Drops - 40==K9 B5@<8= >?8AK205B A8BC0F8N, ?@8 :>B>@>9 <0@:5B-<59:5@ "@>=O5B" A2>N F5=C bid, :>B>@0O 1K;0 ;CGH59, =0 1>;55 =87:89 C@>25=L ?>A;5 2K?>;=5=8O >@45@0 2 SOES. Held - B5@<8=, >7=0G0NI89 ?@8>AB0=>2:C B>@3>2 ?> F5==>9 1C<035 (<0@:5B-<59:5@0< =5 @07@5H5=> 2K2>48BL ?> =59 A2>8 :>B8@>2:8). He Lifts - B5@<8=, 8A?>;L7C5<K9 2 A8BC0F88, :>340 <0@:5B-<59:5@ ?>A;5 2K?>;=5=8O >@45@0 2 SOES ?>4=8<05B A2>N B5:CICN F5=C offer, :>B>@0O ?5@5AB05B 1KBL A0<>9 =87:>9. He Stays - B5@<8= 8A?>;L7C5BAO 2 A8BC0F88, :>340 <0@:5B-<59:5@ 2K?>;=8; >@45@ 2 SOES ?> AB>@>=5 bid 8;8 offer, 53> B5:CI0O F5=0 bid 8;8 offer ?@>4>;605B >AB020BLAO ;CGH59, 8 >= ?@>4>;605B >ACI5AB2;OBL ?> =8< ?>:C?:C 8;8 ?@>406C. High Bid - B5@<8= 8A?>;L7C5BAO 2 A8BC0F88, :>340 <0@:5B-<59:5@ 2 >?@545;5==K9 <><5=B 2@5<5=8 65;05B >ACI5AB28BL ?>:C?:C ?> 1>;55 2KA>:>9 F5=5, G5< >AB0;L=K5 <0@:5B-<59:5@K. @87=0: 1KGL53> =0AB@>5=8O. Hit the Bid - B5@<8= >?@545;O5B A8BC0F8N, :>340 B@5945@ ?@>40; 0:F88 ?> B5:CI59 F5=5 bid. Index investing (indexing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nside Market - 2 :>=:@5B=K9 <><5=B 2@5<5=8 ?@><56CB>: <564C ;CGH8<8 :>B8@C5<K<8 F5=0<8, =082KAH59 bid 8 A0<>9 =87:>9 offer. In the red - "2 :@0A=><" - 2K@065=85, 8A?>;L7C5<>5 4;O >1>7=0G5=8O C1KB>G=KE >?5@0F89 (@0=LH5 2 1CE30;B5@A:8E :=830E C1KB:8 70?8AK20;8AL :@0A=K<8 G5@=8;0<8). 1@0B=> : in the black - "2 G5@=><" - >B@065=85 157C1KB>G=KE >?5@0F89. Lastsale Reporting - >BG5B=>ABL ?> ?>A;54=8< ?@>4060< - M;5:B@>==K9 22>4 G;5=0<8 NASD =0 Nasdaq Stock Market F5=K 8 :>;8G5AB20 0:F89 ?> A45;:5. BG5B=>ABL ?> A45;:5 4>;6=0 1KBL ?@54AB02;5=0 2 Nasdaq 2 B5G5=85 90 A5:C=4 A <><5=B0 55 A>25@H5=8O. Lift Offer - B5@<8=, 8A?>;L7C5<K9 4;O A8BC0F88, :>340 <0@:5B-<59:5@ ?>2KH05B A2>N F5=C offer, =5 65;0O >ACI5AB2;OBL ?@>406C ?> ?@54K4CI59 F5=5. 1KG=> @0AA<0B@8205BAO :0: ?@87=0: 1KGL53> =0AB@>5=8O. Limit Order - ;8<8B=K9 ?@8:07 - ?@8:07 1@>:5@C :C?8BL 8;8 ?@>40BL F5==K5 1C<038 ?> >3>2>@5==>9 8;8 ;CGH59 F5=5.  A;CG05 ?>:C?:8 >@45@ =8:>340 =5 1C45B 8A?>;=5= ?> F5=5 2KH5 C:070==>9, 0 2 A;CG05 ?@>4068 - ?> F5=5 =865 C:070==>9. A;8 ;8<8B=K9 ?@8:07 22>48BAO 2 A8AB5<C SOES, 8 =8 >48= <0@:5B-<59:5@ =5 :>B8@C5B A2>N F5=C =0 C@>2=5, >?@545;5==>< 2 ;8<8B->@45@5, >@45@ 02B><0B8G5A:8 >B<5=O5BAO, 8 >BG5B ?> 53> 8A?>;=5=8N 2K3;O48B :0: "No SOES Market Maker Available" (" SOES =5B <0@:5B-<59:5@0"). Loss taking - D8:A0F8O C1KB:>2 - 70:@KB85 ?>78F88 ?@8 4>AB865=88 >?@545;5==>3> C@>2=O ?>B5@L. Low Offer - B5@<8= 8A?>;L7C5BAO 2 A8BC0F88, ?@8 :>B>@>9 <0@:5B-<59:5@ A=8605B A2>N F5=C offer 8 =0 B5:CI89 <><5=B :>B8@C5B 55 =0 A0<>< =87:>< C@>2=5 A@548 2A5E <0@:5B-<59:5@>2. @87=0: <54256L53> =0AB@>5=8O. Markdown - @07=8F0 <564C =082KAH59 B5:CI59 F5=>9 bid, ?@54;0305<>9 48;5@0<8, 8 1>;55 =87:>9 F5=>9, :>B>@CN 48;5@ C?;0G8205B :;85=BC. 1@0B=> markup. Market Order - @K=>G=K9 >@45@ - ?@8:07 1@>:5@C :C?8BL 8;8 ?@>40BL F5==K5 1C<038 ?> =08;CGH59 4>ABC?=>9 =0 @K=:5 2 <><5=B ?>ABC?;5=8O >@45@0 F5=5. Market Timing - ">BA;56820=85 @K=:0" - 8=25AB8F8>==0O AB@0B538O, A>AB>OI0O 2 ?>?KB:5 ?@028;L=> 2K1@0BL 2@5<O ?>:C?:8 8 ?@>4068 F5==KE 1C<03 =0 >A=>25 0=0;870 @K=>G=>9 8 >1I5M:>=><8G5A:>9 8=D>@<0F88. Markup - @07=8F0 <564C A0<>9 =87:>9 B5:CI59 F5=>9 offer, ?@54;0305<>9 48;5@0<8, 8 1>;55 2KA>:>9 F5=>9, 278<05<>9 A :;85=B0. 1@0B=> : markdown. Matching orders - "A>2?040NI85 >@45@0" - >4=>2@5<5==> 22>48<K5 845=B8G=K5 8;8 ?>GB8 845=B8G=K5 ?@8:07K =0 ?>:C?:C 8 ?@>406C >4=8E 8 B5E 65 F5==KE 1C<03 4;O A>740=8O 2848<>AB8 B>@3>2>9 0:B82=>AB8. 0==0O ?@0:B8:0 O2;O5BAO =0@CH5=85< 0=B8<>H5==8G5A:8E ?>;>65=89 0:>=0 > D>=4>2KE 18@60E 1934. Neural net - =59@>==0O A5BL - :><?LNB5@=0O ?@>3@0<<0, >A=>20==0O =0 8A?>;L7>20=88 8A:CAAB25==>3> 8=B5;;5:B0 8 >1;040NI0O A?>A>1=>ABLN : A0<>>1CG5=8N. -DD5:B82=>ABL ?@8<5=5=8O B0:8E :><?LNB5@=KE ?@>3@0<< =0 ?@0:B8:5, 2 G0AB=>AB8 4;O ?@>3=>78@>20=8O 42865=8O @K=:0, ?>:0 =5 4>:070=0. Offer Out - F5=0, ?> :>B>@>9 <0@:5B-<59:5@ ?@>405B F5==K5 1C<038, 0 >1KG=K5 8=25AB>@K ?>:C?0NB. >340 2K offer out, 2K 15@5B5 =0 A51O @>;L <0@:5B-<59:5@0, ?@54;030O ?@>40BL A2>8 1C<038 ?> F5=5 offer =0 ECN 8;8 Selectnet.  1>;LH8=AB25 A;CG052 40==0O AB@0B538O 8A?>;L7C5BAO 4;O 70:@KB8O 4;8==KE ?>78F89, => <>65B ?@8<5=OBLAO 8 4;O >B:@KB8O :>@>B:8E. Off the Offer - A8BC0F8O, ?@8 :>B>@>9 <0@:5B-<59:5@, 2KAB02;O2H89 A0<CN =87:CN F5=C offer, ?>4=8<05B 55, =5 65;0O 1>;LH5 ?@>4020BL F5==K5 1C<038 ?> B0:>9 =87:>9 F5=5. Open Order - >B:@KBK9 >@45@ - ?@8:07 1@>:5@C :C?8BL 8;8 ?@>40BL F5==K5 1C<038 ?> F5=5, =5 A>2?040NI59 A B5:CI59 @K=>G=>9, :>B>@K9 >AB05BAO 2 A8;5 4> <><5=B0 A2>53> 8A?>;=5=8O 8;8 >B<5=K. Override - "?5@5:@K20BL" - B5@<8= 8A?>;L7C5BAO, :>340 B@5945@ A>18@05BAO ?@54;>68BL A2>8 0:F88 ?> F5=5 1>;55 2KA>:>9 ?> A@02=5=8N A B5:CI59 F5=>9 offer, 8;8 ?@54;0305B F5=C ?>:C?:8, :>B>@0O =865 B5:CI59 F5=K bid. Principal Orders - ">A=>2=K5 >@45@0" - >@45@0 1@>:5@>2-48;5@>2 ?@8 >ACI5AB2;5=88 8<8 B>@3>2KE >?5@0F89 70 A2>9 AG5B. Profit-taking - D8:A0F8O ?@81K;8 - 70:@KB85 ?>78F89 ?> F5==K< 1C<030<, AB>8<>ABL :>B>@KE 2K@>A;0 4> >?@545;5==>3> 70?;0=8@>20==>3> C@>2=O, 4;O @50;870F88 ?@81K;8. 0:@KB85 ?>78F89 ?@>8AE>48B 2=5 7028A8<>AB8 >B ?@54?>;>65=89 2 >B=>H5=88 40;L=59H53> 42865=8O F5=K. Position trading - ?