You are on page 1of 61

SU(1[[

(8523($135(67$1'$5'
35e1250((8523e(11(
(8523b,6&+(9251250

6HSWHPEHU

8'&
'HVFULSWRUV

(QJOLVKYHUVLRQ

(XURFRGH'HVLJQRIVWHHOVWUXFWXUHV
3DUW*HQHUDOVWUXFWXUDOUXOHV
&DOFXOGHVVWUXFWXUHVHQDFLHU

%HPHVVXQJXQG.RQVWUXNWLRQYRQ6WDKOEDXWHQ

3DUWLH5qJOHVJpQpUDOHV

7HLO$OOJHPHLQH%HPHVVXQJVUHJHOQ

&(1
(XURSHDQ&RPPLWWHHIRU6WDQGDUGLVDWLRQ
&RPLWp(XURSpHQGH1RUPDOLVDWLRQ
(XURSlLVFKHV.RPLWHHIU1RUPXQJ
&HQWUDO6HFUHWDULDWUXHGH6WDVVDUW%%UXVVHOV

[[&RS\ULJKWUHVHUYHGWRDOO&(1PHPEHUV

5HI1R(1[[(

3DJH
SU(1[[

&RQWHQW

)LQDOGUDIW
6HSWHPEHU
3DJH

)RUHZRUG

*HQHUDO
 6FRSH
 6FRSHRI(XURFRGH
 6FRSHRI3DUWRI(XURFRGH
 1RUPDWLYHUHIHUHQFHV
 *HQHUDOUHIHUHQFHVWDQGDUGV
 :HOGDEOHVWUXFWXUDOVWHHOUHIHUHQFHVWDQGDUGV
 'LPHQVLRQVRIVHFWLRQVUHIHUHQFHVWDQGDUGV
 $VVXPSWLRQV
 'LVWLQFWLRQEHWZHHQSULQFLSOHVDQGDSSOLFDWLRQUXOHV
 'HILQLWLRQV
 6\PEROV
 &RQYHQWLRQVIRUPHPEHUD[HV

%DVLVRIGHVLJQ
 5HTXLUHPHQWV
 %DVLFUHTXLUHPHQWV
 5HOLDELOLW\PDQDJHPHQW
 'HVLJQZRUNLQJOLIHGXUDELOLW\DQGUREXVWQHVV
 3ULQFLSOHVRIOLPLWVWDWHGHVLJQ
 %DVLFYDULDEOHV
 $FWLRQVDQGHQYLURQPHQWDOLQIOXHQFHV
 0DWHULDODQGSURGXFWSURSHUWLHV
 9HULILFDWLRQE\WKHSDUWLDOIDFWRUPHWKRG
 'HVLJQYDOXHRIPDWHULDOSURSHUW\
 'HVLJQYDOXHRIJHRPHWULFDOGDWD
 'HVLJQUHVLVWDQFHV
 9HULILFDWLRQRIVWDWLFHTXLOLEULXP (48
 'HVLJQDVVLVWHGE\WHVWLQJ

0DWHULDOV
 *HQHUDO
 6WUXFWXUDOVWHHO
 0DWHULDOSURSHUWLHV
 'XFWLOLW\UHTXLUHPHQWV
 )UDFWXUHWRXJKQHVV
 7KURXJKWKLFNQHVVSURSHUWLHV
 7ROHUDQFHV
 'HVLJQYDOXHVRIPDWHULDOFRHIILFLHQWV
 &RQQHFWLQJGHYLFHV
 )DVWHQHUV
 :HOGLQJFRQVXPDEOHV









































'XUDELOLW\



6WUXFWXUDODQDO\VLV



 6WUXFWXUDOPRGHOOLQJIRUDQDO\VLV
 6WUXFWXUDOPRGHOOLQJDQGEDVLFDVVXPSWLRQV
 -RLQWPRGHOOLQJ
 *URXQGVWUXFWXUHLQWHUDFWLRQ
 6WUXFWXUDOVWDELOLW\
 (IIHFWVRIGHIRUPHGJHRPHWU\RIWKHVWUXFWXUH
 0HWKRGVRIDQDO\VLV
 ,PSHUIHFWLRQV










)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 %DVLV
 ,PSHUIHFWLRQVIRUJOREDODQDO\VLV
 ,PSHUIHFWLRQIRUDQDO\VLVRIEUDFLQJV\VWHPV
 0HPEHULPSHUIHFWLRQV
 &DOFXODWLRQRIDFWLRQHIIHFWV
 0HWKRGVRIDQDO\VLVFRQVLGHULQJWKHHIIHFWVRIGHIRUPHGJHRPHWU\
 0HWKRGVRIDQDO\VLVFRQVLGHULQJPDWHULDOQRQOLQHDULWLHV
 &ODVVLILFDWLRQRIFURVVVHFWLRQV
 %DVLV
 &ODVVLILFDWLRQ
 &URVVVHFWLRQUHTXLUHPHQWVIRUSODVWLFJOREDODQDO\VLV
 &URVVVHFWLRQUHTXLUHPHQWVZKHQHODVWLFJOREDODQDO\VLVLVXVHG















8OWLPDWHOLPLWVWDWHV



 *HQHUDO
 5HVLVWDQFHRIFURVVVHFWLRQV
 *HQHUDO
 6HFWLRQSURSHUWLHV
 7HQVLRQ
 &RPSUHVVLRQ
 %HQGLQJPRPHQW
 6KHDU
 7RUVLRQ
 %HQGLQJDQGVKHDU
 %HQGLQJDQGD[LDOIRUFH
 %HQGLQJVKHDUDQGD[LDOIRUFH
 %XFNOLQJUHVLVWDQFHRIPHPEHUV
 &RPSUHVVLRQPHPEHUV
 /DWHUDOWRUVLRQDOEXFNOLQJRIEHDPV
 /DWHUDOWRUVLRQDOEXFNOLQJRIIUDPHV
 %HQGLQJDQGD[LDOFRPSUHVVLRQ
 %XLOWXSFRPSUHVVLRQPHPEHUV
 *HQHUDO
 /DFHGFRPSUHVVLRQPHPEHUV
 &RPSRQHQWVRIEDWWHQHGFRPSUHVVLRQPHPEHUV
 &ORVHO\VSDFHGEXLOWXSPHPEHUV
























6HUYLFHDELOLW\OLPLWVWDWHV



)DVWHQHUVZHOGVFRQQHFWLRQVDQGMRLQWV



$QQH[$>LQIRUPDWLYH@5HFRPPHQGDWLRQVIRUDOWHUQDWLYHLQWHUDFWLRQIDFWRUVLQ  DQG 

$
*HQHUDO

$
0HWKRG$0RGLILFDWLRQRIWKHLQWHUDFWLRQIDFWRUVIRUN N N DQGN IRUFODVVDQGFODVV
FURVVVHFWLRQV


$
0HWKRG%$OWHUQDWLYHLQWHUDFWLRQIDFWRUVN N N DQGN
\\

\\

\]

]\

\]

]]

]\

]]

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

)RUHZRUG
7KLV (XURSHDQ 6WDQGDUG (1  'HVLJQ RI 6WHHO 6WUXFWXUHV  *HQHUDO UXOHV KDV EHHQ SUHSDUHG RQ
EHKDOIRI7HFKQLFDO&RPPLWWHH&(17&6WUXFWXUDO(XURFRGHVWKH6HFUHWDULDWRIZKLFKLVKHOGE\
%6,&(17&LVUHVSRQVLEOHIRUDOO6WUXFWXUDO(XURFRGHV
7KHWH[WRIWKHGUDIWVWDQGDUGZDVVXEPLWWHGWRWKHIRUPDOYRWHDQGZDVDSSURYHGE\&(1DV(1
RQ<<<<00''
1RH[LVWLQJ(XURSHDQ6WDQGDUGLVVXSHUVHGHG

%DFNJURXQGRIWKH(XURFRGHSURJUDPPH
,Q  WKH &RPPLVVLRQ RI WKH (XURSHDQ &RPPXQLW\ GHFLGHG RQ DQ DFWLRQ SURJUDPPH LQ WKH ILHOG RI
FRQVWUXFWLRQ EDVHG RQ DUWLFOH  RI WKH 7UHDW\ 7KH REMHFWLYH RI WKH SURJUDPPH ZDV WKH HOLPLQDWLRQ RI
WHFKQLFDOREVWDFOHVWRWUDGHDQGWKHKDUPRQLVDWLRQRIWHFKQLFDOVSHFLILFDWLRQV
:LWKLQWKLVDFWLRQSURJUDPPHWKH&RPPLVVLRQWRRNWKHLQLWLDWLYHWRHVWDEOLVKDVHWRIKDUPRQLVHGWHFKQLFDO
UXOHVIRUWKHGHVLJQRIFRQVWUXFWLRQZRUNVZKLFKLQDILUVWVWDJHZRXOGVHUYHDVDQDOWHUQDWLYHWRWKHQDWLRQDO
UXOHVLQIRUFHLQWKH0HPEHU6WDWHVDQGXOWLPDWHO\ZRXOGUHSODFHWKHP
)RUILIWHHQ\HDUVWKH&RPPLVVLRQZLWKWKHKHOSRID6WHHULQJ&RPPLWWHHZLWK5HSUHVHQWDWLYHVRI0HPEHU
6WDWHV FRQGXFWHG WKH GHYHORSPHQW RI WKH (XURFRGHV SURJUDPPH ZKLFK OHG WR WKH ILUVW JHQHUDWLRQ RI
(XURSHDQFRGHVLQWKHV
,QWKH&RPPLVVLRQDQGWKH0HPEHU6WDWHVRIWKH(8DQG()7$GHFLGHGRQWKHEDVLVRIDQDJUHHPHQW
EHWZHHQWKH&RPPLVVLRQDQG&(1WRWUDQVIHUWKHSUHSDUDWLRQDQGWKHSXEOLFDWLRQRIWKH(XURFRGHVWRWKH
&(1WKURXJKDVHULHVRI0DQGDWHVLQRUGHUWRSURYLGHWKHPZLWKDIXWXUHVWDWXVRI(XURSHDQ6WDQGDUG (1 
7KLVOLQNVGHIDFWRWKH(XURFRGHVZLWKWKHSURYLVLRQVRIDOOWKH&RXQFLOV'LUHFWLYHVDQGRU&RPPLVVLRQV
'HFLVLRQVGHDOLQJZLWK(XURSHDQVWDQGDUGV HJWKH&RXQFLO'LUHFWLYH((&RQFRQVWUXFWLRQSURGXFWV
&3'DQG&RXQFLO'LUHFWLYHV((&((&DQG((&RQSXEOLFZRUNVDQGVHUYLFHVDQG
HTXLYDOHQW()7$'LUHFWLYHVLQLWLDWHGLQSXUVXLWRIVHWWLQJXSWKHLQWHUQDOPDUNHW 


7KH6WUXFWXUDO(XURFRGHSURJUDPPHFRPSULVHVWKHIROORZLQJVWDQGDUGVJHQHUDOO\FRQVLVWLQJRIDQXPEHURI
3DUWV
(1 (XURFRGH

%DVLVRIVWUXFWXUDOGHVLJQ

(1 (XURFRGH $FWLRQVRQVWUXFWXUHV


(1 (XURFRGH 'HVLJQRIFRQFUHWHVWUXFWXUHV
(1 (XURFRGH 'HVLJQRIVWHHOVWUXFWXUHV
(1 (XURFRGH 'HVLJQRIFRPSRVLWHVWHHODQGFRQFUHWHVWUXFWXUHV
(1 (XURFRGH 'HVLJQRIWLPEHUVWUXFWXUHV
(1 (XURFRGH 'HVLJQRIPDVRQU\VWUXFWXUHV
(1 (XURFRGH *HRWHFKQLFDOGHVLJQ
(1 (XURFRGH 'HVLJQRIVWUXFWXUHVIRUHDUWKTXDNHUHVLVWDQFH
(1 (XURFRGH 'HVLJQRIDOXPLQLXPVWUXFWXUHV
(XURFRGH VWDQGDUGV UHFRJQLVH WKH UHVSRQVLELOLW\ RI UHJXODWRU\ DXWKRULWLHV LQ HDFK 0HPEHU 6WDWH DQG KDYH
VDIHJXDUGHGWKHLUULJKWWRGHWHUPLQHYDOXHVUHODWHGWRUHJXODWRU\VDIHW\PDWWHUVDWQDWLRQDOOHYHOZKHUHWKHVH
FRQWLQXHWRYDU\IURP6WDWHWR6WDWH


$JUHHPHQW EHWZHHQ WKH &RPPLVVLRQ RI WKH (XURSHDQ &RPPXQLWLHV DQG WKH (XURSHDQ &RPPLWWHH IRU 6WDQGDUGLVDWLRQ &(1
FRQFHUQLQJWKHZRUNRQ(852&2'(6IRUWKHGHVLJQRIEXLOGLQJDQGFLYLOHQJLQHHULQJZRUNV %&&(1 

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

6WDWXVDQGILHOGRIDSSOLFDWLRQRI(XURFRGHV
7KH 0HPEHU 6WDWHV RI WKH (8 DQG ()7$ UHFRJQLVH WKDW (XURFRGHV VHUYH DV UHIHUHQFH GRFXPHQWV IRU WKH
IROORZLQJSXUSRVHV





DVDPHDQVWRSURYHFRPSOLDQFHRIEXLOGLQJDQGFLYLOHQJLQHHULQJZRUNVZLWKWKHHVVHQWLDOUHTXLUHPHQWV
RI&RXQFLO'LUHFWLYH((&SDUWLFXODUO\(VVHQWLDO5HTXLUHPHQW1 0HFKDQLFDOUHVLVWDQFH DQG
VWDELOLW\DQG(VVHQWLDO5HTXLUHPHQW16DIHW\LQFDVHRIILUH
DVDEDVLVIRUVSHFLI\LQJFRQWUDFWVIRUFRQVWUXFWLRQZRUNVDQGUHODWHGHQJLQHHULQJVHUYLFHV
DVDIUDPHZRUNIRUGUDZLQJXSKDUPRQLVHGWHFKQLFDOVSHFLILFDWLRQVIRUFRQVWUXFWLRQSURGXFWV (1VDQG
(7$V

7KH(XURFRGHVDVIDUDVWKH\FRQFHUQWKHFRQVWUXFWLRQZRUNVWKHPVHOYHVKDYHDGLUHFWUHODWLRQVKLSZLWKWKH
,QWHUSUHWDWLYH'RFXPHQWV UHIHUUHGWRLQ$UWLFOHRIWKH&3'DOWKRXJKWKH\DUHRIDGLIIHUHQWQDWXUHIURP
KDUPRQLVHG SURGXFW VWDQGDUG  7KHUHIRUH WHFKQLFDO DVSHFWV DULVLQJ IURP WKH (XURFRGHV ZRUN QHHG WR EH
DGHTXDWHO\FRQVLGHUHGE\&(17HFKQLFDO&RPPLWWHHV DQGRU (27$ :RUNLQJ *URXSV ZRUNLQJ RQ SURGXFW
VWDQGDUGVZLWKDYLHZWRDFKLHYLQJDIXOOFRPSDWLELOLW\RIWKHVHWHFKQLFDOVSHFLILFDWLRQVZLWKWKH(XURFRGHV


7KH(XURFRGHVWDQGDUGVSURYLGHFRPPRQVWUXFWXUDOGHVLJQUXOHVIRUHYHU\GD\ XVH IRUWKH GHVLJQ RI ZKROH


VWUXFWXUHV DQG FRPSRQHQW SURGXFWV RI ERWK D WUDGLWLRQDO DQG DQ LQQRYDWLYH QDWXUH 8QXVXDO IRUPV RI
FRQVWUXFWLRQ RU GHVLJQ FRQGLWLRQV DUH QRW VSHFLILFDOO\ FRYHUHG DQG DGGLWLRQDO H[SHUW FRQVLGHUDWLRQ ZLOO EH
UHTXLUHGE\WKHGHVLJQHULQVXFKFDVHV

1DWLRQDO6WDQGDUGVLPSOHPHQWLQJ(XURFRGHV
7KH1DWLRQDO6WDQGDUGVLPSOHPHQWLQJ(XURFRGHVZLOOFRPSULVHWKHIXOOWH[WRIWKH(XURFRGH LQFOXGLQJDQ\
DQQH[HV DVSXEOLVKHGE\&(1ZKLFKPD\EHSUHFHGHGE\D1DWLRQDOWLWOHSDJHDQG1DWLRQDOIRUHZRUGDQG
PD\EHIROORZHGE\D1DWLRQDODQQH[ LQIRUPDWLYH 
7KH1DWLRQDO$QQH[ LQIRUPDWLYH PD\RQO\FRQWDLQLQIRUPDWLRQRQWKRVHSDUDPHWHUVZKLFKDUHOHIWRSHQLQ
WKH(XURFRGHIRUQDWLRQDOFKRLFHNQRZQDV1DWLRQDOO\'HWHUPLQHG3DUDPHWHUVWREHXVHGIRUWKHGHVLJQRI
EXLOGLQJVDQGFLYLOHQJLQHHULQJZRUNVWREHFRQVWUXFWHGLQWKHFRXQWU\FRQFHUQHGLH


YDOXHVIRUSDUWLDOIDFWRUVDQGRUFODVVHVZKHUHDOWHUQDWLYHVDUHJLYHQLQWKH(XURFRGH

YDOXHVWREHXVHGZKHUHDV\PERORQO\LVJLYHQLQWKH(XURFRGH

JHRJUDSKLFDODQGFOLPDWLFGDWDVSHFLILFWRWKH0HPEHU6WDWHHJVQRZPDS

WKHSURFHGXUHWREHXVHGZKHUHDOWHUQDWLYHSURFHGXUHVDUHJLYHQLQWKH(XURFRGH

UHIHUHQFHVWRQRQFRQWUDGLFWRU\FRPSOHPHQWDU\LQIRUPDWLRQWRDVVLVWWKHXVHUWRDSSO\WKH(XURFRGH

/LQNVEHWZHHQ(XURFRGHVDQGSURGXFWKDUPRQLVHGWHFKQLFDOVSHFLILFDWLRQV (1V
DQG(7$V
7KHUHLVD QHHG IRU FRQVLVWHQF\ EHWZHHQ WKH KDUPRQLVHG WHFKQLFDO VSHFLILFDWLRQV IRU FRQVWUXFWLRQ SURGXFWV
DQG WKH WHFKQLFDOUXOHV IRU ZRUNV  )XUWKHUPRUH DOO WKH LQIRUPDWLRQ DFFRPSDQ\LQJ WKH &( 0DUNLQJ RI WKH
FRQVWUXFWLRQ SURGXFWV ZKLFK UHIHU WR (XURFRGHV VKRXOG FOHDUO\ PHQWLRQ ZKLFK 1DWLRQDOO\ 'HWHUPLQHG
3DUDPHWHUVKDYHEHHQWDNHQLQWRDFFRXQW



$FFRUGLQJWR$UWRIWKH&3'WKHHVVHQWLDOUHTXLUHPHQWV (5V VKDOOEHJLYHQFRQFUHWHIRUPLQLQWHUSUHWDWLYHGRFXPHQWVIRUWKH


FUHDWLRQRIWKHQHFHVVDU\OLQNVEHWZHHQWKHHVVHQWLDOUHTXLUHPHQWVDQGWKHPDQGDWHVIRUK(1VDQG(7$*V(7$V

$FFRUGLQJWR$UWRIWKH&3'WKHLQWHUSUHWDWLYHGRFXPHQWVVKDOO
D JLYHFRQFUHWHIRUPWRWKHHVVHQWLDOUHTXLUHPHQWVE\KDUPRQLVLQJWKHWHUPLQRORJ\DQGWKHWHFKQLFDOEDVHVDQGLQGLFDWLQJFODVVHV
RUOHYHOVIRUHDFKUHTXLUHPHQWZKHUHQHFHVVDU\
E LQGLFDWH PHWKRGV RI FRUUHODWLQJ WKHVH FODVVHV RU OHYHOV RI UHTXLUHPHQW ZLWK WKH WHFKQLFDO VSHFLILFDWLRQV HJ PHWKRGV RI
FDOFXODWLRQDQGRISURRIWHFKQLFDOUXOHVIRUSURMHFWGHVLJQHWF
F VHUYHDVDUHIHUHQFHIRUWKHHVWDEOLVKPHQWRIKDUPRQLVHGVWDQGDUGVDQGJXLGHOLQHVIRU(XURSHDQWHFKQLFDODSSURYDOV
7KH(XURFRGHVGHIDFWRSOD\DVLPLODUUROHLQWKHILHOGRIWKH(5DQGDSDUWRI(5

 6HH$UWDQG$UWRIWKH&3'DVZHOODVFODXVHVDQGRI,'

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

$GGLWLRQDOLQIRUPDWLRQVSHFLILFWR(1
(1LVLQWHQGHGWREHXVHGZLWK(XURFRGHV(1%DVLVRI6WUXFWXUDO'HVLJQ(1$FWLRQVRQ
VWUXFWXUHVDQG(1WR(1ZKHQVWHHOVWUXFWXUHVRUVWHHOFRPSRQHQWVDUHUHIHUUHGWR
(1LVWKHILUVWSDUWRIVHYHQSDUWVRI(1'HVLJQRI6WHHO6WUXFWXUHVDQGJLYHVJHQHULFGHVLJQ
UXOHVWKDWDUHLQWHQGHGWREHXVHGZLWKWKHRWKHUSDUWV(1WR(1
(1  FRPSULVHV HOHYHQ VXESDUWV (1  WR (1  HDFK DGGUHVVLQJ VSHFLILF VWHHO
FRPSRQHQWVOLPLWVWDWHVRUPDWHULDOV
,W PD\ DOVR EH XVHG IRU GHVLJQ FDVHV QRW FRYHUHG E\ WKH (XURFRGHV RWKHU VWUXFXWUHV RWKHU DFWLRQV RWKHU
PDWHULDOV VHUYLQJDVDUHIHUHQFHGRFXPHQWIRURWKHU&(17&VFRQFHUQLQJVWUXFWXUDOPDWWHUV
(1LVLQWHQGHGIRUXVHE\


FRPPLWWHHVGUDIWLQJGHVLJQUHODWHGSURGXFWWHVWLQJDQGH[HFXWLRQVWDQGDUGV

FOLHQWV HJIRUWKHIRUPXODWLRQRIWKHLUVSHFLILFUHTXLUHPHQWV

GHVLJQHUVDQGFRQVWUXFWRUV

UHOHYDQWDXWKRULWLHV

1XPHULFDOYDOXHVIRUSDUWLDOIDFWRUV DQG RWKHUUHOLDELOLW\ SDUDPHWHUV DUHUHFRPPHQGHG DV EDVLF YDOXHVWKDW


SURYLGH DQ DFFHSWDEOH OHYHO RI UHOLDELOLW\ 7KH\ KDYH EHHQ VHOHFWHG DVVXPLQJ WKDW DQ DSSURSULDWH OHYHO RI
ZRUNPDQVKLSDQGTXDOLW\PDQDJHPHQWDSSOLHV

1DWLRQDODQQH[IRU(1
7KLV VWDQGDUG JLYHV DOWHUQDWLYH SURFHGXUHV YDOXHV DQG UHFRPPHQGDWLRQV IRU FODVVHV ZLWK QRWHV LQGLFDWLQJ
ZKHUH QDWLRQDO FKRLFHV PD\ KDYH WR EH PDGH 7KHUHIRUH WKH 1DWLRQDO 6WDQGDUG LPSOHPHQWLQJ (1 
VKRXOGKDYHD1DWLRQDO$QQH[FRQWDLQLQJDOO1DWLRQDOO\'HWHUPLQHG3DUDPHWHUVWREHXVHGIRUWKHGHVLJQRI
VWHHOVWUXFWXUHVWREHFRQVWUXFWHGLQWKHUHOHYDQWFRXQWU\
1DWLRQDOFKRLFHLVDOORZHGLQ(1WKURXJKFODXVHV


 

 

 

 

 

 

 

 

$ 

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 *HQHUDO
 6FRSH
 6FRSHRI(XURFRGH
 (XURFRGHDSSOLHVWRWKHGHVLJQRIEXLOGLQJVDQGFLYLOHQJLQHHULQJZRUNVLQVWHHO,WFRPSOLHVZLWKWKH
SULQFLSOHV DQG UHTXLUHPHQWV IRU WKH VDIHW\ DQG VHUYLFHDELOLW\ RI VWUXFWXUHV WKH EDVLV RI WKHLU GHVLJQ DQG
YHULILFDWLRQWKDWDUHJLYHQLQ(1%DVLVRIVWUXFWXUDOGHVLJQ
 (XURFRGH  LV RQO\ FRQFHUQHG ZLWK UHTXLUHPHQWV IRU UHVLVWDQFH VHUYLFHDELOLW\ GXUDELOLW\ DQG ILUH
UHVLVWDQFH RI VWHHO VWUXFWXUHV 2WKHU UHTXLUHPHQWV HJ FRQFHUQLQJ WKHUPDO RU VRXQG LQVXODWLRQ DUH QRW
FRQVLGHUHG


(XURFRGHLVLQWHQGHGWREHXVHGLQFRQMXQFWLRQZLWK

(1%DVLVRIVWUXFWXUDOGHVLJQ

(1$FWLRQVRQVWUXFWXUHV

(1VIRUFRQVWUXFWLRQSURGXFWVUHOHYDQWIRUVWHHOVWUXFWXUHV

(1[[[ 5HTXLUHPHQWVIRUWKHH[HFXWLRQRIVWHHOVWUXFWXUHV

(1WR(1ZKHQVWHHOVWUXFWXUHVRUVWHHOFRPSRQHQWVDUHUHIHUUHGWR

(XURFRGHLVVXEGLYLGHGLQYDULRXVSDUWV

(1 'HVLJQRI6WHHO6WUXFWXUHV*HQHULFUXOHV
(1 'HVLJQRI6WHHO6WUXFWXUHV6WHHOEULGJHV
(1 'HVLJQRI6WHHO6WUXFWXUHV%XLOGLQJV
(1 'HVLJQRI6WHHO6WUXFWXUHV6LORVWDQNVDQGSLSHOLQHV
(1 'HVLJQRI6WHHO6WUXFWXUHV3LOLQJ
(1 'HVLJQRI6WHHO6WUXFWXUHV&UDQHVXSSRUWLQJVWUXFWXUHV
(1 'HVLJQRI6WHHO6WUXFWXUHV7RZHUVPDVWVDQGFKLPQH\V
 7KHSDUWV(1WR(1UHIHUWRWKH*HQHULFUXOHVLQ3DUWWKHFODXVHVLQSDUWV(1
WR(1VXSSOHPHQWWKHFODXVHVLQ(1