>78F8>==0O B>@3>2;O - 8=25AB8F8>==0O AB@0B538O, 2 @0<:0E :>B>@>9 ?>78F88 =5 70:@K20NBAO 4>AB0B>G=> ?@>4>;68B5;L=>5 2@5<O - 4> 6-12 <5AOF52 8 1>;55. '0AB> ?@>B82>?>AB02;O5BAO day trading, G0AB><C >B:@KB8N 8 70:@KB8N ?>78F89 2 B5G5=85 >4=>3> B>@3>2>3> 4=O. Program trading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ump-and-dump - "=0:0G820=85 @K=:0" - ?@0:B8:0 =54>1@>A>25AB=KE B@5945@>2, :>B>@K5 8A:CAAB25==> @074C20NB 8=B5@5A : F5==K< 1C<030<, :>B>@K5 >=8 :C?8;8 70@0=55, A B5<, GB>1K 70B5< ?@>40BL 8E ?;>E> 8=D>@<8@>20==K< 8 =5>?KB=K< 8=25AB>@0< ?> 7=0G8B5;L=> 1>;55 2KA>:>9 F5=5. Real Time trade reporting - >BG5B=>ABL ?> A45;:0< 2 @50;L=>< 2@5<5=8 - B@51>20=85, =0;0305<>5 =0 <0@:5B-<59:5@>2 (8 2 =5:>B>@KE A;CG0OE 8 =0 =5 <0@:5B-<59:5@>2), ?@54>AB02;OBL >BG5B=>ABL ?> A45;:0< =570<54;8B5;L=> ?>A;5 8E 7025@H5=8O. > A45;:0< A 0:F8O<8, B>@3C5<K<8 =0 Nasdaq, >BG5B=>ABL 4>;6=0 ?>ABC?0BL 2 B5G5=85 90 A5:C=4 ?>A;5 8E A>25@H5=8O. Rebound - >B:0B 8;8 2>AAB0=>2;5=85 - A<5=0 =0?@02;5=8O 42865=8O @K=>G=KE F5= ?>A;5 B>3>, :0: 4>;3>A@>G=0O B5=45=F8O 8E @>AB0 8;8 ?045=8O ?@825;0 : B><C, GB> CG0AB=8:8 @K=:0 AG8B0NB A;>682H85AO F5=>2K5 C@>2=8 A;8H:>< 2KA>:8<8 8;8 70=865==K<8. Refreshes - 2 >A=>2=>< B> 65, GB> He stays - 8A?>;L7C5BAO 2 A8BC0F88, :>340 <0@:5B-<59:5@ 8A?>;=8; >@45@ ?> 2KAB02;5==>9 8< F5=5 bid 8;8 offer 8 ?@>4>;605B ?>:C?0BL 8 ?@>4020BL F5==K5 1C<038 ?> :>B8@C5<K< =0 ?@56=5< C@>2=5 F5=0<. Screening - ?@>F5AA ?>8A:0 8 >B1>@0 F5==KE 1C<03 A 7040==K<8 8=25AB8F8>==K<8 8 D8=0=A>2K<8 E0@0:B5@8AB8:0<8 2 :0:>9-;81> 1075 40==KE. !CBL <5B>40 A>AB>8B 2 ?>A;54>20B5;L=>< 8A?>;L7>20=88 D8;LB@>2 (screens) 4;O >?@545;5=8O 2K1>@:8, >B25G0NI59 =C6=K< :@8B5@8O<. Slippage - @07=8F0 <564C ?@54?>;0305<>9 F5=>9 A45;:8 8 F5=>9, ?> :>B>@>9 >=0 @50;L=> 1K;0 A>25@H5=0. Spread - @07=8F0 <564C B5:CI8<8 F5=0<8 bid 8 offer. Stop order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bid =0E>48BAO =0 CAB0=>2;5==>< C@>2=5 8;8 =865. !B>?->@45@0 =0 ?>:C?:C 4;O 1C<03 2=518@652>3> @K=:0 AB0=>2OBAO @K=>G=K<8, :>340 >=8 ?@54;030NBAO ?> CAB0=>2;5==>9 F5=5 8;8 GCBL 2KH5. ;O 1C<03, B>@3C5<KE =0 OTCBB, AB>?->@45@0 =5 ?@8<5=ONBAO. 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">@3>2K5 >?5@0F88 =0 @K=:5 Nasdaq (Nasdaq Stock Market), 2 ?5@2>9 2 <8@5 M;5:B@>==>9 B>@3>2>9 A8AB5<5, =0G0;8AL 2 1971. !53>4=O Nasdaq O2;O5BAO A0<>9 1KAB@>@0ABCI59 B>@3>2>9 ?;>I04:>9 2 !( 8 AB>8B A@548 D>=4>2KE @K=:>2 =0 2B>@>< <5AB5 2 <8@5 ?> >1J5<C B>@3>2;8. "0:>5 1C@=>5 @0728B85 MB>3> @K=:0 >1JOA=O5BAO 53> ?>AB>O==>9 M2>;NF859, 48:BC5<>9 2>7=8:=>25=85< =>2KE ?>B@51=>AB59 8=25AB>@>2 8 ?C1;8G=KE :><?0=89. PRIVATE1961 F5;OE C;CGH5=8O >1I53> @53C;8@>20=8O >B@0A;8 F5==KE 1C<03 0<5@8:0=A:89 >=3@5AA 40; ?>@CG5=85 SEC (><8AA88 ?> F5==K< 1C<030< 8 18@60<) >ACI5AB28BL 87CG5=85 2A5E A53<5=B>2 @K=:0 F5==KE 1C<03. 1963SEC >?C1;8:>20;0 A2>9 >BG5B, 2 :>B>@>< 2=518@652>9 @K=>: F5==KE 1C<03 (over-the-counter (OTC) securities market) 1K; >E0@0:B5@87>20= :0: @074@>1;5==K9 8 =5@53C;8@C5<K9. SEC 2 :0G5AB25 @5H5=8O ?@54;>68;0 02B><0B870F8N 8 ?>@CG8;0 @50;870F8N MB>3> @5H5=8O 0F8>=0;L=>9 AA>F80F88 D>=4>2KE 48;5@>2 (NASD). 1968 0G0;>AL A>740=85 02B><0B878@>20==>9 A8AB5<K 4;O 2=518@652>3> @K=:0, :>B>@0O 2?>A;54AB288 ?>;CG8;0 =0720=85 National Association of Securities Dealers Automated Quotation-8;8 "NASDAQ". 1971 5@2K< >D8F80;L=K< B>@3>2K< 4=5< 2 A8AB5<5 Nasdaq AG8B05BAO 8 D52@0;O - ?5@2K9 45=L, :>340 >:>=G0B5;L=> ?@>25@5==0O A8AB5<0 =0G0;0 ?@54AB02;OBL A@54=85 :>B8@>2:8 ?> 1>;55 G5< 2500 F5==K< 1C<030< 2=518@652>3> @K=:0. 1975 Nasdaq CAB0=02;8205B =>2K5 AB0=40@BK 4;O 2=5A5=8O 2 ;8AB8=3, :>B>@K5 >1O70=K A>1;N40BL 2A5 ?@>H54H85 ?@>F54C@C ;8AB8=30 :><?0=88. -B> G5B:> >B45;8;> F5==K5 1C<038, B>@3C5<K5 =0 Nasdaq, >B 4@C38E 2=518@652KE F5==KE 1C<03. 1980 Nasdaq =0G8=05B 2K2>48BL =0 M:@0= 2=CB@5==85 :>B8@>2:8 (inside quotations) - ;CGH85 @K=>G=K5 F5=K bid 8 offer.  @57C;LB0B5 >10 >B@0605<KE =0 M:@0=5 8 ?C1;8:C5<KE A?@540 ?> 0:F8O< Nasdaq A>:@0B8;8AL 1>;55 G5< =0 85%. 1982 @C?=59H85 :><?0=88, :>B8@C5<K5 =0 Nasdaq, >BA>548=8;8AL, GB>1K A>740BL Nasdaq National Market (@K=>G=CN A8AB5<C Nasdaq), GL8 ;8AB8=3>2K5 B@51>20=8O >B;8G0;8AL 1>;LH59 AB5?5=LN AB@>3>AB8. Nasdaq National Market B0:65 ?@54>AB02;O5B B>@3>2CN AB0B8AB8:C 2 @50;L=>< 2@5<5=8, GB> ?>72>;O5B 8=25AB>@0< ?>;CG8BL 1>;55 H8@>:89 4>ABC? : @K=>G=>9 8=D>@<0F88. 1984Nasdaq 22>48B 2 459AB285 !8AB5<C 8A?>;=5=8O <0;KE >@45@>2 (Small Order Execution System, SOES). @54=07=0G5==0O 4;O 02B><0B8G5A:>3> 8A?>;=5=8O <0;KE ?@8:07>2 ?@>B82 ;CGH8E :>B8@>2>:, SOES @0AH8@8;0 B>@3>2CN <>I=>ABL 8 MDD5:B82=>ABL Nasdaq. 1986 !>25B C?@02;ONI8E $ ! ?@54>AB028; Nasdaq National Market @07@5H5=85 =0 B>@3>2;N A <0@659, GB> >7=0G0;> 2>7<>6=>ABL 4;O :;85=B>2 8A?>;L7>20BL 1@>:5@A:89 :@548B ?@8 ?>:C?:5 F5==KE 1C<03. 1990 Nasdaq >D8F80;L=> <5=O5B =0720=85 =0 "The Nasdaq Stock Market". !>740=85 M;5:B@>==>3> 8=D>@<0F8>==>3> B01;> 2=518@652>3> @K=:0 (OTC Bulletin Board, OTCBB) ?@54>AB028;> 8=25AB>@0< 8=D>@<0F8N 8 4>ABC? : F5==K< 1C<030<, =5 :>B8@C5<K< =0 Nasdaq. 1991 &5==K5 1C<038, B>@3C5<K5 =0 Nasdaq National Market, 4>AB83;8 ?> "70:>=0< 3>;C1>3> =510" (70:>=K HB0B>2, @53C;8@CNI85 @538AB@0F8N 8 ?