(1*HQHULFUXOHVFRPSULVHV

(1

'HVLJQRI6WHHO6WUXFWXUHV*HQHUDOVWUXFWXUDOUXOHV

(1

'HVLJQRI6WHHO6WUXFWXUHV6WUXFWXUDOILUHGHVLJQ

(1

'HVLJQRI6WHHO6WUXFWXUHV&ROGIRUPHGWKLQJDXJHPHPEHUVDQGVKHHWLQJ

(1

'HVLJQRI6WHHO6WUXFWXUHV6WDLQOHVVVWHHOV

(1

'HVLJQRI6WHHO6WUXFWXUHV3ODWHGVWUXFWXUDOHOHPHQWV

(1

'HVLJQRI6WHHO6WUXFWXUHV6WUHQJWKDQGVWDELOLW\RIVKHOOVWUXFWXUHV

(1

'HVLJQ RI 6WHHO 6WUXFWXUHV  6WUHQJWK DQG VWDELOLW\ RI SODQDU SODWHG VWUXFWXUHV WUDQVYHUVHO\
ORDGHG

(1

'HVLJQRI6WHHO6WUXFWXUHV'HVLJQRIMRLQWV

(1

'HVLJQRI6WHHO6WUXFWXUHV)DWLJXHVWUHQJWKRIVWHHOVWUXFWXUHV

(1 'HVLJQ RI 6WHHO 6WUXFWXUHV  6HOHFWLRQ RI PDWHULDOV IRU IUDFWXUH WRXJKQHVV DQG WKURXJK
WKLFNQHVVSURSHUWLHV


(1[[[LVWKHFRQYHUVLRQRI(19

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

(1 'HVLJQRI6WHHO6WUXFWXUHV8VHRIKLJKVWUHQJWKWHQVLOHHOHPHQWV
 6FRSHRI3DUWRI(XURFRGH


7KH3DUWRI(XURFRGHJLYHVEDVLFGHVLJQUXOHVIRUVWHHOVWUXFWXUHV

7KHIROORZLQJVXEMHFWVDUHGHDOWZLWKLQ3DUW

6HFWLRQ

,QWURGXFWLRQ

6HFWLRQ

%DVLVRIGHVLJQ

6HFWLRQ

0DWHULDOV

6HFWLRQ

'XUDELOLW\

6HFWLRQ

6WUXFWXUDODQDO\VLV

6HFWLRQ

8OWLPDWHOLPLWVWDWHV

6HFWLRQ

6HUYLFHDELOLW\OLPLWVWDWHV

6HFWLRQ

)DVWHQHUVZHOGFRQQHFWLRQVDQGMRLQWV

6HFWLRQWRSURYLGHDGGLWLRQDOFODXVHVWRWKRVHJLYHQLQ(1%DVLVRIVWUXFWXUDOGHVLJQ

6HFWLRQGHDOVZLWKPDWHULDOSURSHUWLHVRISURGXFWVPDGHRIORZDOORZVWUXFWXUDOVWHHOV

6HFWLRQJLYHVJHQHUDOUXOHVIRUGXUDELOLW\

6HFWLRQUHIHUVWRWKHVWUXFWXUDODQDO\VLVRIEDUVWUXFWXUHV

6HFWLRQJLYHVGHWDLOHGUXOHVIRUWKHGHVLJQRIFURVVVHFWLRQVDQGPHPEHUV

6HFWLRQJLYHQUXOHVIRUVHUYLFHDELOLW\

 1RUPDWLYHUHIHUHQFHV
 7KH IROORZLQJ QRUPDWLYH GRFXPHQWV FRQWDLQ SURYLVLRQV ZKLFK WKURXJK UHIHUHQFHV LQ WKLV WH[W
FRQVWLWXWHSURYLVLRQVRIWKLV(XURSHDQVWDQGDUG)RUGDWHGUHIHUHQFHVVXEVHTXHQWDPHQGPHQWVWRRUUHYLVLRQV
RIDQ\RIWKHVHSXEOLFDWLRQVGRQRWDSSO\+RZHYHUSDUWLHVWRDJUHHPHQWVEDVHGRQWKLV(XURSHDQVWDQGDUG
DUHHQFRXUDJHGWRLQYHVWLJDWHWKHSRVVLELOLW\RIDSSO\LQJWKHPRVWUHFHQWHGLWLRQVRIWKHQRUPDWLYHGRFXPHQWV
LQGLFDWHGEHORZ)RUXQGDWHGUHIHUHQFHVWKHODWHVWHGLWLRQRIWKHQRUPDWLYHGRFXPHQWUHIHUUHGWRDSSOLHV
 *HQHUDOUHIHUHQFHVWDQGDUGV
(1

'HILQLWLRQDQGFODVVLILFDWLRQRIJUDGHVRIVWHHOV

(1

*HQHUDOWHFKQLFDOGHOLYHU\UHTXLUHPHQWVIRUVWHHODQGLURQSURGXFWV

(1

'HILQLWLRQVRIVWHHOSURGXFWV

(1[[[

5HTXLUHPHQWVIRUWKHH[HFXWLRQRIVWHHOVWUXFWXUHV

 :HOGDEOHVWUXFWXUDOVWHHOUHIHUHQFHVWDQGDUGV
(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  *HQHUDO GHOLYHU\


FRQGLWLRQV

(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  7HFKQLFDO GHOLYHU\


FRQGLWLRQVIRUQRQDOOR\VWUXFWXUDOVWHHOV

(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  7HFKQLFDO GHOLYHU\


FRQGLWLRQVIRUQRUPDOL]HGQRUPDOL]HGUROOHGZHOGDEOHILQHJUDLQVWUXFWXUDO
VWHHOV

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  7HFKQLFDO GHOLYHU\


FRQGLWLRQV IRU WKHUPRPHFKDQLFDO UROOHG ZHOGDEOH ILQH JUDLQ VWUXFWXUDO
VWHHOV

(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  7HFKQLFDO GHOLYHU\


FRQGLWLRQV IRU VWUXFWXUDO VWHHOV ZLWK LPSURYHG DWPRVSKHULF FRUURVLRQ
UHVLVWDQFH

(16HSWHPEHU

+RWUROOHG SURGXFWV RI VWUXFWXUDO VWHHOV  3DUW  7HFKQLFDO GHOLYHU\


FRQGLWLRQV IRU IODW SURGXFWV RI KLJK \LHOG VWUHQJWK VWUXFWXUDO VWHHOV LQ WKH
TXHQFKHGDQGWHPSHUHGFRQGLWLRQ

(1

'HOLYHU\ UHTXLUHPHQWV IRU VXUIDFH FRQGLWLRQ RI KRWUROOHG VWHHO SODWHV ZLGH IODWV DQG
VHFWLRQV3DUW*HQHUDOUHTXLUHPHQWV3DUWSODWHVDQGZLGHIODWV3DUW6HFWLRQV

(1

6WHHOSURGXFWVZLWKLPSURYHGGHIRUPDWLRQSURSHUWLHVSHUSHQGLFXODUWRWKHVXUIDFHRIWKH
SURGXFW7HFKQLFDOGHOLYHU\FRQGLWLRQV

(1

+RW ILQLVKHG VWUXFWXUDO KROORZ VHFWLRQV RI QRQDOOR\ DQG ILQH JUDLQ VWUXFWXUDO VWHHOV
3DUW7HFKQLFDOGHOLYHU\UHTXLUHPHQWV

(1

&ROG IRUPHG KROORZ VHFWLRQV RI VWUXFWXUDO VWHHO  3DUW  7HFKQLFDO GHOLYHU\
UHTXLUHPHQWV

 'LPHQVLRQVRIVHFWLRQVUHIHUHQFHVWDQGDUGV
(1

+RWUROOHGWDSHUIODQJH,VHFWLRQV7ROHUDQFHVRQVKDSHDQGGLPHQVLRQV

(1

+RW UROOHG VWHHO SODWHV  PP WKLFN RU DERYH  7ROHUDQFHV RQ GLPHQVLRQV VKDSH DQG
PDVV

(1

6WUXFWXUDOVWHHO,DQG+VHFWLRQV7ROHUDQFHVRQVKDSHDQGGLPHQVLRQV

(1

+RWUROOHGQDUURZWHHOVWULS7ROHUDQFHVRQVKDSHDQGGLPHQVLRQV

(1

&RQWLQXRXVO\KRWUROOHGXQFRDWHGSODWHVKHHWDQGVWULSRIQRQDOOR\DQGDOOR\VWHHOV
7ROHUDQFHVRQGLPHQVLRQVDQGVKDSH

(1

+RW UROOHG VWHHO HTXDO IODQJH WHHV ZLWK UDGLXVHG URRW DQG WRHV  'LPHQVLRQV DQG
WROHUDQFHVRQVKDSHDQGGLPHQVLRQV

(1

6WUXFWXUDOVWHHOHTXDODQGXQHTXDOOHJDQJOHV3DUW'LPHQVLRQV

(1

6WUXFWXUDO VWHHO HTXDO DQG XQHTXDO OHJ DQJOHV  3DUW  7ROHUDQFHV RQ VKDSH DQG
GLPHQVLRQV

(1

+RWUROOHGEXOEIODWV'LPHQVLRQVDQGWROHUDQFHVRQVKDSHGLPHQVLRQVDQGPDVV

(1

+RW ILQLVKHG VWUXFWXUDO KROORZ VHFWLRQV RI QRQDOOR\ DQG ILQH JUDLQ VWUXFWXUDO VWHHOV
3DUW7ROHUDQFHVGLPHQVLRQVDQGVHFWLRQDOSURSHUWLHV

(1

&ROG IRUPHG KROORZ VHFWLRQV RI VWUXFWXUDO VWHHO  3DUW  'LPHQVLRQV WROHUDQFHV DQG
JHRPHWULFDOSURSHUWLHV

(1

+RWUROOHGVWHHOFKDQQHO7ROHUDQFHVRQVKDSHDQGGLPHQVLRQV

 $VVXPSWLRQV



,QDGGLWLRQWRWKHJHQHUDODVVXPSWLRQVRI(1WKHIROORZLQJDVVXPSWLRQVDSSO\
IDEULFDWLRQDQGHUHFWLRQFRPSOLHVZLWK(1[[[

 'LVWLQFWLRQEHWZHHQSULQFLSOHVDQGDSSOLFDWLRQUXOHV


7KHUXOHVLQ(1FODXVHDSSO\

 'HILQLWLRQV


7KHUXOHVLQ(1FODXVHDSSO\

3DJH
SU(1[[


)LQDOGUDIW
6HSWHPEHU

7KHIROORZLQJWHUPVDUHXVHGLQ3DUWRI(XURFRGHZLWKWKHIROORZLQJPHDQLQJV


IUDPH
WRWDORUSRUWLRQRIDVWUXFWXUHFRPSULVLQJDQDVVHPEO\RIGLUHFWO\FRQQHFWHGVWUXFWXUDOHOHPHQWVGHVLJQHGWR
DFWWRJHWKHU WR UHVLVWORDGWKLV WHUP UHIHUVWR ERWK PRPHQW IUDPHV DQG WULDQJXODWHG IUDPHV LW FRYHUV ERWK
SODQHIUDPHVDQGWKUHHGLPHQVLRQDOIUDPHV

VXEIUDPH
DIUDPHZKLFKIRUPVSDUWRIDODUJHUIUDPHEXWPD\EHWUHDWHGDVDQLVRODWHGIUDPHLQDVWUXFWXUDODQDO\VLV

W\SHRIIUDPLQJ
WHUPVXVHGWRGLVWLQJXLVKEHWZHHQIUDPHVZKLFKDUHHLWKHU


VHPLFRQWLQXRXV LQ ZKLFK WKH VWUXFWXUDO SURSHUWLHV RI WKH PHPEHUV DQG FRQQHFWLRQV QHHG H[SOLFLW
FRQVLGHUDWLRQLQWKHJOREDODQDO\VLV
FRQWLQXRXV LQ ZKLFK RQO\ WKH VWUXFWXUDO SURSHUWLHV RI WKH PHPEHUV QHHG EH FRQVLGHUHG LQ WKH JOREDO
DQDO\VLV
VLPSOHLQZKLFKWKHMRLQWVDUHQRWUHTXLUHGWRUHVLVWPRPHQWV


JOREDODQDO\VLV
WKHGHWHUPLQDWLRQRIDFRQVLVWHQWVHWRILQWHUQDOIRUFHVDQGPRPHQWVLQDVWUXFWXUHZKLFKDUHLQHTXLOLEULXP
ZLWKDSDUWLFXODUVHWRIDFWLRQVRQWKHVWUXFWXUH

V\VWHPOHQJWK
GLVWDQFHEHWZHHQWZRDGMDFHQWSRLQWVDWZKLFKDPHPEHU LV EUDFHGDJDLQVW ODWHUDO GLVSODFHPHQW LQ D JLYHQ
SODQHRUEHWZHHQRQHVXFKSRLQWDQGWKHHQGRIWKHPHPEHU

EXFNOLQJOHQJWK
V\VWHPOHQJWKRIDQRWKHUZLVHVLPLODUPHPEHUZLWKSLQQHGHQGVZKLFKKDVWKHVDPHEXFNOLQJUHVLVWDQFHDVD
JLYHQPHPEHU

VKHDUODJHIIHFW
QRQOLQHDU VWUHVV GLVWULEXWLRQ LQ ZLGH IODQJHV GXH WR VKHDU GHIRUPDWLRQV WKDW LV WDNHQ LQWR DFFRXQW E\ D
UHGXFWLRQRIWKHIODQJHZLGWKLQVDIHW\DVVHVVPHQW

 6\PEROV


)RUWKHSXUSRVHRIWKLVVWDQGDUGWKHIROORZLQJV\PEROVDSSO\

'UDIWQRWH WREHLQVHUWHGODWHU

 &RQYHQWLRQVIRUPHPEHUD[HV


,QJHQHUDOWKHFRQYHQWLRQIRUPHPEHUD[HVLV
[[ 

DORQJWKHPHPEHU

\\ 

D[LVRIWKHFURVVVHFWLRQ

]] 

D[LVRIWKHFURVVVHFWLRQ

)LQDOGUDIW
6HSWHPEHU


)RUVWHHOPHPEHUVWKHFRQYHQWLRQVXVHGIRUFURVVVHFWLRQD[HVDUH


3DJH
SU(1[[

JHQHUDOO\
\\ 

FURVVVHFWLRQD[LVSDUDOOHOWRWKHIODQJHV

]]

FURVVVHFWLRQD[LVSHUSHQGLFXODUWRWKHIODQJHV

IRUDQJOHVHFWLRQV
\\ 

D[LVSDUDOOHOWRWKHVPDOOHUOHJ

]]

D[LVSHUSHQGLFXODUWRWKHVPDOOHUOHJ

ZKHUHQHFHVVDU\
XX 

PDMRUD[LV ZKHUHWKLVGRHVQRWFRLQFLGHZLWKWKH\\D[LV

YY 

PLQRUD[LV ZKHUHWKLVGRHVQRWFRLQFLGHZLWKWKH]]D[LV

7KHV\PEROVXVHGIRUGLPHQVLRQVDQGD[HVRIUROOHGVWHHOVHFWLRQVDUHLQGLFDWHGLQ)LJXUH

 7KHFRQYHQWLRQXVHGIRUVXEVFULSWVZKLFKLQGLFDWHD[HVIRUPRPHQWVLV8VHWKHD[LVDERXWZKLFKWKH
PRPHQWDFWV
E

W
G

W
Z

G \

E

\
X

DFFRUGLQJWR(XURQRUP

E
\

W
]

U


]
X

\
X
]

)LJXUH'LPHQVLRQVDQGD[HVRIVHFWLRQV

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 %DVLVRIGHVLJQ
 5HTXLUHPHQWV
 %DVLFUHTXLUHPHQWV


7KHGHVLJQRIVWHHOVWUXFWXUHVVKDOOEHLQDFFRUGDQFHZLWKWKHJHQHUDOUXOHVJLYHQLQ(1

7KHVXSSOHPHQWDU\SURYLVLRQVIRUVWHHOVWUXFWXUHVJLYHQLQWKLVVHFWLRQVKDOODOVREHDSSOLHG

 7KHEDVLFUHTXLUHPHQWVRI(1VHFWLRQDUHGHHPHGEHVDWLVILHGIRUVWHHOVWUXFWXUHVZKHQOLPLW
VWDWHGHVLJQLQFRQMXQFWLRQZLWKWKHSDUWLDOIDFWRUPHWKRGXVLQJ(1DQG(1IRUDFWLRQVDQGWKHLU
FRPELQDWLRQVDQG(1IRUUHVLVWDQFHVUXOHVIRUVHUYLFHDELOLW\DQGGXUDELOLW\DUHDSSOLHG
 5HOLDELOLW\PDQDJHPHQW
 :KHQ GLIIHUHQW OHYHOV RI UHOLDELOLW\ DUH UHTXLUHG WKHVH OHYHOV VKRXOG EH SUHIHUDEO\ DFKLHYHG E\ DQ
DSSURSULDWHFKRLFHRITXDOLW\PDQDJHPHQWLQGHVLJQDQGH[HFXWLRQDFFRUGLQJWR(1$QQH[&DQG(1
[[[ 


 'HVLJQZRUNLQJOLIHGXUDELOLW\DQGUREXVWQHVV
 'HSHQGLQJRQWKHW\SHRIDFWLRQDIIHFWLQJGXUDELOLW\DQGWKHGHVLJQZRUNLQJOLIH VHH(1 VWHHO
VWUXFWXUHVVKRXOGEH


GHVLJQHGIRUFRUURVLRQZLWK


VXLWDEOHVXUIDFHSURWHFWLRQ VHH(1

XVHRIZHDWKHULQJVWHHO

XVHRIVWDLQOHVVVWHHO VHH3DUW

GHWDLOHGIRUVXIILFLHQWIDWLJXHOLIH VHH3DUW

GHVLJQHGIRUZHDULQJ

LQVSHFWHGDQGPDLQWDLQHG

 3ULQFLSOHVRIOLPLWVWDWHGHVLJQ
 7KHUHVLVWDQFHVRIFURVVVHFWLRQVDQGPHPEHUVVSHFLILHGLQWKLV(XURFRGHIRUWKHXOWLPDWHOLPLWVWDWHV
DV GHILQHG LQ (1  DUH EDVHG RQ WHVWV LQ ZKLFK WKH PDWHULDO H[KLELWHG VXIILFLHQW GXFWLOLW\ WR DSSO\
VLPSOLILHGGHVLJQPRGHOV7KHVLPSOLILFDWLRQVFRPSULVH


WKHXVHRIQRPLQDOVWUHVVHVZLWKRXWFRQVLGHULQJQRWFKHIIHFWV

WKHQHJOHFWLRQRIUHVLGXDOVWUHVVHVIURPIDEULFDWLRQDQGHUHFWLRQLQWHQVLRQHOHPHQWV

WKHQHJOHFWLRQRIFRQVWUDLQWVGXHWRQRQOLQHDUWHPSHUDWXUHGLVWULEXWLRQ

WKHDGRSWLRQRIVWUHVVEORFGLVWULEXWLRQVIRUSODVWLFUHVLVWDQFHV

WKHQHJOHFWLRQRIVHFRQGDU\EHQGLQJPRPHQWVIURPGHIRUPDWLRQVLQMRLQWVRIWUXVVHV

WKHDVVXPSWLRQVRIXQLIRUPVWUHVVGLVWULEXWLRQVLQILOOHWZHOGVVHH3DUW

WKHDVVXPSWLRQRIXQLIRUPIRUFHGLVWULEXWLRQVLQJURXSVRIIDVWHQHUVVHH3DUW

WKHQHJOHFWLRQRIHIIHFWVRIWROHUDQFHVLQMRLQWV

 7KH UHVLVWDQFHV VSHFLILHG LQWKLV (XURFRGH 3DUW PD\ WKHUHIRUH RQO\ EH XVHG ZKHQ WKH FRQGLWLRQV IRU
PDWHULDOVLQVHFWLRQDUHPHWDQGZKHQWKHFKRLFHRIPDWHULDOFRPSOLHVZLWKWKHFRQGLWLRQVLQ3DUWWR
DYRLGEULWWOHIUDFWXUH

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 %DVLFYDULDEOHV
 $FWLRQVDQGHQYLURQPHQWDOLQIOXHQFHV
 $FWLRQV IRU WKH GHVLJQ RI VWHHO VWUXFWXUHV VKRXOG EH WDNHQ IURP (1  )RU WKH FRPELQDWLRQ RI
DFWLRQVDQGSDUWLDOIDFWRUVRIDFWLRQVVHH$QQH[$WR(1
127(  7KH 1DWLRQDO $QQH[ PD\ GHILQH DFWLRQV IRU SDUWLFXODU UHJLRQDO RU FOLPDWLF RU DFFLGHQWDO
VLWXDWLRQV


7KHDFWLRQVWREHFRQVLGHUHGLQWKHHUHFWLRQVWDJHVKRXOGEHREWDLQHGIURP(1

 7KHHIIHFWVRISUHGLFWHGDEVROXWHDQGGLIIHUHQWLDOVHWWOHPHQWVVKRXOGEHFRQVLGHUHGDVEHVWHVWLPHWHVRI
LPSRVHGGHIRUPDWLRQV
 7KH HIIHFWV RI XQHYHQ VHWWOHPHQWV RU LPSRVHG GHIRUPDWLRQV RU RWKHU IRUPV RI SUHVWUHVVLQJ LPSRVHG
GXULQJHUHFWLRQVKRXOGEHFRQVLGHUHGE\WKHLUQRPLQDOYDOXH3 DVSHUPDQHQWDFWLRQDQGJURXSHGZLWKRWKHU
SHUPDQHQWDFWLRQV* WRDVLQJXODUDFWLRQ * 3 
N

 )RUVWUXFWXUHVIRUZKLFKWKHIRUPDWLRQRISODVWLFPHFKDQLVPVPD\EHWDNHQLQWRDFFRXQWDQG RUGHU
HIIHFWV GR QRW DSSO\ LQGLUHFW DFWLRQV FDXVHG E\ XQHYHQ VHWWOHPHQWV RU LPSRVHG GHIRUPDWLRQV QHHG QRW EH
FRQVLGHUHGLQXOWLPDWHOLPLWVWDWHV
QG

)DWLJXHDFWLRQVQRWGHILQHGLQ(1VKRXOGEHGHWHUPLQHGDFFRUGLQJWR$QQH[$RI3DUW

 0DWHULDODQGSURGXFWSURSHUWLHV
 0DWHULDO SURSHUWLHV IRU VWHHOV DQG FRQVWUXFWLRQ SURGXFWV DQG JHRPHWULFDO GDWD WR EH XVHG IRU GHVLJQ
VKRXOGEHWKRVHVSHFLILHGLQWKHUHOHYDQWK(1VRU(7$VXQOHVVRWKHUZLVHLQGLFDWHGLQWKLVVWDQGDUG

 9HULILFDWLRQE\WKHSDUWLDOIDFWRUPHWKRG
 'HVLJQYDOXHRIPDWHULDOSURSHUW\
 )RU WKH GHVLJQ RI VWHHO VWUXFWXUHV FKDUDFWHULVWLF YDOXH ;  RU QRPLQDO YDOXHV ;  RI PDWHULDO SURSHUW\
VKDOOEHXVHGDVLQGLFDWHGLQWKLV(XURFRGH
.

 'HVLJQYDOXHRIJHRPHWULFDOGDWD
 *HRPHWULFDO GDWD IRU FURVV VHFWLRQV DQG V\VWHPV PD\ EH WDNHQ DV QRPLQDO YDOXHV IURP SURGXFW
VWDQGDUGVK(1RUGUDZLQJVIRUWKHH[HFXWLRQWR(1[[[ 





'HVLJQYDOXHVRIJHRPHWULFDOLPSHUIHFWLRQVVSHFLILHGLQWKLVVWDQGDUGFRPSULVH
WKHHIIHFWVRIJHRPHWULFDOLPSHUIHFWLRQVRIPHPEHUVDVFRQWUROOHGE\JHRPHWULFDOWROHUDQFHVLQSURGXFW
VWDQGDUGVRUWKHH[HFXWLRQVWDQGDUG
WKH HIIHFWV RI VWUXFWXUDO LPSHUIHFWLRQV IURP IDEULFDWLRQ DQG HUHFWLRQ UHVLGXDO VWUHVVHV GLVWULEXWLRQ RI
\LHOGVWUHQJWK

 'HVLJQUHVLVWDQFHV


)RUVWHHOVWUXFWXUHVHTXDWLRQ F RUHTXDWLRQ G RI(1DSSOLHV

5G =
ZKHUH 5

5N

=
5 N (h; N  hL ; NL  D G )
g0 g0



LV WKH FKDUDFWHULVWLF YDOXH RI UHVLVWDQFH RI D FURVV VHFWLRQ RU PHPEHU GHWHUPLQHG ZLWK
FKDUDFWHULVWLFRUQRPLQDOYDOXHVIRUWKHPDWHULDOSURSHUWLHV
LVWKHJOREDOSDUWLDOIDFWRUIRUWKHSDUWLFXODUUHVLVWDQFH

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 9HULILFDWLRQRIVWDWLFHTXLOLEULXP (48


 7KHUHOLDELOLW\IRUPDWHIRUWKHYHULILFDWLRQRI VWDWLFHTXLOLEULXP LQ7DEOH  $ LQ $QQH[ $ RI (1
DOVRDSSOLHVWRGHVLJQVLWXDWLRQVHTXLYDOHQWWR (48 HJIRUWKHGHVLJQRIKROGGRZQDQFKRUVRUWKH
YHULILFDWLRQRIXSOLIWRIEHDULQJVRIFRQWLQXRXVEHDPV

 'HVLJQDVVLVWHGE\WHVWLQJ


7KHUHVLVWDQFHV5 LQWKLVVWDQGDUGKDYHEHHQGHWHUPLQHGDFFRUGLQJWR$QQH['RI(1
.

 ,Q UHFRPPHQGLQJ FODVVHV RI FRQVWDQW SDUWLDO IDFWRUV


IURP
5  5 
.

ZKHUH 5

0L

0L

 WKH FKDUDFWHULVWLF YDOXHV 5  ZHUH REWDLQHG


.



0L

DUHGHVLJQYDOXHVDFFRUGLQJWR$QQH['RI(1
DUHUHFRPPHQGHGSDUWLDOIDFWRUV

127(7KHQXPHULFDOYDOXHVRIWKHUHFRPPHQGHGSDUWLDOIDFWRUV KDYHEHHQGHWHUPLQHGVXFKWKDW
5 UHSUHVHQWVDSSUR[LPDWHO\WKHIUDFWLOHIRUDQLQILQLWHQXPEHURIWHVWV
0L

127()RUFKDUDFWHULVWLFYDOXHVRIIDWLJXHVWUHQJWKDQGSDUWLDOIDFWRUV

0I

IRUIDWLJXHVHH3DUW

127(   )RU FKDUDFWHULVWLF YDOXHV RI WRXJKQHVV UHVLVWDQFH DQG VDIHW\ HOHPHQWV IRU WKH WRXJKQHVV
YHULILFDWLRQVHH3DUW
 :KHQUHVLVWDQFHV 5  IRU SUHIDEULFDWHG SURGXFWV VKDOO EH GHWHUPLQHGIURP WHVWV WKH SURFHGXUHLQ 
VKRXOGEHFRQVLGHUHG
.

 0DWHULDOV
 *HQHUDO
 7KH QRPLQDO YDOXHV RI PDWHULDO SURSHUWLHV JLYHQ LQ WKLV VHFWLRQ VKDOO EH DGRSWHG DV FKDUDFWHULVWLF
YDOXHVLQGHVLJQFDOFXODWLRQV
 7KLV3DUWRI(1FRYHUVWKHGHVLJQRIVWHHOVWUXFWXUHVIDEULFDWHGIURPVWHHOPDWHULDOFRQIRUPLQJWR
WKHVWHHOJUDGHVOLVWHGLQ7DEOH
 2WKHUPDWHULDOVDQGSURGXFWVPD\RQO\EHXVHGLIWKHLUXVHLVHYDOXDWHGLQDFFRUGDQFHZLWKWKHUHOHYDQW
UXOHVLQWKLVVWDQGDUGDQGWKHDSSOLFDEOH1DWLRQDO$QQH[

 6WUXFWXUDOVWHHO
 0DWHULDOSURSHUWLHV
 7KH QRPLQDO YDOXHV RI WKH \LHOG VWUHQJWK I  DQG WKH XOWLPDWH VWUHQJWK I  IRU VWUXFWXUDO VWHHO VKDOO EH
REWDLQHG
\

D HLWKHULQGLUHFWXVHRIWKHYDOXHVI  5 DQGI  5 RIWKHSURGXFWVWDQGDUG


\

HK

E RUE\XVLQJWKHVLPSOLILFDWLRQJLYHQLQ7DEOH
127()RUWKHFKRLFHRIWKHPHWKRGVHH1DWLRQDO$QQH[

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 'XFWLOLW\UHTXLUHPHQWV


7KHGHVLJQUXOHVDUHEDVHGRQWKHIROORZLQJUHTXLUHPHQWV


XQOHVV RWKHUZLVH VSHFLILHG WKH UDWLR RI WKH VSHFLILHG PLQLPXP XOWLPDWH WHQVLOH VWUHQJWK I  WR WKH
VSHFLILHGPLQLPXP\LHOGVWUHQJWKI VKRXOGVDWLVI\
X

I I 
X

WKH HORQJDWLRQDWIDLOXUH RQ D JDXJH OHQJWK RI  $ R  ZKHUH $  LV WKH RULJLQDO FURVVVHFWLRQ


DUHD LVQRWOHVVWKDQ


WKHXOWLPDWHVWUDLQe LVDWOHDVWWLPHVWKH\LHOGVWUDLQe ZKHUHe FRUUHVSRQGVWRWKHXOWLPDWH


VWUHQJWKI 
X

7KHVWHHOJUDGHVOLVWHGLQ7DEOHDUHDFFHSWHGDVVDWLVI\LQJWKHVHUHTXLUHPHQWV

 )UDFWXUHWRXJKQHVV
 7KHPDWHULDOVKDOOKDYHVXIILFLHQWIUDFWXUHWRXJKQHVVWRDYRLGEULWWOHIUDFWXUHRIWHQVLRQHOHPHQWVDWWKH
ORZHVWVHUYLFHWHPSHUDWXUHH[SHFWHGWRRFFXUZLWKLQWKHLQWHQGHGGHVLJQOLIHRIWKHVWUXFWXUH
127(7KHORZHVWVHUYLFHWHPSHUDWXUHWREHDGRSWHGLQGHVLJQPD\EHJLYHQLQWKH1DWLRQDO$QQH[
 1RIXUWKHUFKHFNDJDLQVWEULWWOHIUDFWXUHQHHGWREHPDGHLIWKHFRQGLWLRQVJLYHQLQ(1DUH
VDWLVILHGIRUWKHORZHVWWHPSHUDWXUH