@54;>65=85 =>2KE F5==KE 1C<03) B>3> 65 AB0BCA0, GB> 8 1C<038, :>B8@C5<K5 =0 NYSE 8 AMEX. (@8<. 0:>= 1996 3. National Securities Market Improvement Act ?@54?8A0;, GB> 2A5 HB0BK >1O70=K >A2>1>640BL F5==K5 1C<038, :>B8@C5<K5 =0 Nasdaq National Market, >B @53C;8@>20=8O ?> "70:>=0< 3>;C1>3> =510"). 1992 0G8=05B DC=:F8>=8@>20BL A8AB5<0 Nasdaq International Service, ?>72>;ONI0O >ACI5AB2;OBL >?5@0F88 A 1C<030<8 Nasdaq National Market 2 @0==85 CB@5==85 G0AK, A <><5=B0 >B:@KB8O D8=0=A>2KE @K=:>2 2 >=4>=5. 0G0B> ?@54>AB02;5=85 B>@3>2>9 AB0B8AB8:8 2 @50;L=>< 2@5<5=8 4;O Nasdaq SmallCap Market (B>@3>20O A8AB5<0 4;O 0:F89 :><?0=89 A <0;>9 :0?8B0;870F859). 1994 >4, O282H89AO ?>2>@>B=K< ?C=:B><. Nasdaq Stock Market ?@527>H5; LN->@:A:CN D>=4>2CN 18@6C NYSE ?> 3>4>2><C >1>@>BC 0:F89. 1997 SEC >4>1@8;0 70?@>A Nasdaq =0 =0G0;> :>B8@>2:8 ?> 1/16 4>;;0@0 4;O 0:F89, F5=0 :>B>@KE ?@52KH05B $10. Nasdaq ?@8=8<05B =>2K5 ?@028;0 ?>@O4:0 8A?>;=5=8O >@45@>2. <5AB5 A ?5@5E>4>< Nasdaq =0 :>B8@>2:C ?> 1/16 40==K5 ?@028;0 A?>A>1AB2>20;8 CAB0=>2;5=8N ;CGH8E F5= 8 A>:@0I5=8N A@54=53> A?@540 =0 40%. 1998!;8O=85 NASD 8 AMEX ?@825;> : A>740=8N @K=>G=>9 3@C??K Nasdaq-Amex Market Group. A>15==>AB8 AB@C:BC@K @K=:0 Nasdaq ! <><5=B0 A2>53> A>740=8O 2 1971 M;5:B@>==K9 @K=>: Nasdaq ?> B5<?0< A2>53> @0728B8O AB018;L=> ?@52>AE>48; 4@C385 @K=:8 F5==KE 1C<03, 8 A53>4=O >= O2;O5BAO A0<>9 1KAB@>@0ABCI59 B>@3>2>9 ?;>I04:>9 !(.  >B;8G85 >B B@048F8>==KE 18@652KE @K=:>2 Nasdaq =5 ?@54?>;0305B ACI5AB2>20=85 :>=:@5B=>3> A?5F80;8AB0, G5@57 :>B>@>3> >ACI5AB2;ONBAO A45;:8. !B@C:BC@0 @K=:0 Nasdaq ?>72>;O5B >ACI5AB2;OBL B>@3>2K5 >?5@0F88 <=>3>G8A;5==K< CG0AB=8:0< @K=:0 G5@57 A;>6=CN :><?LNB5@=CN A5BL, A2O7K20NICN ?>:C?0B5;59 8 ?@>402F>2 2> 2A5< <8@5. #G0AB=8:8 @K=:0 ?><>30NB >15A?5G820BL ?@>7@0G=>ABL 8 ;8:284=>ABL F5==KE 1C<03 2 CA;>28OE ?>445@60=88 A8AB5<0B878@>20==>9 @01>BK @K=:0 ?>4 AB@>38< :>=B@>;5< @53C;8@CNI8E >@30=>2.  A>AB02 Nasdaq Stock Market 2E>4OB 420 @K=:0: - The Nasdaq National Market (0F8>=0;L=0O K=>G=0O !8AB5<0 Nasdaq).  ;8AB8=3 Nasdaq National Market, @K=:0 4;O =081>;55 0:B82=> B>@3C5<KE =0 Nasdaq F5==KE 1C<03 :@C?=59H8E :><?0=89-M<8B5=B>2, 2E>48B 1>;55 G5< 4,400 F5==KE 1C<03. ;O ?>;CG5=8O :>B8@>2:8 =0 National Market :><?0=8O 4>;6=0 A>>B25BAB2>20BL AB@>38< :@8B5@8O< 2 >B=>H5=88 D8=0=A>2>3> ?>;>65=8O, :0?8B0;870F88 8 :>@?>@0B82=>3> C?@02;5=8O. - The Nasdaq SmallCap Market ( K=>: Nasdaq 4;O 0:F89 :><?0=89 <0;>9 :0?8B0;870F88).  ;8AB8=3 Nasdaq SmallCap Market, @K=:0 4;O <>;>4KE 8 1KAB@>@0ABCI8E :><?0=89, 2E>48B >:>;> 1,800 F5==KE 1C<03. "0: :0: =0 MB>< A53<5=B5 Nasdaq B>@3CNBAO 0:F88 :><?0=89 A <5=LH59 :0?8B0;870F859, B@51>20=8O 4;O ?>;CG5=8O :>B8@>2:8 745AL =5A:>;L:> <O3G5, G5< =0 Nasdaq National Market, MB> >B=>A8BAO 8 : D8=0=A>2><C A>AB>O=8N :><?0=88-M<8B5=B0, 8 : :>@?>@0B82=><C C?@02;5=8N. ! =0@0I820=85< "25A0" :><?0=88 A <0;>9 :0?8B0;870F859 G0AB> ?5@5E>4OB =0 Nasdaq National Market. 59AB2CNI85 2 =0AB>OI89 <><5=B ?>?@02:8 : ;8AB8=3>2K< B@51>20=8O< Nasdaq Stock Market, :>B>@K5 1K;8 >4>1@5=K SEC 22 023CAB0 1997, 5I5 1>;55 C65AB>G8;8 8 :>;8G5AB25==K5 8 :0G5AB25==K5 B@51>20=8O : M<8B5=B0<, 2=5A5==K< 2 ;8AB8=3 Nasdaq. ?5@2K5 B@51>20=8O : :>@?>@0B82=>9 ?>;8B8:5, ?@8<5=O5<K5 =0 Nasdaq National Market, @0A?@>AB@0=8;8AL 8 =0 Nasdaq SmallCap Market, GB> ACI5AB25==> ?>2KA8;> ?>@>3>2K9 C@>25=L 4;O ?@>E>645=8O ?@>F54C@K ;8AB8=30 =0 Nasdaq SmallCap Market. 865 ?@82>48BAO :@0B:>5 >?8A0=85 2=5A5==KE 87<5=5=89: 8=8<0;L=> B@51C5<K9 C@>25=L F5=K bid (?>:C?:8) 4;O >1K:=>25==KE 8 ?@828;538@>20==KE 0:F89 A>AB02;O5B $1. 1K:=>25==K5 8 ?@828;538@>20==K5 0:F88 4>;6=K 8<5BL <8=8<0;L=CN F5=C bid $1. 0==>5 B@51>20=85 >15A?5G8205B 70I8BC >B >?@545;5==>3> @>40 @K=>G=>9 0:B82=>AB8, A2O70==>9 A "45H52K<8" F5==K<8 1C<030<8, 0 B0:65 A?>A>1AB2C5B @>ABC 4>25@8O : @K=:C. Nasdaq O2;O5BAO 548=AB25==K< @K=:><, 8<5NI8< B@51>20=85 <8=8<0;L=>9 F5=K bid. #65AB>G5=85 :>;8G5AB25==KE B@51>20=89. 0==>5 C65AB>G5=85 B@51>20=89 : D8=0=A>2><C A>AB>O=8N ?@8720=> C;CGH8BL :0G5AB2> 8 AB018;L=>ABL :><?0=89, B>@3C5<KE =0 Nasdaq, 8 @0AH8@8BL 4;O =8E 2>7<>6=>AB8 ?@82;5G5=8O 4>?>;=8B5;L=>3> :0?8B0;0. @8=OB85 B@51>20=8O > 2708<=>9 ?@>25@:5 (Peer Review Requirement). 5;>20O ?@0:B8:0 2A5E =57028A8<KE 0C48B>@>2, ?@>25@ONI8E :><?0=88, 70=5A5==K5 2 ;8AB8=3 Nasdaq, 4>;6=0 ?>4;560BL :>=B@>;N 2 @0<:0E :0:>9-;81> ?@>3@0<<K 2708<=>9 ?@>25@:8, =0?@8<5@, AICPA SEC Practice Section peer review program. "0:0O ?@>3@0<<0 ?@54?>;0305B, GB> :064K5 B@8 3>40 4>;6=0 >ACI5AB2;OBLAO 2708<=0O ?@>25@:0 :0G5AB20 CA;C3 0C48B>@A:8E :><?0=89. @8=OB85 B@51>20=89 : :>@?>@0B82=>9 ?>;8B8:5. A=>2=K5 B@51>20=8O : :>@?>@0B82=>9 ?>;8B8:5 4;O :><?0=89, 2=5A5==KE 2 ;8AB8=3 Nasdaq SmallCap Market: 0AAK;:0 3>4>2KE 8 ?@><56CB>G=KE >BG5B>2 !CI5AB2>20=85 :0: <8=8<C< 42CE =57028A8<KE 48@5:B>@>2 52878>==K9 :><8B5B, 1>;LH8=AB2> 2 :>B>@>< ?@54AB02;ONB =57028A8<K5 48@5:B>@0 @>2545=85 5653>4=>3> A>1@0=8O 0:F8>=5@>2 !>1;N45=8O :2>@C<0 >@O4>: 70>G=>3> 3>;>A>20=8O 0AA<>B@5=85 :>=D;8:B0 8=B5@5A>2 5>1E>48<>ABL >4>1@5=8O 0:F8>=5@>2 2 >B=>H5=88 =5:>B>@KE 459AB289 :><?0=88 50;870F8O ?@020 3>;>A0 =0 A>1@0=88 0:F8>=5@>2 >2K5 B@51>20=8O Nasdaq =0?