7DEOH1RPLQDOYDOXHVRI\LHOGVWUHQJWKI DQGXOWLPDWHWHQVLOHVWUHQJWKI IRU


KRWUROOHGVWUXFWXUDOVWHHO
\

6WDQGDUG
DQG
VWHHOJUDGH

7KLFNQHVVWPP
WPP

PPWPP

I  1PP

I  1PP

I  1PP

I  1PP

6
6
6

















611/
611/
611/
611/





















600/
600/
600/
600/





















644/4/


















(1

6:

6:

)RUIODWSURGXFWVPPWPPRQO\
WLVWKHQRPLQDOWKLFNQHVVRIWKHHOHPHQW














3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

7DEOH FRQWLQXHG 1RPLQDOYDOXHVRI\LHOGVWUHQJWKI DQGXOWLPDWHWHQVLOH


VWUHQJWKI IRUVWUXFWXUDOKROORZVHFWLRQV
\

6WDQGDUG
DQG
VWHHOJUDGH

7KLFNQHVVWPP

WPP

PPWPP

I  1PP

I  1PP

I  1PP

I  1PP

6+
6+
6+

















61+1/+
61+1/+
61+1/+

















6+
6+
6+









61+1/+
61+1/+
61+1/+









(1

(1

60+0/+

60+0/+

60+0/+

60+0/+

WLVWKHQRPLQDOWKLFNQHVVRIWKHHOHPHQW








 7KURXJKWKLFNQHVVSURSHUWLHV


6WHHOZLWKLPSURYHGWKURXJKWKLFNQHVVSURSHUWLHVWR(1VKRXOGEHXVHGZKHUHQHFHVVDU\
127(*XLGDQFHRQWKHFKRLFHRIWKURXJKWKLFNQHVVSURSHUWLHVLVJLYHQLQSU(1

 7ROHUDQFHV
 7KH GLPHQVLRQDO DQG PDVV WROHUDQFHV RI UROOHG VWHHO VHFWLRQV VWUXFWXUDO KROORZ VHFWLRQV DQG SODWHV
VKRXOGFRQIRUPZLWKWKHUHOHYDQWSURGXFWVWDQGDUGXQOHVVPRUHVHYHUHWROHUDQFHVDUHVSHFLILHG


)RUVWUXFWXUDODQDO\VLVDQGGHVLJQWKHQRPLQDOYDOXHVRIGLPHQVLRQVVKRXOGEHXVHG

 'HVLJQYDOXHVRIPDWHULDOFRHIILFLHQWV
 7KH PDWHULDO FRHIILFLHQWV WR EH DGRSWHG LQ FDOFXODWLRQV IRU WKH VWUXFWXUDO VWHHOV FRYHUHG E\ WKLV
(XURFRGH3DUWVKRXOGEHWDNHQDVIROORZV


PRGXOXVRIHODVWLFLW\

( =  1  PP 

VKHDUPRGXOXV

* = (    + n

3RLVVRQVUDWLR

n = 

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

FRHIILFLHQWRIOLQHDUWKHUPDOH[SDQVLRQ

XQLWZHLJKW

a =   - SHU&
=  N1P 

 )RU FDOFXODWLQJ WKH VWUHVV HIIHFWV RI XQHTXDO WHPSHUDWXUHV LQ FRPSRVLWH FRQFUHWHVWHHO VWUXFWXUHV WKH
FRHIILFLHQWRIOLQHDUWKHUPDOH[SDQVLRQPD\EHWDNHQDV a =   - SHU& 

 &RQQHFWLQJGHYLFHV
 )DVWHQHUV


5HTXLUHPHQWVIRUIDVWHQHUVDUHJLYHQLQ(1

 :HOGLQJFRQVXPDEOHV


5HTXLUHPHQWVIRUZHOGLQJFRQVXPDEOHVDUHJLYHQLQ(1

 'XUDELOLW\


7KHEDVLFUHTXLUHPHQWVIRUGXUDELOLW\DUHVHWRXWLQ(1

 7KHPHDQVRIH[HFXWLQJWKHSURWHFWLYHWUHDWPHQWXQGHUWDNHQRIIVLWHDQGRQVLWHVKDOOEHLQDFFRUGDQFH
ZLWK(1[[[ 


127((1[[[ OLVWVWKHIDFWRUVDIIHFWLQJH[HFXWLRQWKDWQHHGWREHVSHFLILHGGXULQJGHVLJQ


 3DUWV VXVFHSWLEOH WR FRUURVLRQ PHFKDQLFDO ZHDU RU IDWLJXH VKRXOG EH GHVLJQHG VXFK WKDW LQVSHFWLRQ
PDLQWHQDQFHDQGUHFRQVWUXFWLRQFDQEHDFKLHYHGLQDZD\VXLWDEOHWRWKHGHVLJQOLIHDQGDFFHVVDYDLODEOHIRU
LQVHUYLFHLQVSHFWLRQDQGPDLQWHQDQFH
127($GRSWLQJDVXLWDEOHLQVSHFWLRQSURJUDPFDQFRQVLGHUDEO\H[WHQGGXUDELOLW\

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 6WUXFWXUDODQDO\VLV
 6WUXFWXUDOPRGHOOLQJIRUDQDO\VLV
 6WUXFWXUDOPRGHOOLQJDQGEDVLFDVVXPSWLRQV
 )RUWKHYHULILFDWLRQRIWKHEDVLFGHVLJQUHTXLUHPHQWVIRUWKHXOWLPDWHOLPLWVWDWHWKHVHUYLFHDELOLW\OLPLW
VWDWHDQGIRUIDWLJXHDVJLYHQLQ(1WKHDFWLRQHIIHFWVVKDOOEHFDOFXODWHGRQWKHEDVLVRIDPRGHOOLQJRI
WKHVWHHOVWUXFWXUHDQGLWVFRPSRQHQWVWKDWLVDSSURSULDWHWRWKHOLPLWVWDWHXQGHUFRQVLGHUDWLRQ
 7KHFDOFXODWLRQPRGHODQGEDVLFDVVXPSWLRQVIRUWKHFDOFXODWLRQVVKDOOUHIOHFWWKHVWUXFWXUDOEHKDYLRXU
LQWKHXOWLPDWHOLPLWVWDWHDQGVHUYLFHDELOLW\OLPLWVWDWHZLWKDSSURSULDWHDFFXUDF\DQGUHIOHFWWKHDQWLFLSDWHG
W\SHRIEHKDYLRXURIWKHFURVVVHFWLRQVPHPEHUVMRLQWVDQGEHDULQJV


7KHGHVLJQDVVXPSWLRQVVKDOOEHFRQVLVWHQWZLWKWKHPHWKRGXVHGIRUWKHDQDO\VLV

 -RLQWPRGHOOLQJ
 7KHHIIHFWVRIWKHEHKDYLRXURIWKHMRLQWVRQWKHGLVWULEXWLRQRILQWHUQDOIRUFHVDQGPRPHQWVZLWKLQD
VWUXFWXUHDQGRQWKHRYHUDOO GHIRUPDWLRQV RIWKHVWUXFWXUH VKRXOG JHQHUDOO\ WDNHQLQWRDFFRXQW EXW ZKHUH
WKHVHHIIHFWVDUHVXIILFLHQWO\VPDOOWKH\PD\EHQHJOHFWHG
 7R LGHQWLI\ ZKHWKHU WKH HIIHFWV RI MRLQW EHKDYLRXU RQ WKH DQDO\VLV QHHG EH WDNHQ LQWR DFFRXQW D
GLVWLQFWLRQPD\EHPDGHEHWZHHQWKUHHMRLQWPRGHOVDVIROORZVVHH(1


VLPSOHLQZKLFKWKHMRLQWPD\EHDVVXPHGQRWWRWUDQVPLWEHQGLQJPRPHQWV

FRQWLQXRXVLQZKLFKWKHEHKDYLRXURIWKHMRLQWPD\EHDVVXPHGWRKDYHQRHIIHFWRQWKHDQDO\VLV

VHPLFRQWLQXRXVLQZKLFKWKHEHKDYLRXURIWKHMRLQWQHHGVWREHWDNHQLQWRDFFRXQWLQWKHDQDO\VLV

7KHUHTXLUHPHQWVRIWKHYDULRXVW\SHVRIMRLQWVDUHJLYHQLQSU(1

 :KHUHVHPLFRQWLQXRXVMRLQWVDUHXVHGWKHLQLWLDOYDOXHRIWKHURWDWLRQDOVWLIIQHVV DVVSHFLILHGLQ(1
 VKRXOGEHXVHGZKHQFDOFXODWLQJHODVWLFFULWLFDOORDGVRUEXFNOLQJOHQJWKV
 *URXQGVWUXFWXUHLQWHUDFWLRQ
 3 $FFRXQWVKDOOEHWDNHQRIWKHGHIRUPDWLRQFKDUDFWHULVWLFVRIWKHVXSSRUWVZKHUHUHOHYDQW
 ,IWKHGLVWULEXWLRQRILQWHUQDOIRUFHVDQGPRPHQWVLQWKHVWUXFWXUHLVQRWVLJQLILFDQWO\DOWHUHGE\JURXQG
VWUXFWXUH LQWHUDFWLRQV OLNH URWDWLRQV RU VHWWOHPHQWV VHH DOVR (1  WKH HIIHFWV RI JURXQG VWUXFWXUH
LQWHUDFWLRQRQWKHVWUXFWXUHPD\EHGLVUHJDUGHG

 6WUXFWXUDOVWDELOLW\
 (IIHFWVRIGHIRUPHGJHRPHWU\RIWKHVWUXFWXUH


7KHLQWHUQDOIRUFHVDQGPRPHQWVPD\JHQHUDOO\EHGHWHUPLQHGXVLQJHLWKHU


ILUVWRUGHUWKHRU\XVLQJWKHLQLWLDOJHRPHWU\RIWKHVWUXFWXUH



VHFRQGRUGHUWKHRU\WDNLQJLQWRDFFRXQWWKHLQIOXHQFHRIWKHGHIRUPDWLRQRIWKHVWUXFWXUH

 7KHILUVWRUGHUWKHRU\PD\EHXVHGIRUWKHJOREDODQDO\VLVLIWKHLQFUHDVHRIWKHUHOHYDQWLQWHUQDOIRUFHV
DQGPRPHQWVFDXVHGE\WKHGHIRUPDWLRQVDFFRUGLQJWRILUVWRUGHUWKHRU\LVOHVVWKDQ7KLVFRQGLWLRQLV
IXOILOOHGLIWKHIROORZLQJFULWHULDDSSOLHV

a FU =

1 FU

1 (G



)LQDOGUDIW
6HSWHPEHU
ZKHUH a FU

3DJH
SU(1[[

LVWKHUDWLRRIWKHHODVWLFFULWLFDOIRUFHIRUWKHUHOHYDQWEXFNOLQJPRGHWRWKHGHVLJQYDOXHRIWKH
FRPSUHVVLRQIRUFH

 0HWKRGVRIDQDO\VLV
 ,IDFFRUGLQJWRWKHLQIOXHQFHRIWKHGHIRUPDWLRQRIWKHVWUXFWXUHKDVWREHWDNHQLQWRDFFRXQW 
RU  VKRXOGEHDSSOLHGWRFRQVLGHUWKHVHHIIHFWVDQGWRYHULI\WKHVWUXFWXUDOVWDELOLW\
 7KH VWDELOLW\ RI VWUXFWXUHV RU WKHLU SDUWV LQ JHQHUDO LV DFFRXQWHG IRU E\ VHFRQG RUGHUDQDO\VLV RI WKH
VWUXFWXUHWDNLQJDFFRXQWRILPSHUIHFWLRQVVHHDQGIROORZLQJRQHRIWKHWKHWZRPHWKRGVD RUE 
D

LIWKHLPSHUIHFWLRQVDQGVHFRQGRUGHUHIIHFWVRIWKHLQGLYLGXDOPHPEHUV VHH DUHLQFOXGHGLQWKH


VHFRQGRUGHUDQDO\VLVRIWKHVWUXFWXUHQRLQGLYLGXDOVWDELOLW\FKHFNIRUWKHPHPEHUVDFFRUGLQJWRLV
QHFHVVDU\

LIWKHLPSHUIHFWLRQVDQGVHFRQGRUGHUHIIHFWVRIWKHLQGLYLGXDOPHPEHUVDUHQRWLQFOXGHGLQWKHVHFRQG
RUGHUDQDO\VLVRIWKHVWUXFWXUHWKHLQGLYLGXDOVWDELOLW\RIWKHPHPEHUVVKDOOEHFKHFNHGDFFRUGLQJWR
7KLVYHULILFDWLRQVKRXOGWDNHDFFRXQWRIHQGPRPHQWVDQGIRUFHVIURPWKHVHFRQGRUGHUDQDO\VLVRIWKH
V\VWHP LQFOXGLQJ HJ WKH KRUL]RQWDO VZD\ DFFRUGLQJ WR    DQG VKRXOG EH EDVHG RQ D EXFNOLQJ
OHQJWKHTXDOWRWKHV\VWHPOHQJWK

 ,PSHUIHFWLRQV
 %DVLV
 $SSURSULDWHDOORZDQFHVVKDOOEHLQFRUSRUDWHGWRFRYHUWKHHIIHFWVRILPSHUIHFWLRQVLQFOXGLQJUHVLGXDO
VWUHVVHVDQGJHRPHWULFDOLPSHUIHFWLRQVVXFKDVODFNRIYHUWLFDOLW\ODFNRIVWUDLJKWQHVVODFNRIIODWQHVVODFN
RIILWDQGWKHXQDYRLGDEOHPLQRUHFFHQWULFLWLHVSUHVHQWLQFRQQHFWLRQVRIWKHXQORDGHGVWUXFWXUH
 6XLWDEOH HTXLYDOHQW JHRPHWULF LPSHUIHFWLRQV VKRXOG EH XVHG ZLWK YDOXHV ZKLFK UHIOHFW WKH SRVVLEOH
HIIHFWV RI DOO W\SH RI LPSHUIHFWLRQV VHH  DQG XQOHVV WKHVH HIIHFWV DUH LQFOXGHG LQ WKH UHVLVWDQFH
IRUPXODHIRUPHPEHUGHVLJQVHHVHFWLRQ


7KHHIIHFWVRILPSHUIHFWLRQVVKRXOGEHWDNHQLQWRDFFRXQWLQWKHIROORZLQJFDVHV
D *OREDODQDO\VLVRIIUDPHVDQGEUDFLQJV\VWHPV
E 0HPEHUGHVLJQ

 ,PSHUIHFWLRQVIRUJOREDODQDO\VLV
 7KHDVVXPHGVKDSHRILPSHUIHFWLRQVPD\EHGHULYHGIURPWKHHODVWLFEXFNOLQJPRGHRIDVWUXFWXUHLQ
WKHSODQHRIEXFNOLQJFRQVLGHUHG
 %RWKWKHSRVVLELOLWLHVRILQDQGRXWRISODQHEXFNOLQJZLWKV\PPHWULFDQGDV\PPHWULFEXFNOLQJVKDSHV
VKRXOGEHWDNHQLQWRDFFRXQWLQWKHPRVWXQIDYRXUDEOHGLUHFWLRQDQGIRUP


7KHHODVWLFEXFNOLQJPRGHVKRXOGEHGHWHUPLQHGLQWKHIROORZLQJZD\

D 7KHPHPEHUVRIWKHVWUXFWXUHVVKRXOGEHFRQVLGHUHGWREHORDGHGE\D[LDOIRUFHV1 RQO\WKDWUHVXOWIURP
WKHHODVWLFDQDO\VLVRIWKHVWUXFWXUHIRUWKHGHVLJQORDGV%HQGLQJPRPHQWVLQWKHSODQHRIEXFNOLQJPD\
EHQHJOHFWHGLQWKHPHPEHUV
(G

E )RU WKLV IRUFH FRQILJXUDWLRQ WKH FULWLFDO EXFNOLQJ PRGH DQG WKH IRUFH DPSOLILHU a  IRU HODVWLF FULWLFDO
EXFNOLQJVKRXOGEHGHWHUPLQHG
FULW

F 7KH PLQLPXP IRUFH DPSOLILHU a  IRU WKH DERYH IRUFH FRQILJXUDWLRQ 1  WR UHDFK WKH FKDUDFWHULVWLF
UHVLVWDQFH RI WKH FURVVVHFWLRQV RI WKH PHPEHUV 1  ZLWKRXW WDNLQJ EXFNOLQJ LQWR DFFRXQW VKRXOG EH
GHWHUPLQHG
X

(G

XN

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

G 7KHUHODWLYHVOHQGHUQHVVRIWKHVWUXFWXUHLVWKHQ

aX
a FULW

l=

H 7KHFULWLFDOEXFNOLQJPRGHVKDSHPD\EHDSSOLHGDVDQLPSHUIHFWLRQZLWKDPD[LPXPDPSOLWXGHRI


H G

cl
:HO
g 0
= a l - 
$  - cl 

IRU l > 

ZKHUH
LVWKHLPSHUIHFWLRQIDFWRUIRUWKHUHOHYDQWEXFNOLQJFXUYHVHH7DEOHDQG7DEOH
LVWKHUHGXFWLRQIDFWRUIRUWKHUHOHYDQWEXFNOLQJFXUYHGHSHQGLQJRQWKHFURVVVHFWLRQVHH
: DQG$DUHWDNHQDVWKHUHOHYDQWFURVVVHFWLRQDOYDOXHVDWWKHORFDWLRQZKHUHa LVDWLWVPLQLPXP
HO

)RU l  QRLPSHUIHFWLRQQHHGEHFRQVLGHUHG

 ,QFDVHVZKHUHWKHFULWLFDOEXFNOLQJFXUYHKDVDERZIRUPZLWKWKHEXFNOLQJOHQJWK/WKHPD[LPXP
DPSOLWXGHYDOXHVLQ7DEOHPD\EHXVHGDVDVLPSOLILFDWLRQ

7DEOH6LPSOLILHGGHVLJQYDOXHVRILQLWLDOERZLPSHUIHFWLRQH
%XFNOLQJFXUYHDFFWR7DEOH
D
D
E
F
G
'UDIWQRWH 9DOXHVWREHFKHFNHG


G

H
/"""
/
/
/
/
G

127(7KHVHYDOXHVKDYHEHHQGHULYHGIRU l YDOXHVVPDOOHUWKDQ
 ,PSHUIHFWLRQIRUDQDO\VLVRIEUDFLQJV\VWHPV
 7KH HIIHFWV RI LPSHUIHFWLRQV VKRXOG EH DOORZHG IRU LQ WKH DQDO\VLV RI EUDFLQJ V\VWHPV ZKLFK DUH
UHTXLUHG WR SURYLGH ODWHUDO VWDELOLW\ ZLWKLQ WKH OHQJWK RI EHDPV RU FRPSUHVVLRQ PHPEHUV E\ PHDQV RI DQ
HTXLYDOHQW JHRPHWULF LPSHUIHFWLRQ RI WKH PHPEHUV WR EH UHVWUDLQHG LQ WKH IRUP RI DQ LQLWLDO ERZ
LPSHUIHFWLRQ
H  a /




ZKHUH /LVWKHVSDQRIWKHEUDFLQJV\VWHP
DQG

a P =   +
P

LQZKLFKPLVWKHQXPEHURIPHPEHUVWREHUHVWUDLQHG
 )RU FRQYHQLHQFH WKH HIIHFWV RI WKH LQLWLDO ERZ LPSHUIHFWLRQV RI WKH PHPEHUV WR EH UHVWUDLQHG E\ D
EUDFLQJV\VWHPPD\EHUHSODFHGE\WKHHTXLYDOHQWVWDELOLVLQJIRUFHDVVKRZQLQ)LJXUH

T = 1 

H + dT
/

ZKHUHd LVWKHLQSODQHGHIOHFWLRQRIWKHEUDFLQJV\VWHPGXHWRTSOXVDQ\H[WHUQDOORDGV
T



)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 :KHUHWKHEUDFLQJV\VWHPLVUHTXLUHGWRVWDELOLVHDEHDPRIFRQVWDQWKHLJKWLIQRWVSHFLILHGLQDPRUH
DFFXUDWHZD\WKHIRUFH1LQ)LJXUHPD\EHREWDLQHGIURP
1 0K



ZKHUH 0 LVWKHPD[LPXPPRPHQWLQWKHEHDP
DQG

K LVWKHRYHUDOOGHSWKRIWKHEHDP

 $WSRLQWVZKHUHEHDPVRUFRPSUHVVLRQPHPEHUVDUHVSOLFHGLWVKRXOGDOVREHYHULILHGWKDWWKHEUDFLQJ
V\VWHPLVDEOHWRUHVLVWDORFDOIRUFHHTXDOWRa 1DSSOLHGWRLWE\HDFKEHDPRUFRPSUHVVLRQPHPEHU
ZKLFK LV VSOLFHG DW WKDW SRLQW DQG WR WUDQVPLW WKLV IRUFH WR WKH DGMDFHQW SRLQWV DW ZKLFK WKDW EHDP RU
FRPSUHVVLRQPHPEHULVUHVWUDLQHGVHH)LJXUH
P

 :KHQ FKHFNLQJ IRU WKH ORFDO IRUFH DFFRUGLQJ WR FODXVH   DQ\ H[WHUQDO ORDGV DFWLQJ RQ EUDFLQJ
V\VWHPVVKRXOGDOVREHLQFOXGHGEXWWKHIRUFHVDULVLQJIURPWKHLPSHUIHFWLRQJLYHQLQ  PD\EHRPLWWHG

)LJXUH(TXLYDOHQWVWDELOLVLQJIRUFH

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

6SOLFH

1

F
F

%UDFLQJ

V\VWHP

F a F F  
P

F1 a 1
P

)LJXUH%UDFLQJIRUFHVDWVSOLFHVLQFRPSUHVVLRQHOHPHQWV
 0HPEHULPSHUIHFWLRQV
 7KHLPSHUIHFWLRQVRIPHPEHUVDUHLQFRUSRUDWHGZLWKLQWKHEXFNOLQJIRUPXODJLYHQLQWKLV(XURFRGH
VHHVHFWLRQ
 ,IWKHVWDELOLW\RIPHPEHUVLVDFFRXQWHGIRUE\VHFRQGRUGHUDQDO\VLVDFFRUGLQJWR  PHWKRGD
IRUFRPSUHVVLRQPHPEHUVLPSHUIHFWLRQVH DFFRUGLQJWR  RU  VKRXOGEHFRQVLGHUHG
G

 )RUDVHFRQGRUGHUDQDO\VLVWDNLQJDFFRXQWRIODWHUDOWRUVLRQDOEXFNOLQJRIDPHPEHUWKHLPSHUIHFWLRQV
PD\ EH DGRSWHG DV  H   ZKHUH H  LV WKH HTXLYDOHQW LQLWLDO ERZ LPSHUIHFWLRQ RI WKH ZHDN D[LV RI WKH
SURILOHFRQVLGHUHG,QJHQHUDODQDGGLWLRQDOWRUVLRQDOLPSHUIHFWLRQQHHGQRWWREHDOORZHGIRU
G

G

 &DOFXODWLRQRIDFWLRQHIIHFWV
 0HWKRGVRIDQDO\VLVFRQVLGHULQJWKHHIIHFWVRIGHIRUPHGJHRPHWU\
 3 7KHHIIHFWVRIWKHGHIRUPHGJHRPHWU\ VHFRQGRUGHUHIIHFWV VKDOOEHFRQVLGHUHGLIWKH\LQFUHDVHWKH
DFWLRQHIIHFWVVLJQLILFDQWO\VHHFULWHULDLQ
 7KH HIIHFWV RI VKHDU ODJ DQG RI ORFDO EXFNOLQJ RQ WKH VWLIIQHVV VKDOO EH WDNHQ LQWR DFFRXQW LI WKLV
VLJQLILFDQWO\LQIOXHQFHVWKHJOREDODQDO\VLVVHH(1
 7KHHIIHFWVRIVKHDUODJRIWKHIODQJHVLQHODVWLFJOREDODQDO\VLVPD\EHWDNHQLQWRDFFRXQWDFFRUGLQJWR
3DUW  DQG  E\WKHXVHRIDQHIIHFWLYHZLGWK)RUVLPSOLFLW\WKLVHIIHFWLYHZLGWKPD\EHDVVXPHG
WREHXQLIRUPRYHUWKHOHQJWKRIWKHEHDP)RUHDFKVSDQRIDEHDPWKHHIIHFWLYHZLGWKRIIODQJHVVKRXOGEH
WDNHQDVWKHOHVVHURIWKHIXOOZLGWKDQG/ SHUVLGHRIWKHZHEZKHUH/ LVWKHGLVWDQFHEHWZHHQSRLQWVRI
]HURPRPHQWVRUWZLFHWKHGLVWDQFHIURPWKHVXSSRUWWRWKHHQGIRUDFDQWLOHYHU


)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 )RU WKH JOREDO DQDO\VLV WKH HIIHFW RI SODWH EXFNOLQJ RQ WKH VWLIIQHVV PD\ EH WDNHQ LQWR DFFRXQW
DFFRUGLQJWR3DUW  7KHHIIHFWRISODWHEXFNOLQJPD\EHLJQRUHGLQQRUPDOSODWHGVWUXFWXUHV,IWKH
HIIHFWLYHFURVVVHFWLRQDODUHDDFFRUGLQJWRRIDQHOHPHQWLQFRPSUHVVLRQLVOHVVWKDQ  WLPHVWKH
JURVVFURVVVHFWLRQDODUHDWKHUHGXFWLRQRIWKHVWLIIQHVVGXHWRSODWHEXFNOLQJVKRXOGEHFRQVLGHUHG
 7KH HIIHFWV RI WKH VOLS LQ EROW KROHV DQG VLPLODU GHIRUPDWLRQV RI FRQQHFWLRQ GHYLFHV OLNH VWXGV DQG
DQFKRUEROWVRQDFWLRQHIIHFWVVKDOOEHWDNHQLQWRDFFRXQWZKHUHUHOHYDQW
 0HWKRGVRIDQDO\VLVFRQVLGHULQJPDWHULDOQRQOLQHDULWLHV



*HQHUDO

7KHLQWHUQDOIRUFHVDQGPRPHQWVPD\EHGHWHUPLQHGXVLQJHLWKHU
D HODVWLFJOREDODQDO\VLV
E SODVWLFJOREDODQDO\VLV

(ODVWLFJOREDODQDO\VLVPD\EHXVHGLQDOOFDVHV

 3ODVWLFJOREDODQDO\VLVVKRXOGEHXVHGRQO\ZKHUHWKHPHPEHUFURVVVHFWLRQVVDWLVI\WKHUHTXLUHPHQWV
VSHFLILHG LQ  DQG ZKHUH UHTXLUHG WKH MRLQWV DUH DEOH WR VXVWDLQ WKH SODVWLF UHVLVWDQFH IRU D VXIILFLHQW
URWDWLRQFDSDFLW\VHHSU(1
127( 7KH 1DWLRQDO $QQH[ PD\ GHILQH SDUWLFXODU FRQGLWLRQVIRUWKH XVHRI SODVWLF JOREDO DQDO\VLV
HJIRUVWUXFWXUHVH[SRVHGWR GHHSWHPSHUDWXUHV RU ZKHUH VSHFLDO VHUYLFHDELOLW\ RU GXUDELOLW\ FULWHULD
DSSO\


(ODVWLFJOREDODQDO\VLV

 (ODVWLFJOREDODQDO\VLVVKDOOEHEDVHGRQWKHDVVXPSWLRQWKDWWKHVWUHVVVWUDLQEHKDYLRXURIWKHPDWHULDO
LVOLQHDUZKDWHYHUWKHVWUHVVOHYHOLV
)RUDVHPLFRQWLQXRXVMRLQWPRGHOWKHURWDWLRQDOVWLIIQHVVRIWKHMRLQW6 VKRXOGEHXVHGVHH(1




127()RUWKHFKRLFHRIDVHPLFRQWLQXRXVMRLQWPRGHOVHH  
 $FWLRQHIIHFWVPD\EH FDOFXODWHG DFFRUGLQJ WR HODVWLF JOREDO DQDO\VLV HYHQ ZKHUH WKHUHVLVWDQFH RID
FURVVVHFWLRQLVEDVHGRQLWVSODVWLFUHVLVWDQFHVHH


3ODVWLFJOREDODQDO\VLV

 3ODVWLFJOREDODQDO\VLVDOORZVIRUWKHHIIHFWVRIPDWHULDOQRQOLQHDULW\LQFDOFXODWLQJWKHDFWLRQHIIHFWV
RIDVWUXFWXUDOV\VWHP7KHEHKDYLRXUVKRXOGEHPRGHOOHG