@02;5=K =0 70I8BC 8=B5@5A>2 8=25AB>@>2 2 @0<:0E C;CGH5=8O :0G5AB20 @01>BK Nasdaq Stock Market. "@51>20=8O Nasdaq SmallCap Market PRIVATE"@51>20=855@2>=0G0;L=K9 ;8AB8=3@>4>;65=85 ;8AB8=30'8ABK5 <0B5@80;L=K5 0:B82K1 K=>G=0O :0?8B0;870F8O '8AB0O ?@81K;L (2 ?>A;54=5< D8=0=A>2>< 3>4C 8;8 42CE 87 ?>A;54=8E 3 D8=0=A>2KE ;5B)$4 <8;;8>=0 8;8 $50 <8;;8>=>2 8;8 $750,000$2 <8;;8>=0 8;8 $35 <8;;8>=>2 8;8 $500,000>;8G5AB2> 0:F89 2 >1@0I5=88, =0E>4OI55AO 2 @C:0E C >1KG=KE 8=25AB>@>221 <8;;8>=500,000 K=>G=0O AB>8<>ABL 0:F89 2 @C:0E C >1KG=KE 8=25AB>@>2$5 <8;;8>=>2$1<8;;8>=8=8<0;L=0O F5=0 bid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ublic float" >?@545;O5BAO :0: :>;8G5AB2> 0:F89 2 >1@0I5=88, =5 =0E>4OI8EAO ?@O<> 8;8 :>A25==> 2 @C:0E 2KAH8E @C:>2>4OI8E ;8F 8;8 48@5:B>@>2 :><?0=88-M<8B5=B0 8;8 8=KE ;8F, O2;ONI8EAO 15=5D8F80@=K<8 A>1AB25==8:0<8 1>;55 G5< 10%-=>3> ?0:5B0 0:F89. 3 5@60B5;O<8 AB0=40@B=KE ;>B>2 (round lot holders) AG8B0NBAO 45@60B5;8 100 8;8 1>;55 0:F89. 4 A;8 8AB>@8O 45OB5;L=>AB8 :><?0=88 =5 ?@52KH05B 1 3>40, 4;O ?5@2>=0G0;L=>3> ;8AB8=30 B@51C5BAO, GB>1K 55 @K=>G=0O :0?8B0;870F8O 1K;0 =5 <5=55 $50 <8;;8>=>2. 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(SEC Rule 15g-2(a), Risk Disclosure Document Relating to the Penny Stock Market). 5A:>;L:> A;>2 >1 8AB>@88  8N=5 19903. A;C610 OTCBB =0G0;0 A2>N @01>BC =0 M:A?5@8<5=B0;L=>9 >A=>25 2 @0<:0E 206=59H8E ?@5>1@07>20=89 AB@C:BC@K D>=4>2>3> @K=:0, ?@8720==KE >15A?5G8BL ?@>7@0G=>ABL =0 2=518@652>< @K=:5. >2K9 70:>= > :>?55G=KE 0:F8OE 19903. (The Penny Stock Reform Act) C?>;=><>G8; SEC =0 A>740=85 M;5:B@>==>9 A8AB5<K, C4>2;5B2>@ONI59 B@51>20=8O< 0745;0 17B 0:>=0 > D>=4>2KE 18@60E. !8AB5<0 704C<K20;0AL 4;O C?@>I5=8O H8@>:>3> @0A?@>AB@0=5=8O 8=D>@<0F88 > :>B8@>2:0E 8 F5=0E ?>A;54=8E ?@>406. ! 45:01@O 19933. >B :><?0=89 ?>B@51>20;>AL ?@54>AB02;OBL >BG5B=>ABL ?> A45;:0< A> 2A5<8 2=CB@5==8<8 1C<030<8 2=518@652>3> @K=:0 G5@57 2B><0B878@>20==CN !;C61C >4B25@645=8O !45;>: (Automated Confirmation Transaction Service) 2 B5G5=85 90 A5:C=4 A <><5=B0 A45;:8.  0?@5;5 19973. SEC A 2=5A5=85< =5:>B>@KE :>@@5:B8@>2>: >4>1@8;0 @01>BC OTCBB =0 ?>AB>O==>9 >A=>25, 8 2 <05 19973. 4>ABC? : :>B8@>2:5 =0 OTCBB ?>;CG8;8 ?@>3@0<<K ?@O<>3> CG0AB8O (DPPs).  0?@5;5 19983. 2A5 8=>AB@0==K5 2K?CA:8 8 ADRs, ?>;=>ABLN 70@538AB@8@>20==K5 2 SEC, ?>;CG8;8 4>ABC? : :>B8@>2:5 8 >B@065=8N 40==KE ?> :>B8@>2:0< 2 @50;L=>< 2@5<5=8, F5=0< ?>A;54=8E ?@>406 8 >1J5<0< B>@3>2 =0 OTCBB. 4 O=20@O 19993. SEC >4>1@8;0 @028;0 !>>B25BAB28O OTCBB. -<8B5=BK F5==KE 1C<03, =5 :>B8@C5<KE =0 OTCBB, A MB>9 40BK 4;O A>1;N45=8O @028; !>>B25BAB28O >1O70=K =0?@02;OBL D8=0=A>2CN >BG5B=>ABL 2 SEC 8 >@30=K, @53C;8@CNI85 10=:>2A:CN 8 AB@0E>2CN 45OB5;L=>ABL. ><?0=8O<, GL8 F5==K5 1C<038 C65 :>B8@CNBAO =0 OTCBB, 8 :>B>@K5 4> A53> <><5=B0 =5 ?@54>AB02;O;8 >BG5B=>ABL, 1K; ?@54>AB02;5= ;L3>B=K9 ?5@8>4 4;O 4>AB865=8O A>>B25BAB28O A =>2K<8 B@51>20=8O<8.  8N=N 20003. 2AO B5:CI0O D8=0=A>20O 8=D>@<0F8O > 2A5E =0F8>=0;L=KE :><?0=8OE, :>B8@C5<KE =0 OTCBB, 1C45B 4>ABC?=0 H8@>:>9 ?C1;8:5. OTCBB: @54>AB02;O5B 4>ABC? : 1>;55 G5< 6,500 F5==K< 1C<030<; 1J548=O5B 1>;55 400 CG0AB=8:>2 <0@:5B-<59:5@>2; @54>AB02;O5B 2 M;5:B@>==>< 2845 :>B8@>2:8 2 @50;L=>< 2@5<5=8, F5=K ?>A;54=8E ?@>406 8 40==K5 >1 >1J5<5 B>@3>2 ?> =0F8>=0;L=K< 1C<030<, 8=>AB@0==K< 2K?CA:0< 8 ADRs; 8 B@0605B ?>:070B5;8 8=B5@5A0 8 ?@5420@8B5;L=CN B>@3>2CN 0:B82=>ABL ?> DPPs. !@02=5=85 Nasdaq 8 OTCBB &5==K5 1C<038 B>@3CNBAO =0 OTCBB A>>1I5AB2>< <0@:5B-<59:5@>2, :>B>@K5 22>4OB :>B8@>2:8 8 B>@3>2K5 >BG5BK G5@57 A;>6=CN 70:@KBCN :><?LNB5@=CN A5BL, 4>ABC? 2 :>B>@CN >15A?5G8205BAO G5@57 Nasdaq Workstation IITM. OTCBB >B;8G05BAO >B Nasdaq Stock Market B5<, GB>: =5 =0;0305B B@51>20=89 4;O ?>;CG5=8O :>B8@>2:8 8 =5 8<55B ;8AB8=3>2KE AB0=40@B>2; =5 ?@54>AB02;O5B 2>7<>6=>AB8 02B><0B8G5A:>3> 8A?>;=5=8O A45;>:; =5 ?>445@68205B 45;>2KE >B=>H5=89 A :><?0=8O<8-M<8B5=B0<8; 8 =5 =0;0305B MB8E >1O70B5;LAB2 =0 <0@:5B-<59:5@>2. PRIVATE"@51>20=85OTCBBNasdaq8=8<0;L=K5 :>;8G5AB25==K5 ;8AB8=3>2K5 B@51>20=8O5B0!1>@K =0 ;8AB8=3 8 ?>445@60=85 4;O M<8B5=B>25B0"@51>20=8O : ?>445@60=8N :>B8@>2:8 8;8 ;8AB8=300*0-;5:B@>==K5 :>B8@>2:8 2 @50;L=>< 2@5<5=8 4;O 2=CB@5==8E 2K?CA:>2008=8<C< ?> $>@<5 211 8;8 2@5<O =0 ?@>F54C@C ;8AB8=303 4=O6-8 =545;L*** -<8B5=BK F5==KE 1C<03, =0G8=0NI8E :>B8@>20BLAO =0 OTCBB ?>A;5 4 O=20@O 19993., 4;O A>E@0=5=8O ?@020 =0 :>B8@>2:C ?>4?040NB ?>4 B@51>20=85 ?@54>AB02;5=8O ?5@8>48G5A:8E D8=0=A>2KE >BG5B>2 2 SEC 8;8 8=>9 @53C;8@CNI89 >@30=. ** 0?>;=5=85 D>@<K 211 =5 B@51C5BAO 4;O 2=5A5=8O 2 ;8AB8=3 Nasdaq; >4=0:>, A@54=55 2@5<O 4;O ?>;CG5=8O >4>1@5=8O =0 2=5A5=85 2 ;8AB8=3 Nasdaq A>AB02;O5B 6-8 =545;L. OTCBB >B;8G05BAO >B " >7>2KE 8AB:>2" ("Pink Sheets"). >7>2K5 ;8AB:8 565=545;L=> ?C1;8:CNBAO 0F8>=0;L=K< N@> >B8@>2>: (National Quotation Bureau) 8 @0A?@>AB@0=ONBAO <564C 1@>:5@0<8/48;5@0<8. -;5:B@>==0O 25@A8O Pink Sheets 5654=52=> >1=>2;O5BAO 8 @0A?@>AB@0=O5BAO G5@57 B5@<8=0;K ?>AB02I8:>2 (25=4>@>2) @K=>G=>9 8=D>@<0F88. Pink Sheets =5 ?@8=04;560B 8 =5 C?@02;ONBAO The Nasdaq Stock Market, Inc. A>15==>AB8 DC=:F8>=8@>20=8O OTCBB 0A?@>AB@0=5=85 @K=>G=>9 8=D>@<0F88 !;54CNI0O 8=D>@<0F8O ?> OTCBB @0A?@>AB@0=O5BAO G5@57 B5@<8=0;K 25=4>@>2 @K=>G=>9 8=D>@<0F88 8 Web-A09BK 4;O :;85=B>2 ?> 2A5<C <8@C: 48=0<8:0 F5= ?>A;54=8E ?@>406 8 8=D>@<0F8O >1 >1J5<0E B>@3>2 ?