HLWKHUE\HODVWRSODVWLFDQDO\VLVZLWKSODVWLILHGVHFWLRQVDQGRUMRLQWVDVSODVWLFKLQJHVRU



RUE\QRQOLQHDUSODVWLFDQDO\VLVFRQVLGHULQJWKHSDUWLDOSODVWLILFDWLRQRIPHPEHUVLQSODVWLF]RQHV

 :KHQSODVWLFJOREDODQDO\VLVLVXVHGODWHUDOUHVWUDLQWVKRXOGEHSURYLGHGDWDOOSODVWLFKLQJHDQGSODVWLF
]RQHORFDWLRQVDWZKLFKURWDWLRQVPD\RFFXUXQGHUDQ\ORDGFDVH
 7KHODWHUDOUHVWUDLQWVKRXOGEHSURYLGHGDWWKHFRPSUHVVLRQIODQJHZLWKLQDGLVWDQFHDORQJWKHPHPEHU
IURPWKHWKHRUHWLFDOSODVWLFKLQJHORFDWLRQQRWH[FHHGLQJWLPHVWKHZLGWKRIWKHIODQJH
 7KHELOLQHDUVWUHVVVWUDLQUHODWLRQVKLSLQGLFDWHGLQ)LJXUHPD\EHXVHGIRUWKHJUDGHVRIVWUXFWXUDO
VWHHOVSHFLILHGLQVHFWLRQ$OWHUQDWLYHO\DPRUHSUHFLVHUHODWLRQVKLSPD\EHDGRSWHGVHH(1

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

)LJXUH%LOLQHDUVWUHVVVWUDLQUHODWLRQVKLS


6\VWHPVWDELOLW\VKRXOGEHFKHFNHGDWWKHLQWHUPLWWHQWVWDJHVRISODVWLILFDWLRQ

)RUDVHPLFRQWLQXRXVMRLQWWKHURWDWLRQVWLIIQHVV6 RIWKHMRLQWVKRXOGEHFRQVLGHUHGVHH(1
M

 ,IQRHIIHFWV RI WKH GHIRUPHG JHRPHWU\ VHFRQGRUGHU HIIHFWV  KDYH WR EHFRQVLGHUHG VHH ULJLG
SODVWLFDQDO\VLVLHSODVWLFJOREDODQDO\VLVQHJOHFWLQJWKHHODVWLFEHKDYLRXUPD\EHXVHG,QWKLVFDVHMRLQWV
DUHFODVVLILHGRQO\E\VWUHQJWKVHHSU(1

 &ODVVLILFDWLRQRIFURVVVHFWLRQV
 %DVLV
 :KHQ SODVWLF JOREDO DQDO\VLV LV XVHG WKH PHPEHUV VKDOO EH FDSDEOH RI IRUPLQJ SODVWLF KLQJHV ZLWK
VXIILFLHQWURWDWLRQFDSDFLW\WRHQDEOHWKHUHTXLUHGUHGLVWULEXWLRQRIEHQGLQJPRPHQWVWRGHYHORS
 :KHQHODVWLFJOREDODQDO\VLVLVXVHGDQ\FODVVRIFURVVVHFWLRQPD\EHXVHGIRUWKHPHPEHUVSURYLGHG
WKDWWKHGHVLJQRIWKHPHPEHUVWDNHVLQWRDFFRXQWWKHSRVVLEOHOLPLWVRQWKHUHVLVWDQFHRIFURVVVHFWLRQVGXH
WRORFDOEXFNOLQJVHH
 &ODVVLILFDWLRQ


)RXUFODVVHVRIFURVVVHFWLRQVDUHGHILQHGDVIROORZV


&ODVVFURVVVHFWLRQVDUHWKRVHZKLFKFDQIRUPDSODVWLFKLQJHZLWKWKHURWDWLRQFDSDFLW\UHTXLUHG
IRUSODVWLFKLQJHV
&ODVV  FURVVVHFWLRQV DUH WKRVH ZKLFK FDQ GHYHORS WKHLU SODVWLF PRPHQW UHVLVWDQFH EXW KDYH
OLPLWHGURWDWLRQFDSDFLW\
&ODVVFURVVVHFWLRQVDUHWKRVHLQZKLFKWKHFDOFXODWHGVWUHVVLQWKHH[WUHPHFRPSUHVVLRQILEUHRI
WKHVWHHOPHPEHUFDQUHDFKLWV\LHOGVWUHQJWKEXWORFDOEXFNOLQJLVOLDEOHWRSUHYHQWGHYHORSPHQW
RIWKHSODVWLFPRPHQWUHVLVWDQFH
&ODVVFURVVVHFWLRQVDUHWKRVHLQZKLFKORFDOEXFNOLQJZLOORFFXUEHIRUHWKHDWWDLQPHQWRI\LHOG
VWUHVVLQRQHRUPRUHSDUWVRIWKHFURVVVHFWLRQ

 (IIHFWLYH ZLGWKV PD\ EH XVHG LQ &ODVV  FURVVVHFWLRQV WR PDNH WKH QHFHVVDU\ DOORZDQFHV IRU
UHGXFWLRQVLQUHVLVWDQFHGXHWRWKHHIIHFWVRIORFDOEXFNOLQJVHH(1


7KHFODVVLILFDWLRQRIFURVVVHFWLRQGHSHQGVRQWKHSURSRUWLRQVRIHDFKRILWVFRPSUHVVLRQHOHPHQWV

 &RPSUHVVLRQHOHPHQWVLQFOXGHHYHU\HOHPHQWRIDFURVVVHFWLRQZKLFKLVHLWKHUWRWDOO\RUSDUWLDOO\LQ
FRPSUHVVLRQXQGHUWKHORDGFRPELQDWLRQFRQVLGHUHG

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 7KHYDULRXVFRPSUHVVLRQHOHPHQWVLQDFURVVVHFWLRQ VXFKDVDZHERUIODQJH FDQLQJHQHUDOEHLQ


GLIIHUHQWFODVVHV
 $ FURVVVHFWLRQ LV FODVVLILHG E\ TXRWLQJ WKH KLJKHVW OHDVW IDYRXUDEOH  FODVV RI LWV FRPSUHVVLRQ
HOHPHQWV([FHSWLRQVDUHVSHFLILHGLQ  DQG  
 $OWHUQDWLYHO\ WKH FODVVLILFDWLRQ RI D FURVVVHFWLRQ PD\ EH GHILQHG E\ TXRWLQJ ERWK WKH IODQJH
FODVVLILFDWLRQDQGWKHZHEFODVVLILFDWLRQ
 7KHOLPLWLQJSURSRUWLRQVIRU&ODVVDQGFRPSUHVVLRQHOHPHQWVVKRXOGEHREWDLQHGIURP 7DEOH
$QHOHPHQWZKLFKIDLOVWRVDWLVI\WKHOLPLWVIRU&ODVVVKRXOGEHWDNHQDV&ODVV


([FHSWDVJLYHQLQ  &ODVVVHFWLRQVPD\EHWUHDWHGDV&ODVVVHFWLRQVLIWKHZLGWKWRWKLFNQHVV

UDWLRVDUH OHVVWKDQWKHOLPLWLQJ SURSRUWLRQV IRU &ODVV  REWDLQHG IURP 7DEOH  LQFUHDVHG E\

I g
\

0

FRP  (G

 LV WKH PD[LPXP GHVLJQ FRPSUHVVLYH VWUHVV LQ WKH HOHPHQW WDNHQ IURP WKH VHFRQG RUGHU
ZKHUH s
DQDO\VLVZKHUHQHFHVVDU\
FRP(G

 +RZHYHUZKHQYHULI\LQJWKHGHVLJQEXFNOLQJUHVLVWDQFHRIDPHPEHUXVLQJVHFWLRQWKHOLPLWLQJ
SURSRUWLRQVIRU&ODVVVKRXOGDOZD\VEHREWDLQHGIURP7DEOH
 &URVVVHFWLRQUHTXLUHPHQWVIRUSODVWLFJOREDODQDO\VLV
 $WSODVWLFKLQJHORFDWLRQVWKHFURVVVHFWLRQRIWKHPHPEHUZKLFKFRQWDLQVWKHSODVWLFKLQJHVKDOOKDYH
DURWDWLRQFDSDFLW\RIQRWOHVVWKDQWKHUHTXLUHGURWDWLRQDWWKDWSODVWLFKLQJHORFDWLRQ
 7KH UHTXLUHPHQW RI D VXIILFLHQW URWDWLRQ FDSDFLW\ FDQ EH DVVXPHG WR EH VDWLVILHG LI DOO PHPEHUV
FRQWDLQLQJ SODVWLF KLQJHV KDYH &ODVV  FURVVVHFWLRQV DW WKH SODVWLF KLQJH ORFDWLRQ )RU VSHFLDO V\VWHPV
UHTXLULQJ H[WUDRUGLQDU\ KLJK URWDWLRQ YDOXHV D GLUHFW YHULILFDWLRQ RI WKH URWDWLRQ FDSDFLW\ FRPSDULQJ WKH
UHTXLUHGURWDWLRQGHWHUPLQHGIRUDV\VWHPZLWKWKHDYDLODEOHURWDWLRQRIDVHFWLRQRUDMRLQWLVQHFHVVDU\
 :KHUH WKH FURVVVHFWLRQV RI WKH PHPEHUV YDU\ DORQJ WKHLU OHQJWK WKH IROORZLQJ DGGLWLRQDO FULWHULD
VKRXOGEHVDWLVILHG
D

$GMDFHQWWRSODVWLFKLQJHORFDWLRQVWKHWKLFNQHVVRIWKHZHEVKRXOGQRWEHUHGXFHGIRUDGLVWDQFH
DORQJWKHEHDPIURPWKHSODVWLFKLQJHORFDWLRQRIDWOHDVWGZKHUHGLVWKHFOHDUGHSWKRIWKHZHE
DW WKH SODVWLF KLQJH ORFDWLRQ:HE VWLIIHQHUV VKRXOG EH SURYLGHG ZLWKLQ D GLVWDQFH RI G RI WKH
KLQJHORFDWLRQZKHQWKHWUDQVYHUVHIRUFHDWWKHKLQJHH[FHHGVRIWKHVKHDUUHVLVWDQFHRIWKH
FURVVVHFWLRQ

$GMDFHQWWR SODVWLF KLQJH ORFDWLRQVWKHFRPSUHVVLRQIODQJH VKRXOG EH &ODVV  DQG DQ\ IDVWHQHU
KROHV LQ WHQVLRQ VKRXOG VDWLVI\    IRU D GLVWDQFH DORQJ WKH EHDP IURP WKH SODVWLF KLQJH
ORFDWLRQRIQRWOHVVWKDQWKHJUHDWHURI



GZKHUHGLVDVGHILQHGLQD
WKHGLVWDQFHWRWKHSRLQWDWZKLFKWKHPRPHQWLQWKHEHDPKDVIDOOHQWRWLPHVWKHSODVWLF
PRPHQWUHVLVWDQFHDWWKHSRLQWFRQFHUQHG

(OVHZKHUHWKHFRPSUHVVLRQIODQJHVKRXOGEH&ODVVRU&ODVV

,QFDVHVZKHUHVRSKLVWLFDWHGPHWKRGVRISODVWLFJOREDODQDO\VLVDUHXVHGZKLFKFRQVLGHUVWKHUHDO
VWUHVV DQG VWUDLQ EHKDYLRXU DORQJ WKH PHPEHU ORFDO DQG JOREDO EXFNOLQJ F  KDV QRW WR EH
FRQVLGHUHG

 &URVVVHFWLRQUHTXLUHPHQWVZKHQHODVWLFJOREDODQDO\VLVLVXVHG
 :KHQHODVWLFJOREDODQDO\VLVLVXVHGWKHUROHRIFURVVVHFWLRQFODVVLILFDWLRQLVWRLGHQWLI\WKHH[WHQWWR
ZKLFKWKHUHVLVWDQFHRIDFURVVVHFWLRQLVOLPLWHGE\LWVORFDOEXFNOLQJUHVLVWDQFH

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 :KHQDOOWKHFRPSUHVVLRQHOHPHQWVRIDFURVVVHFWLRQDUH&ODVVWKHFURVVVHFWLRQPD\EHWDNHQDV
FDSDEOHRIGHYHORSLQJLWVIXOOSODVWLFUHVLVWDQFHPRPHQW
 :KHQDOOWKHFRPSUHVVLRQHOHPHQWVRIDFURVVVHFWLRQDUH&ODVVLWVUHVLVWDQFHVKRXOGEHEDVHGRQDQ
HODVWLFGLVWULEXWLRQRIVWUHVVHVDFURVVWKHFURVVVHFWLRQOLPLWHGWRWKH\LHOGVWUHQJWKDWWKHH[WUHPHILEUHV
 :KHQ\LHOGLQJILUVWRFFXUVRQWKHWHQVLRQVLGHRIWKHQHXWUDOD[LVWKHSODVWLFUHVHUYHVRIWKHWHQVLRQ
]RQHPD\EHXWLOLVHGZKHQGHWHUPLQLQJWKHUHVLVWDQFHRID&ODVVFURVVVHFWLRQ
 &URVVVHFWLRQVZLWKD&ODVVZHEDQG&ODVVRUIODQJHVPD\EHWUHDWHGDVHIIHFWLYH&ODVVFURVV
VHFWLRQV ZLWK DQ HIIHFWLYH ZHE LQ DFFRUGDQFH ZLWK )LJXUH  7KH SURSRUWLRQ RI WKH ZHE LQ FRPSUHVVLRQ
VKRXOG EH UHSODFHG E\ DQ HOHPHQW RI eW  DGMDFHQW WR WKH FRPSUHVVLRQ IODQJH ZLWK DQRWKHU HOHPHQW RI
eW DGMDFHQWWRWKHSODVWLFQHXWUDOD[LVRIWKHHIIHFWLYHFURVVVHFWLRQ
Z

&RPSUHVVLRQ



e WZ

1HJOHFW



3ODVWLF

e WZ

QHXWUDOD[LV


7HQVLRQ

7HQVLRQ

&RPSUHVVLRQ

)LJXUH(IIHFWLYHFODVVZHE
 :KHQ WKH ZHE LV FRQVLGHUHG WR UHVLVW VKHDU IRUFHV RQO\ DQG GRHV QRW FRQWULEXWH WR WKH EHQGLQJ DQG
QRUPDOIRUFHUHVLVWDQFHRIWKHFURVVVHFWLRQWKHFURVVVHFWLRQPD\EHGHVLJQHGDV&ODVVRUVHFWLRQV
GHSHQGLQJRQO\RQWKHIODQJHFODVV