> =0F8>=0;L=K< 8 8=>AB@0==K< F5==K< 1C<030< 8 ADRs; A0<0O 2KA>:0O 8 =87:0O F5=0 70 45=L, F5=0 =0 <><5=B 70:@KB8O 8 >1J5< B>@3>2 ?> DPPs; F5=K bid/ask 8 ?>:070B5;8 8=B5@5A0, 2KAB02;O5<K5 :>=:@5B=K<8 <0@:5B-<59:5@0<8; 2=CB@5==85 :>B8@>2:8 4;O =0F8>=0;L=KE 8 8=>AB@0==KE F5==KE 1C<03 8 ADRs 2 A;CG05 8E 4>ABC?=>AB8; 8=48:0B82=K5 :>B8@>2:8 4;O DPPs; 8 :>=B0:B=0O 8=D>@<0F8O ?> <0@:5B-<59:5@0<. @><5 B>3>, 2A5 ?>4?8AG8:8 Nasdaq Workstation II (D8@<K, 22>4OI85 >@45@0 8 <0@:5B-<59:5@K) <>3CB 2845BL 2AN 8=D>@<0F8N OTCB =0 A2>8E @01>G8E A8AB5<0E, =5 =5AO ?@8 MB>< 4>?>;=8B5;L=KE @0AE>4>2. @58<CI5AB20 4;O <0@:5B-<59:5@>2 #G0AB=8:8 <0@:5B-<59:5@K <>3CB: 70@538AB@8@>20BLAO =0 65;05<>5 :>;8G5AB2> F5==KE 1C<03; >1=>2;OBL :>B8@>2:8 bid 8 ask 2 @568<5 @50;L=>3> 2@5<5=8 4;O =0F8>=0;L=KE 8 8=>AB@0==KE F5==KE 1C<03 8 ADRs 8 42064K 2 45=L >1=>2;OBL :>B8@>2:8 ?> DPPs; 22>48BL >4=>AB>@>==85 8;8 42CAB>@>==85 :>B8@>2:8; 8A?>;L7>20BL F5=K bid G5@57 "offer-wanted" (OW) entries (22>4 >1JO2;5=89 > =5>1E>48<>AB8 ?@54;>65=8O > ?@>4065) 8 F5=K offer G5@57 "bid-wanted" (BW) entries (22>4 >1JO2;5=89 > =5>1E>48<>AB8 ?@54;>65=8O > ?>:C?:5); 8 70O2;OBL > A2>59 4>1@>2>;L=>9 708=B5@5A>20==>AB8 2 :>=:@5B=>9 F5==>9 1C<035 157 C:070=8O F5=K. 538AB@0F8O =0 "A>740=85 @K=:0" ?> 1C<030<, :>B8@C5<K< =0 OTCBB. OTCBB DC=:F8>=8@C5B :0: 48;5@A:0O A8AB5<0. >MB><C 2A5 1C<038, :>B8@C5<K5 =0 OTCBB, 4>;6=K A?>=A8@>20BLAO CG0AB2CNI8< <0@:5B-<59:5@><, :>B>@K9 2 A;CG05 >BACBAB28O >A2>1>645=8O @538AB@8@C5B F5==CN 1C<03C G5@57 70?>;=5=85 $>@<K 211. 0@:5B-<59:5@ 4>;65= ?>40BL $>@<C 211 2 NASD OTC Compliance Unit (>B45; A>>B25BAB28O) 2<5AB5 A 42C<O :>?8O<8 4>:C<5=B>2, B@51C5<KE >B M<8B5=B0, =5 ?>74=55 G5< 70 3 @01>G8E 4=O 4> >?C1;8:>20=8O :>B8@>2:8 =0 OTC Bulletin Board. >A;5 ?@>25@:8 Nasdaq Market Data Integrity (>B45; 4>AB>25@=>AB8 @K=>G=>9 8=D>@<0F88) C254><8B <0@:5B-<59:5@0, GB> >= 1K; 70@538AB@8@>20= ?> F5==>9 1C<035 8 <>65B 22>48BL :>B8@>2:C. "54>?CI5==K5" F5==K5 1C<038 A5 1C<038 2=518@652>3> @K=:0, =5 :>B8@C5<K5 2 =0AB>OI89 <><5=B =0 OTCBB, AG8B0NBAO "=54>?CI5==K<8", ?>:0 <0@:5B-<59:5@ =5 ?@54AB028B $>@<C 211 8;8 $>@<C >A2>1>645=8O 15c2-11. >A;5 ?@>25@:8 F5==>9 1C<035 ?@8A208205BAO AB0BCA "4>?CI5==>9". ">?CI5==K5" F5==K5 1C<038 A;8 F5==0O 1C<030 8<55B AB0BCA "4>?CI5==>9", MB> >7=0G05B, GB> >48= 8;8 =5A:>;L:> <0@:5B-<59:5@>2 ?>;CG8;8 ?@02> :>B8@>20BL 2K?CA: =0 OTC Bulletin Board 2 ?>A;54=85 30 4=59. A5 4@C385 CG0AB2CNI85 <0@:5B-<59:5@K, :>B>@K5 65;0NB :>B8@>20BL 2K?CA:, 4>;6=K B0:65 ?@54AB028BL 70?>;=5==CN $>@<C 211.  ?5@8>4 ACI5AB2>20=8O C 1C<038 AB0BCA0 "4>?CI5==>9" ?@>2>48BAO B5AB "G0AB>BK :>B8@>2:8" (frequency-of-quotation test). -B>B B5AB >?8AK205BAO =865. > B5E ?>@, ?>:0 B5AB =5 ?@>945=, <0@:5B-<59:5@K >1O70=K ?@>4>;60BL ?@54>AB02;OBL 70?>;=5==CN $>@<C 211. :B82=K5 F5==K5 1C<038 >?CI5==0O =0 OTCBB F5==0O 1C<030, C4>2;5B2>@ONI0O B@51>20=8O< B5AB0 =0 "G0AB>BC :>B8@>2:8" 4;O 8A:;NG5=8O "A?8=0 ?>@>A5=:0" ("piggyback" exception), >?@545;O5BAO 2 A8AB5<5 :0: 0:B82=0O. 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"@51>20=8O >BG5B=>AB8 0@:5B-<59:5@K A5 A45;:8 A =0F8>=0;L=K<8 2K?CA:0<8, :0=04A:8<8 2K?CA:0<8 8 ADRs ?>4;560B >BG5B=>AB8 2 B5G5=85 90 A5:C=4 G5@57 2B><0B878@>20==CN !;C61C >4B25@645=8O !45;>:. A5 >AB0;L=K5 A45;:8 <>3CB D8:A8@>20BLAO ?> ?@8=F8?C T+1 (@0AG5B ?> F5==K< 1C<030< G5@57 1 @01>G89 45=L ?>A;5 70:;NG5=8O A45;:8). -<8B5=BK Nasdaq =5 8<55B =8:0:8E 45;>2KE >B=>H5=89 A M<8B5=B0<8, GL8 1C<038 :>B8@CNBAO =0 OTC Bulletin Board. 0==K5 :><?0=88 =5 =5ACB =8:0:8E >1O70B5;LAB2 ?> @538AB@0F88 8;8 >BG5B=>AB8 =8 ?5@54 The Nasdaq Stock Market, Inc., =8 NASD. 4=0:> M<8B5=BK F5==KE 1C<03, :>B>@K5 =0G0;8 :>B8@>20BLAO =0 OTCBB ?>A;5 4 O=20@O 19993., ?>4;560B ?5@8>48G5A:><C ?@54AB02;5=8N 4>:C<5=B>2 2 SEC 8;8 8=>9 @53C;8@CNI89 >@30=. =D>@<0F8O >1 M<8B5=B5 ">;L:> <0@:5B-<59:5@K <>3CB :>B8@>20BL F5==K5 1C<038 2 A8AB5<5 OTCBB. -<8B5=BK <>3CB A2O70BLAO A >4=8< 87 C?>;=><>G5==KE <0@:5B-<59:5@>2 2 F5;OE ?>;CG5=8O A?>=A>@A:>9 ?>445@6:8 4;O :>B8@>2:8 =0 OTCBB. OTCBB =5 278<05B A M<8B5=B>2 ?;0BK 70 ?>;CG5=85 :>B8@>2:8. @028;0 NASD 70?@5I0NB <0@:5B-<59:5@0< ?@8=8<0BL :0:>5-;81> 2>7=03@0645=85 70 :>B8@>2:C F5==KE 1C<03 M<8B5=B0 =0 OTCBB 8;8 2 0=0;>38G=>9 :>B8@>2>G=>9 A8AB5<5. B25BK =0 G0AB> 7040205<K5 2>?@>AK >65B ;8 0:F8O >4=>2@5<5==> B>@3>20BLAO =0 OTCBB 8 Nasdaq? 5B. OTCBB O2;O5BAO :>B8@>2>G=>9 A8AB5<>9 4;O F5==KE 1C<03, :>B>@K5 =5 ?@>H;8 ?@>F54C@C ;8AB8=30 8 =5 :>B8@CNBAO =0 Nasdaq 8;8 :0:>9-;81> =0F8>=0;L=>9 D>=4>2>9 18@65. 4=0:> <>65B 2>7=8:=CBL A8BC0F8O, ?@8 :>B>@>9 0:F8O 70=>A8BAO 2 ;8AB8=3 8;8 8A:;NG05BAO 87 ;8AB8=30 Nasdaq 8 2 B>B 65 B>@3>2K9 45=L ?5@5E>48B A>>B25BAB25==> 87 OTCBB =0 Nasdaq 8;8 87 Nasdaq =0 OTCBB.  G5< 70:;NG05BAO @07=8F0 <564C 2=518@652K< @K=:>< (OTC market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ink Sheets") =5 ACI5AB2C5B =8:0:8E 45;>2KE >B=>H5=89.  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A>AB02 8=45:A0 2E>4OB 400 8=4CAB@80;L=KE, 20 B@0=A?>@B=KE, 40 :><<C=0;L=KE 8 40 D8=0=A>2KE :><?0=89. 725H5= ?> @K=>G=>9 :0?8B0;870F88. E20BK205B ?@8<5@=> 80% >1I59 :0?8B0;870F88 :><?0=89, B>@3C5<KE =0 LN->@:A:>9 D>=4>2>9 18@65. 0?8B0;870F8O :><?0=89 2 2K1>@:5 A>AB02;O5B >B 73 <8;;8>=>2 4> 75 <8;;80@4>2 4>;;0@>2. Standard & Poor's 400 Index (aka S&P Midcap) 0=0;>38G5= S&P 500, => >E20BK205B 400 ?@><KH;5==KE :><?0=89, :0?8B0;870F8O :>B>@KE 20@L8@C5BAO >B 85 <8;;8>=>2 4> 6.8 <8;;80@4>2 4>;;0@>2. Standard & Poor's 100 0=0;>38G5= S&P 500, => >E20BK205B B>;L:> 100 0:F89, =0 :>B>@K5 ACI5AB2CNB >?F8>==K5 :>=B@0:BK =0 '8:03A:>9 18@65 >?F8>=>2. "OEX" - =0720=85 >?F8>=0 =0 40==K9 8=45:A, O2;ONI53>AO >48= 87 A0<KE ?>?C;O@=KE 8 B>@3C5<KE >?F8>=>2. Value Line Composite 725H5==K9 ?> F5=5 8=45:A :0: ?@>B82>?>;>6=>ABL 8=45:AC, 2725H5==><C ?> :0?8B0;870F88. 5:>B>@K5 AG8B0NB, GB> 40==K9 8=45:A 405B ;CGH55 ?@54AB02;5=85 >1 MDD5:B82=>AB8 8=25AB8F89, B0: :0: >B45;L=K5 0:F88 =5 ?5@5H820NB 2 =5<, 8 1>;LH8=AB2> 8=48284C0;L=KE 8=25AB>@>2 =5 AB@>OB A2>9 ?>@BD5;L A 2725H820=85< ?> @K=>G=>9 :0?8B0;870F88. (?>:0 >=8 =5 ?>:C?0NB 8=45:A=K5 D>=4K). Wilshire 5000 =45:A >E20BK205B 2A5 :><?0=88, 8<5NI85 3>;>2=>9 >D8A 2 !(, 4;O :>B>@KE 4>ABC?=0 8=D>@<0F8O ?> F5=5. 8AB>@8G5A:8 A;>68;>AL, GB> :><?0=88 87 @>7>2KE ;8AB:>2 1K;8 =5 2:;NG5=K 2 8=45:A, => A ?@>3@5AA>< A?>A>1>2 ?5@540G8 8=D>@<0F88, A?8A>: :><?0=89, 2E>4OI8E 2 8=45:A C25;8G8;AO 4> 1>;55 G5< 7000. =45:A 2725H5= ?> @K=>G=>9 :0?8B0;870F88. "0: :0: =5:>B>@K5 :><?0=88, 2E>4OI85 2 8=45:A S&P 500 8<5NB 3>;>2=>9 >D8A 70 ?@545;0<8 !(, =5 25@=> CB25@640BL, GB> Wilshire 5000 2:;NG05B S&P 500. $@0=F8O A=>2=K<8 D>=4>2K<8 8=45:A0<8 O2;ONBAO CAC-40 8 CAC General. !! 40 @0AAG8BK205BAO ?> 40 0:F8O< :@C?=59H8E M<8B5=B>2, B>@3C5<K< =0 0@86A:>9 D>=4>2>9 18@65. $LNG5@A=K9 :>=B@0:B =0 40==K9 8=45:A, 2>7<>6=>, O2;O5BAO A0<K< ?>?C;O@=K< 8 B>@3C5<K< DLNG5@A=K< :>=B@0:B>< 2> 2A5< <8@5. !! General @0AAG8BK205BAO ?> 0:F8O< 250 M<8B5=B>2. 5@<0=8O A=>2=K< D>=4>2K< 8=45:A>< O2;O5BAO DAX 30, >E20BK20NI89 30 A0<KE B>@3C5<KE 0:F89 (=0 >A=>25 B>@3>2>9 AB0B8AB8:8 70 3 ?>A;54=8E 3>40) =0 $@0=:DC@BA:>9 18@65. =45:A 2725H5= ?> @K=>G=>9 :0?8B0;870F88. > @57C;LB0B0< B>@3>2 2 M;5:B@>==>9 A8AB5<5 @0AAG8BK205BAO 8=45:A Xetra DAX, >= ?@0:B8G5A:8 A>2?0405B A DAX 30. 4=0:> M;5:B@>==0O A5AA8O 4;8==55, ?>MB><C F5=K 70:@KB8O <>3CB ACI5AB25==> @07;8G0BLAO. 0AAG8BK20NBAO B0:65 DAX 100 8 :><?>78B=K9 8=45:A CDAX ?> 320 0:F8O<. 5;8:>1@8B0=8O FT-SE 30 Share Index, Financial Times Industrial Ordinary Share Index 2?5@2K5 AB0; ?C1;8:>20BLAO 2 19353. 8 >E20BK205B 0:F88 30 ?@><KH;5==KE 8 B>@3>2KE :><?0=89. 0AAG8BK205BAO :0: 35><5B@8G5A:0O A@54=OO, ?>;CG05<0O ?CB5< ?5@5<=>65=8O :C@A>2 30 0:F89 87 2K1>@:8 8 ?>A;54CNI53> 872;5G5=8O 87 ?@>872545=8O :>@=O 30-9 AB5?5=8. FT-SE 100 - =081>;55 @0A?@>AB@0=5==K9 8=45:A 2 5;8:>1@8B0=88, H8@>:> 8725AB=K9 :0: 'footsie' ($CBA8 100). @54AB02;O5B A>1>9 2725H5==K9 0@8D<5B8G5A:89 8=45:A, @0AAG8BK205<K9 =0 1075 100 :@C?=59H8E ?> @K=>G=>9 :0?8B0;870F88 :><?0=89 5;8:>1@8B0=88 =0 ?><8=CB=>9 >A=>25. 0 :><?>=5=BK "$CBA8" ?@8E>48BAO >:>;> 70% >1I59 :0?8B0;870F88 D>=4>2>3> @K=:0 5;8:>1@8B0=88. FT-SE Mid 250 - 8=45:A 0:F89 :><?0=89 A> A@54=59 :0?8B0;870F859, =0 :>B>@K5 ?@8E>48BAO ?@8<5@=> 20% @K=:0 5;8:>1@8B0=88. -B> A;54CNI85 250 :><?0=89 ?>A;5 A>B=8 :@C?=59H8E, 2E>4OI8E 2 8=45:A FT-SE 100. 0AAG8BK205BAO A 45:01@O 19853. /?>=8O ;02=K9 D>=4>2K9 8=45:A /?>=88 - "Nikkei" (A>:@0I5==>5 >B A;>2>A>G5B0=8O "nihon keizai" - "nihon" ?>-O?>=A:8 /?>=8O, 0 "keizai" - "D8=0=AK, M:>=><8:0").  53> 2K1>@:C 2E>4OB 225 0:F89, B>@3C5<KE =0 ">:89A:>9 D>=4>2>9 18@65. -B> A@54=50@8D<5B8G5A:89 =52725H5==K9 8=45:A, @0AAG8BK205<K9 ?> B>9 65 <5B>48:5, GB> DJIA. C1;8:C5BAO A 19503. B>@>9 4>AB0B>G=> ?>?C;O@=K9 8=45:A - Topix, @0AAG8BK205<K9 A 19683. ?> 2A5< 0:F8O<, B>@3C5<K< =0 1->9 A5:F88 "$. =45:A JPN O2;O5BAO <>48D8F8@>20==K< 2725H5==K< ?> F5=5 8=45:A><, >B@060NI8< 48=0<8:C 210 >1K:=>25==KE 0:F89, 0:B82=> B>@3C5<KE =0 ">:89A:>9 D>=4>2>9 18@65 8 ?@54AB02;ONI8E >1H8@=K9 A@57 2A5E >B@0A;59 O?>=A:>9 M:>=><8:8. JPN B5A=> A2O70=, => =5 845=B8G5= 8=45:AC Nikkei. 0=040 081>;55 8725AB5= 8=45:A ">@>=BA:>9 18@68 TSE 300, 2725H5==K9 ?> 25;8G8=5 :0?8B0;870F88 8 >E20BK20NI89 14 A5:B>@>2 M:>=><8:8. 5:A8:0 0 5:A8:0=A:>9 D>=4>2>9 18@65 @0AAG8BK205BAO 8=45:A IPC. -B> 2725H5==K9 ?> :0?8B0;870F88 8=45:A, >E20BK20NI89 35 :@C?=59H8E <5:A8:0=A:8E :><?0=89. !>AB02 2K1>@:8 4;O @0AG5B0 :>@@5:B8@C5BAO :064K5 2 <5AOF0. @078;8O !0<K9 8725AB=K9 8=45:A - Bovespa, 2 2K1>@:C 4;O @0AG5B0 :>B>@>3> 2:;NG5=K =081>;55 ;8:284=K5 0:F88, :>B8@C5<K5 =0 18@65 !0=-0C;>. >=:>=3 081>;55 8725AB=K9 8=45:A - 2725H5==K9 ?> @K=>G=>9 :0?8B0;870F88 8=45:A >=:>=3A:>9 D>=4>2>9 18@68 Hang Seng Index, @0AAG8BK205<K9 ?> 0:F8O< 33 :><?0=89, :0?8B0;870F8O :>B>@KE ?@54AB02;O5B >:>;> 70% >1I59 :0?8B0;870F88 @K=:0.  A>AB02 8=45:A0 2E>4OB :><?0=88 4 A5:B>@>2: B>@3>2;O 8 ?@><KH;5==>ABL, D8=0=AK, :><<C=0;L=K5 CA;C38, 75<5;L=0O A>1AB25==>ABL. 5B>48:0 @0AG5B0 8=45:A0 Hang Seng Index (HSI) 07>2K9 45=L ;O ?@>AB>BK ?@8<5@0 ?@54?>;>68<, GB> 2 2K1>@:C 4;O @0AG5B0 8=45:A0 2:;NG5=K 0:F88 6 :><?0=89, A3@C??8@>20==K5 ?> 2 A5:B>@0<, I 8 II.  B01;8F5 C:070=> :>;8G5AB2> 2K?CI5==KE 0:F89 8 F5=0 70:@KB8O 4;O 107>2>3> 4=O. =45:A 107>2>3> 4=O ?@8=OB 70 100. (HKD - 3>=:>=3A:89 4>;;0@) PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.20,0006.0120,000289,0005,00017.085,000C7,00012.084,000II.D8,00021.0168,000370,000E10,00010.0100,000F12,0008.5102,000A5 0:F88 2 2K1>@:5659,0005=L ?5@2K9: >1KG=K9 @0AG5B 5 B@51C5BAO =8:0:8E :>@@5:B8@>2>:, ?>B><C GB> A 0:F8O<8 2 2K1>@:5 =5 ?@>87>H;> =8:0:8E 87<5=5=89. &5=0 70:@KB8O 4=O 8 4@C385 40==K5 4;O @0AG5B0 8=45:A0 ?@82>4OBAO 2 ?5@2>9 B01;8F5. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A20,0006.5130,000293,000B5,00016.582,500C7,00011.580,500II.D8,00020.5164,000373,600E10,00011.0110,000F12,0008.399,600A5 0:F88 2 2K1>@:5666,600 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A 107>2>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L ?5@2K907>2K9 45=L(1)(2)(3)(3)E(1)/(2)I293,000289,000100101.3841II373,600370,000100100.9730HSI666,600659,000100101.15335=L 2B>@>9: >=CA=0O M<8AA8O (bonus issue). ><?0=8O  >ACI5AB2;O5B 1>=CA=CN M<8AA8N (2K?CA: 4>?>;=8B5;L=KE 0:F89 4;O 15A?;0B=>3> @0A?@545;5=8O <564C 0:F8>=5@0<8 ?@>?>@F8>=0;L=> C65 8<5NI8<AO C =8E 0:F8O<) 2 ?@>?>@F88 "1" : "2". &5=0 0:F89  C:07K205BAO :0: ex-bonus (XB) - 8E ?>:C?:0 =5 405B ?@02> =0 15A?;0B=>5 ?>;CG5=85 0:F89, 2K?CI5==KE 2 @0<:0E 1>=CA=>9 M<8AA88.>2>5 :>;8G5AB2> 2K?CI5==KE 0:F89  = 20,000 E (20+1) / 2 = 30,000 PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0004.5XB135,000297,000B5,00017.085,000C7,00011.077,000II.D8,00021.0168,000364,000E10,00010.0100,000F12,0008.096,000A5 0:F88 2 2K1>@:5661,000 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A ?5@2>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L 2B>@>95=L ?5@2K9(1)(2)(3)(3)E(1)/(2)I297,000293,000101.3841102.7682II364,000373,600100.973098.3784HSI661,000666,600101.1533100.30355=L B@5B89: K?CA: =>2KE 0:F89 4;O ;8F, 8<5NI8E =0 =8E ?@02> (rights issue). &5=0 =0 0:F88 D C:07K205BAO :0: ex-right (XR) ("8A:;NG0O ?@02> =0 ?>:C?:C =>2KE 0:F89, ?@54=07=0G5==KE 4;O ?@>4068 C65 ACI5AB2CNI8< 0:F8>=5@0<") 2 ?@>?>@F88 "1" : "4" ?> HKD10 70 0:F8N. >2>5 :>;8G5AB2> 2K?CI5==KE 0:F89 D = 8,000 E (4+1) / 4 = 10,000 PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0005.0150,000318,000B5,00017.587,500C7,00011.580,500II.D10,00019.0XR190,000393,400E10,00010.5105,000F12,0008.298,400A5 0:F88 2 2K1>@:5711,400 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A 2B>@>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L B@5B895=L 2B>@>9(1)(2)(3)(3)E(1)/(2)I318,000297,000102.7682110.0346II393,400384,000*98.3784100.7866HSI711,400681,000*100.3035104.7811* >@@5:B8@>2:0 4;O 0:F89 D A CG5B>< rights issue: 1I0O @K=>G=0O :0?8B0;870F8O 4;O A5:B>@0 II = HKD364,000 + (HKD10 x 2,000) = HKD384,000 1I0O @K=>G=0O :0?8B0;870F8O 4;O 2A5E 0:F89 2 2K1>@:5 = HKD297,000 + HKD384,000 = HKD681,000 5=L G5B25@BK9: =>@<0;L=K9 @0AG5B  0:F8OE, 2:;NG5==KE 2 2K1>@:C, =5 ?@>87>H;> =8:0:8E 87<5=5=89. >MB><C :>@@5:B8@>2>: ?@8 @0AG5B5 8=45:A0 =5 B@51C5BAO. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0005.5165,000336,500B5,00017.587,500C7,00012.084,000II.D10,00020.0200,000402,000E10,00010.0100,000F12,0008.5102,000A5 0:F88 2 2K1>@:5738,500 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A B@5BL53> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L G5B25@BK95=L B@5B89(1)(2)(3)(3)E(1)/(2)I336,500318,000110.0346116.4360II402,000393,400100.7866102.9899HSI738,500711,400104.7811108.77265=L ?OBK9: 0<5=0 0:F89 2 2K1>@:5 :F88 :><?0=88  70<5=ONBAO =0 0:F88 :><?0=88 G. :F88 G B>@3CNBAO 2 G5B25@BK9 45=L ?> F5=5 HKD15, 8 :>;8G5AB2> 2K?CI5==KE 0:F89 A>AB02;O5B 6,000. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0005.0150,000329,100B7,00012.386,100C6,00015.593,000II.D10,00020.5205,000403,000E10,0009.090,000F12,0009.0108,000A5 0:F88 2 2K1>@:5732,100 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A G5B25@B>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L ?OBK95=L G5B25@BK9(1)(2)(3)(3)E(1)/(2)I329,100339,000*116.4360113.0357II403,000402,000102.9899103.2461HSI732,100741,000*108.7726107.4662*>@@5:B8@>2:0 A CG5B>< 70<5=K 0:F89  =0 0:F88 G: 1I0O @K=>G=0O :0?8B0;870F8O 4;O A5:B>@0 I = HKD336,500 - HKD87,500 + (HKD15 x 6,000) = HKD339,000 1I0O @K=>G=0O :0?8B0;870F8O 4;O 2A5E 0:F89 2 2K1>@:5 = HKD339,000 + HKD402,000 = HKD741,000 5=L H5AB>9: @8>AB0=>2:0 B>@3>2 (suspension) ">@38 ?> 0:F8O<  ?@8>AB0=>2;5=K **. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,000Susp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x (112.4677/113,0357) = HKD149,246 1I0O @K=>G=0O :0?8B0;870F8O 4;O 2A5E 0:F89 2 2K1>@:5 B>340 A>AB028B HKD178,200 + HKD400,000 + HKD149,246 = HKD727,446 5=L A54L<>9: >7>1=>2;5=85 ?@8>AB0=>2;5==KE B>@3>2. ">@38 ?> 0:F8O<  2>7>1=>2;ONBAO. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0004.0120,000302,200B7,00013.091,000C6,00015.291,200II.D10,00020.8208,000399,000E10,0008.989,000F12,0008.5102,000A5 0:F88 2 2K1>@:5701,200 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A H5AB>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L A54L<>95=L H5AB>9(1)(2)(3)(3)E(1)/(2)I302,200327,446*112.4677103.7965II399,000400,000102.4775102.2213HSI701,200727,446*106.7830102.9303* >@@5:B8@>2:0 A CG5B>< 2:;NG5=8O CA;>2=> @0AAG8B0==>9 @K=>G=>9 :0?8B0;870F88 ?> 0:F8O<  (=0 >A=>25 40==KE ?> 4=N H5AB><C): 1I0O @K=>G=0O :0?8B0;870F8O 4;O A5:B>@0 I = HKD178,200 + HKD149,246 = HKD327,446 1I0O @K=>G=0O :0?8B0;870F8O 4;O 2A5E 0:F89 2 2K1>@:5 = HKD327,446 + HKD400,000 = HKD727,446 5=L 2>AL<>9: 82845=4K :F88 G B>@3CNBAO :0: ex-dividend (XD) ("8A:;NG0O 482845=4K" - ?>:C?:0 0:F89 =5 405B ?@02> =0 ?>;CG5=85 >G5@54=KE 482845=4>2, 482845=4K ?>;CG05B ?@>4025F). 8:0:8E 87<5=5=89 ?@8 @0AG5B5 8=45:A0 2=>A8BL =5 B@51C5BAO. PRIVATE!5:B>@:F8O>;8G5AB2>&5=0 70:@KB8O (HKD) K=>G=0O :0?8B0;870F8O (HKD)1I0O @K=>G=0O :0?8B0;870F8O (HKD)I.A30,0004.2126,000309,100B7,00013.393,100C6,00015.0XD90,000II.D10,00021.0210,000406,600E10,0009.191,000F12,0008.8105,600A5 0:F88 2 2K1>@:5715,700 0AG5B 8=45:A0: PRIVATE!5:B>@1I0O @K=>G=0O :0?8B0;870F8O (HKD)=45:A A54L<>3> 4=O=0G5=85 8=45:A0 =0 A53>4=O5=L 2>AL<>95=L A54L<>9(1)(2)(3)(3)E(1)/(2)I309,100302,200103.7965106.1664II406,600399,000102.2213104.1684HSI715,700701,200102.9303105.0588 =45:AK @07;8G=KE A5:B>@>2 http://cbs.marketwatch.com/data/dbcfiles/indindext.htx PRIVATESym.Company Name$XALAIRLINE (AMEX)$AUXAUTOMOTIVE (CBOE)$BANKBANKING (NASDAQ)$BKXBANK PHLX/KBW (PHLX)$BIXBANK S&P (CBOE)$BTKBIOTECH (AMEX)$IXBTBIOTECH (NASDAQ)$CEXCHEMICAL S&P (CBOE)$IXCOCOMPUTER NASDAQ$GHACOMPUTER HARDWARE GOLDMAN/SACHS$GSVCOMPUTER SERVICES GOLDMAN/SACHS$CWXCOMPUTER SOFTWARE (CBOE)$GSOCOMPUTER SOFTWARE GOLDMAN/SACHS$XCICOMPUTER TECHNOLOGY (AMEX)$CMRCONSUMER MORGAN STANLEY (AMEX)$DJRDOW JONES EQUITY REIT$NFFINANCIAL (NYSE)$IXFFINANCIAL (NASDAQ)$OFINFINANCIALS OTHER (NASDAQ)$FPPFOREST & PAPER PRODUCTS (PHLX)$GAXGAMING (CBOE)$GOXGOLD (CBOE)$XAUGOLD AND SILVER (PHLX)$HCXHEALTH CARE S&P (CBOE)$MSHHIGH TECH 35 MORGAN STANLEY (AMEX)$NDINDUSTRIAL (NYSE)$INDSINDUSTRIAL (NASDAQ)$NINDINDUSTRIAL NASDAQ NATIONAL MARKET$INSRINSURANCE (NASDAQ)$IUXINSURANCE S&P (CBOE)$IIXINTERNET (AMEX)$INXINTERNET (CBOE)$GININTERNET GOLDMAN/SACHS$XNGNATURAL GAS (AMEX)$NWXNETWORKING (AMEX)$GIPNETWORKING MULTIMEDIA (GOLDMAN/SACHS)$XOIOIL (AMEX)$OIXOIL (CBOE)$OSXOIL SERVICE$DRGPHARMACEUTICAL (AMEX)$RLXRETAIL S&P (CBOE)$GSMSEMICONDUCTOR GOLDMAN/SACHS$SOXSEMICONDUCTOR (PHLX)$XBDSECURITIES BROKER/DEALER (AMEX)$TXXTECHNOLOGY (CBOE)$PSETECHNOLOGY (PSE)$IXTCTELECOMMUNICATIONS (NASDAQ)$TRANQTRANSPORTATION (NASDAQ)$NVTRANSPORTATION (NYSE)$TRXTRANSPORTATION S&P (CBOE)$NNAUTILITIES (NYSE)$UTYUTILITIES (PHLX) !>AB02 >A=>2=KE 8=45:A>2 Dow Jones 30 :><?0=89, 2E>4OI8E 2 A>AB02 Dow Jones Industrial Average: (* >2K5 :><?0=88, 2>H54H85 2 8=45:A 1 =>O1@O 19993.) http://averages.dowjones.com/djia_cos.html PRIVATECompany NameSymbolPriceWeighting %Alcoa Inc.(AA)69.18753.112American Express Co.(AXP)144.50006.500AT & T Corp.(T)54.87502.468Boeing Co.(BA)36.12501.625Caterpillar Inc.(CAT)42.43751.909Citigroup Inc.(C)58.62502.637Coca-Cola Co.(KO)47.62502.142DuPont Co.(DD)57.56252.589Eastman Kodak Co.(EK)60.00002.699Exxon Mobil Corp.(XOM)79.75003.587General Electric Co.(GE)153.18756.891General Motors Corp.(GM)82.43753.708* Home Depot Inc.(HD)63.06252.837Honeywell International Inc.(HON)52.75002.373Hewlett-Packard Co.(HWP)142.68756.419International Business Machines Corp.(IBM)123.43755.553* Intel Corp.(INTC)129.87505.842International Paper Co.(IP)40.31251.813J.P. Morgan & Co.(JPM)134.43756.048Johnson & Johnson(JNJ)77.50003.486McDonald's Corp.(MCD)37.68751.695Merck & Co.(MRK)67.43753.033* Microsoft Corp.(MSFT)86.37503.885Minnesota Mining & Manufacturing Co.(MMM)91.12504.099Philip Morris Cos.(MO)22.37501.006Procter & Gamble Co.(PG)61.56252.769* SBC Communications Inc.(SBC)46.31252.083United Technologies Corp.(UTX)61.00002.744Wal-Mart Stores Inc.(WMT)58.37502.626Walt Disney Co.(DIS)40.18751.80720 :><?0=89, 2E>4OI8E 2 A>AB02 Dow Jones Transportation Average: http://averages.dowjones.com/djta_cos.html PRIVATECompany NameSymbolPriceWeighting %Airborne Freight Corp.(ABF)22.81253.625Alexander & Baldwin, Inc.(ALEX)19.75003.139AMR Corp.(AMR)34.31255.453Burlington Northern Santa Fe Corp.(BNI)24.31253.864CNF Transportation, Inc.(CNF)29.00004.609CSX Corp.(CSX)23.87503.794Delta Air Lines, Inc.(DAL)55.25008.781FDX Corp.(FDX)39.37506.258GATX Corp.(GMT)36.81255.851J.B. Hunt Transportation Services(JBHT)14.62502.324Norfolk Southern Corp.(NSC)15.93752.533Northwest Airlines Corp.(NWAC)22.68753.606Roadway Express, Inc.(ROAD)20.18753.208Ryder System, Inc.(R)22.06253.506Southwest Airlines Co.(LUV)21.25003.377UAL Corp.(UAL)61.37509.755Union Pacific Corp.(UNP)41.00006.516US Airways Group, Inc.(U)29.37504.668USFreightways(USFC)38.50006.119Yellow Corp.(YELL)17.50002.78115 :><?0=89, 2E>4OI8E 2 A>AB02 Dow Jones Utility Average: http://averages.dowjones.com/djua_cos.html PRIVATECompany NameSymbolPriceWeighting %American Electric Power Co.(AEP)31.62505.760Columbia Energy Group(CG)60.500011.02Consolidated Edison Inc.(ED)29.81255.430Dominion Resources Inc.(D)40.00007.286Duke Energy Corp.(DUK)53.87509.813Edison International(EIX)16.87503.073Enron Corp.(ENE)66.562512.12Reliant Energy(REI)24.00004.371PECO Energy Co.(PE)40.68757.411PG&E Corp.(PCG)21.75003.961Public Service Enterprise Group(PEG)30.12505.487Southern Co.(SO)23.12504.212Texas Utilities Co.(TXU)31.00005.646Unicom Corp.(UCM)39.12507.126Williams Cos.(WMB)39.93757.274      HYPERLINK "http://diplomukr.com.ua" diplomukr.com.ua - @0<>B=>5 8 :0G5AB25==>5 2K?>;=5=85 2A5E 284>2 =0CG=KE @01>B. !:84:8, >@838=0;L=>ABL, :>=B@>;L ?;0380B0, ?@O<>5 >1I5=85 A 02B>@><. 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