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

7DEOH VKHHWRI 0D[LPXPZLGWKWRWKLFNQHVVUDWLRVIRUFRPSUHVVLRQ


HOHPHQWV
,QWHUQDOFRPSUHVVLRQHOHPHQWV

F
W

$[LVRI
K EHQGLQJ

F KW
E
W

$[LVRI
EHQGLQJ

W
F EW

&ODVV
6WUHVV
GLVWULEXWLRQ
LQHOHPHQWV
FRPSUHVVLRQ
SRVLWLYH

(OHPHQWVXEMHFWWR
EHQGLQJ
I\


(OHPHQWVXEMHFWWR
FRPSUHVVLRQ
I\


I\

I\

(OHPHQWVXEMHFWWREHQGLQJDQGFRPSUHVVLRQ
I\


aF

I\

e
a - 
e
ZKHQ a   F  W
a
e
ZKHQ a >   F  W
a - 
e
ZKHQ a   F  W
a

ZKHQ a >   F  W




F  W e

F  W e

F  W e

F  W e

6WUHVV
GLVWULEXWLRQ
LQHOHPHQWV
FRPSUHVVLRQ
SRVLWLYH

I\


F

I\

I\
F


F


y I\

I\

F  W e

F  W e

ZKHQ y > -  F  W

e
 + y

ZKHQ y -  F  W e  - y -y

I










e
7KLV FW YDOXH UHIHUV WR WKH XWLOLVDWLRQ RI SODVWLF UHVHUYHV LQ WKH WHQVLRQ ]RQH VHH    WKHUHIRUH
UHIHUVWRWKHVWUDLQUDWLR

e =   I \

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

7DEOH VKHHWRI 0D[LPXPZLGWKWRWKLFNQHVVUDWLRVIRUFRPSUHVVLRQ


HOHPHQWV
2XWVWDQGIODQJHV

F
W

5ROOHGVHFWLRQV
&ODVV

F  W e

F  W e

6WUHVV
GLVWULEXWLRQ
LQHOHPHQWV
FRPSUHVVLRQ
SRVLWLYH

e =   I \

(OHPHQWVXEMHFWWREHQGLQJDQGFRPSUHVVLRQ
7LSLQFRPSUHVVLRQ
7LSLQWHQVLRQ

:HOGHGVHFWLRQV

(OHPHQWVXEMHFWWR
FRPSUHVVLRQ

6WUHVV
GLVWULEXWLRQ
LQHOHPHQWV
FRPSUHVVLRQ
SRVLWLYH

aF

e
a
e
FW
a

FW
FW

e
a a
e
a a

F  W e N s

F  W e
\

aF

FW

I
e







)RUNsVHH3DUW








)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

7DEOH VKHHWRI 0D[LPXPZLGWKWRWKLFNQHVVUDWLRVIRUFRPSUHVVLRQ


HOHPHQWV
$QJOHV

5HIHUDOVRWR2XWVWDQGIODQJHV
VHHVKHHWRI
&ODVV
6WUHVV
GLVWULEXWLRQ
DFURVV
VHFWLRQ
FRPSUHVVLRQ
SRVLWLYH

'RHVQRWDSSO\WRDQJOHVLQ
FRQWLQXRXVFRQWDFWZLWKRWKHU
FRPSRQHQWV

6HFWLRQLQFRPSUHVVLRQ
I\

K  W e 

E+K
e
W

7XEXODUVHFWLRQV

&ODVV



6HFWLRQLQEHQGLQJDQGRUFRPSUHVVLRQ

e =   I \

I
e
e





G  W e 
G  W e 
G  W e 

















3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 8OWLPDWHOLPLWVWDWHV
 *HQHUDO
 7KHSDUWLDOIDFWRUVg DVGHILQHGLQDUHDSSOLHGWRWKHYDULRXVFKDUDFWHULVWLFYDOXHVRIUHVLVWDQFHLQ
WKLVVHFWLRQDVIROORZV
0

UHVLVWDQFHRIFURVVVHFWLRQVWRH[FHVVLYH\LHOGLQJLQFOXGLQJORFDOEXFNOLQJ GHSHQGLQJRQI 

0

UHVLVWDQFHRIPHPEHUVWRPHPEHUEXFNOLQJ

0

UHVLVWDQFHRIFURVVVHFWLRQVLQWHQVLRQWRIUDFWXUH GHSHQGLQJRQI 

0

UHVLVWDQFHRIMRLQWV

VHH3DUW

127(  1XPHULFDO YDOXHV IRU g  PD\ EH GHILQHG LQ WKH 1DWLRQDO $QQH[ 7KH IROORZLQJ QXPHULFDO
YDOXHVDUHUHFRPPHQGHG
0L

g  
0

g  
0

g  
0

 5HVLVWDQFHRIFURVVVHFWLRQV
 *HQHUDO
 7KLVFODXVHFRYHUVWKHUHVLVWDQFHRIPHPEHUFURVVVHFWLRQVZKLFKDUHOLPLWHGE\RQHRIWKHIROORZLQJ
FDVHV


WKHUHVLVWDQFHRIWKHJURVVFURVVVHFWLRQWRH[FHVVLYH\LHOGLQJ

WKHUHVLVWDQFHRIWKHQHWVHFWLRQDWKROHVIRUIDVWHQHUVWRIUDFWXUHLQWHQVLRQ

$V IDU DV VKHDU ODJ HIIHFWV RU ORFDO EXFNOLQJ HIIHFWV RI FODVV  VHFWLRQV DUH FRQFHUQHG WKHVH HIIHFWV DUH
LQFOXGHGE\WKHHIIHFWLYHZLGWKDFFRUGLQJWR(16KHDUEXFNOLQJHIIHFWVVKRXOGDOVREHFRQVLGHUHG
DFFRUGLQJWR(1
 7KHGHVLJQYDOXHRIDQDFWLRQHIIHFWLQHDFKFURVVVHFWLRQVKDOOQRWH[FHHGWKHFRUUHVSRQGLQJGHVLJQ
UHVLVWDQFHDQGLIVHYHUDODFWLRQHIIHFWVDFWVLPXOWDQHRXVO\WKHFRPELQHGHIIHFWVKDOOQRWH[FHHGWKHUHVLVWDQFH
IRUWKDWFRPELQDWLRQ
 7KLVUHTXLUHPHQW  VKDOOEHIXOILOOHGLQ DOO FURVVVHFWLRQV FRUUHVSRQGLQJ WRWKHFODVVLILFDWLRQ RIWKH
FURVVVHFWLRQ
 (ODVWLF YHULILFDWLRQ DFFRUGLQJ WR WKH HODVWLF UHVLVWDQFH LV SRVVLEOH IRU DOO FURVV VHFWLRQDO FODVVHV
SURYLGHGWKHHIIHFWLYHFURVVVHFWLRQDOSURSHUWLHVDUHXVHGIRUFODVV


,IQRWRWKHUZLVHVSHFLILHGIRUWKHHODVWLFYHULILFDWLRQWKHIROORZLQJ\LHOGFULWHULRQVKRXOGEHVDWLVILHG

I g

[ (G

0

s
+
I g

]  (G

0

s
-
I g

[  (G

0

I g

]  (G

0

t
+ 
I g

(G

0

ZKHUH

[  (G

LVWKHGHVLJQYDOXHRIWKHORFDOORQJLWXGLQDOVWUHVVDWWKHSRLQWRIFRQVLGHUDWLRQ

]  (G

LVWKHGHVLJQYDOXHRIWKHORFDOWUDQVYHUVHVWUHVVDWWKHSRLQWRIFRQVLGHUDWLRQ

(G

LVWKHGHVLJQYDOXHRIWKHORFDOVKHDUVWUHVVDWWKHSRLQWRIFRQVLGHUDWLRQ



)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 7KH SODVWLF UHVLVWDQFH RI D FURVVVHFWLRQV VKDOO EH YHULILHG E\ ILQGLQJ D VWUHVV GLVWULEXWLRQ ZKLFK
HTXLOLEUDWHVWKHLQWHUQDOIRUFHVDQGPRPHQWVZLWKRXWH[FHHGLQJWKH\LHOGVWUHQJWKSURYLGHGWKDWWKLVVWUHVV
GLVWULEXWLRQLVIHDVLEOHFRQVLGHULQJWKHDVVRFLDWHGSODVWLFGHIRUPDWLRQV
 $VD FRQVHUYDWLYH DSSUR[LPDWLRQ IRU DOO FURVVVHFWLRQDO FODVVHV DOLQHDU VXPPDWLRQ RIWKH XWLOLVDWLRQ
UDWLRVIRUHDFKVWUHVVUHVXOWDQWPD\EHXVHG)RUH[DPSOHIRUWKHFRPELQDWLRQRI1 0 DQG0 E\
XVLQJWKHIROORZLQJFULWHULD
(G

1
1

(G

5G

\  (G

\  5G

ZKHUH 1 0
FODVVLILFDWLRQ
5G

+
\5G

]  (G

]  5G

 DQG 0

]5G

\(G

]5G



 DUH WKH GHVLJQ YDOXHV RI WKH UHVLVWDQFH GHSHQGLQJ RQ WKH FURVV VHFWLRQDO

 6HFWLRQSURSHUWLHV


*URVVFURVVVHFWLRQ

 7KHSURSHUWLHVRIWKHJURVVFURVVVHFWLRQVKDOOEHGHWHUPLQHGXVLQJWKHQRPLQDOGLPHQVLRQV+ROHVIRU
IDVWHQHUVQHHGQRWEHGHGXFWHGEXWDOORZDQFHVKDOOEHPDGHIRUODUJHURSHQLQJV6SOLFHPDWHULDOVVKDOOQRWEH
LQFOXGHG


1HWDUHD

 7KHQHWDUHDRIDFURVVVHFWLRQVKDOOEHWDNHQDVLWVJURVVDUHDOHVVDSSURSULDWHGHGXFWLRQVIRUDOOKROHV
DQGRWKHURSHQLQJV
 :KHQFDOFXODWLQJQHWVHFWLRQSURSHUWLHVWKHGHGXFWLRQIRUDVLQJOHIDVWHQHUKROHVKRXOGEHWKHJURVV
FURVVVHFWLRQDODUHDRIWKHKROHLQWKHSODQHRILWVD[LV)RUFRXQWHUVXQNKROHVDSSURSULDWHDOORZDQFHVKRXOG
EHPDGHIRUWKHFRXQWHUVXQNSRUWLRQ
 3URYLGHG WKDW WKH IDVWHQHU KROHV DUH QRW VWDJJHUHG WKH WRWDO DUHD WR EH GHGXFWHG IRU IDVWHQHU KROHV
VKRXOG EH WKH PD[LPXP VXP RI WKH VHFWLRQDO DUHDV RI WKH KROHV LQ DQ\ FURVVVHFWLRQ SHUSHQGLFXODU WR WKH
PHPEHUD[LV VHHIDLOXUHSODQHLQ)LJXUH 

RI

:KHQWKHIDVWHQHUKROHVDUHVWDJJHUHGWKHWRWDODUHDWREHGHGXFWHGIRUIDVWHQHUVVKDOOEHWKHJUHDWHU
D WKHGHGXFWLRQIRUQRQVWDJJHUHGKROHVJLYHQLQ 

E  W Q G -

V
 S



ZKHUH
V LVWKHVWDJJHUHGSLWFKWKHVSDFLQJRIWKHFHQWUHVRI WZR FRQVHFXWLYH KROHVLQWKHFKDLQ PHDVXUHG
SDUDOOHOWRWKHPHPEHUD[LV
S LVWKHVSDFLQJRIWKHFHQWUHVRIWKHVDPHWZRKROHVPHDVXUHGSHUSHQGLFXODUWRWKHPHPEHUD[LV
W

LVWKHWKLFNQHVV

Q LVWKHQXPEHURIKROHVH[WHQGLQJLQDQ\GLDJRQDORU]LJ]DJOLQHSURJUHVVLYHO\DFURVVWKHPHPEHU
RUSDUWRIWKHPHPEHUVHH)LJXUH
 ,QDQDQJOHRURWKHUPHPEHUZLWKKROHVLQPRUHWKHQRQHSODQHWKHVSDFLQJSVKDOOEHPHDVXUHGDORQJ
WKHFHQWUHRIWKLFNQHVVRIWKHPDWHULDO VHH)LJXUH 

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

)LJXUH6WDJJHUHGKROHV

)LJXUH$QJOHVZLWKKROHVLQERWKOHJV


6KHDUODJHIIHFWV

 7KHFDOFXODWLRQRIWKHHIIHFWLYHZLGWKVLVFRYHUHGLQ(1IRUFROGIRUPHGWKLQJDXJHPHPEHUV
DQGLQ(1IRUSODQDUSODWHGVWUXFWXUHV
 ,QFDVH RI &ODVV VHFWLRQVWKHLQWHUDFWLRQEHWZHHQ VKHDU ODJ DQG ORFDOEXFNOLQJ VKDOO EH FRQVLGHUHG
DFFRUGLQJWR(1IRUFROGIRUPHGWKLQJDXJHPHPEHUVDQG(1IRUSODQDUSODWHGVWUXFWXUHV


(IIHFWLYHFURVVVHFWLRQSURSHUWLHVRI&ODVVFURVVVHFWLRQV

 7KHHIIHFWLYHFURVVVHFWLRQSURSHUWLHVRI&ODVVFURVVVHFWLRQVVKRXOGEHEDVHGRQWKHHIIHFWLYHZLGWKV
RIWKHFRPSUHVVLRQHOHPHQWV


7KHHIIHFWLYHZLGWKVRISODQDUFRPSUHVVLRQHOHPHQWVVKRXOGEHREWDLQHGIURPSU(1

)RUFLUFXODUKROORZVHFWLRQVZLWKFODVVFURVVVHFWLRQVVHH(1

 :KHQWKHFURVVVHFWLRQLVVXEMHFWHGWRDQD[LDOIRUFHWKHPHWKRGJLYHQLQ(1VKRXOGEHXVHG
WRGHWHUPLQHWKHSRVVLEOHVKLIWH RIWKHFHQWURLGRIWKHHIIHFWLYHDUHD$ UHODWLYHWRWKHFHQWUHRIJUDYLW\RI
WKHJURVVFURVVVHFWLRQDQGWKHUHVXOWLQJDGGLWLRQDOPRPHQW
1

D0 (G = 1 (G H 1
ZKHUH1 LVSRVLWLYHIRUFRPSUHVVLRQ
(G

HII



)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 7HQVLRQ


7KHGHVLJQYDOXHRIWKHWHQVLRQIRUFH1 DWHDFKFURVVVHFWLRQVKDOOVDWLVI\
(G

1
1

 

(G



W  5G

)RUVHFWLRQVZLWKKROHVWKHGHVLJQWHQVLRQUHVLVWDQFH1

VKRXOGEHWDNHQDVWKHVPDOOHURI

W5G

D WKHGHVLJQSODVWLFUHVLVWDQFHRIWKHJURVVFURVVVHFWLRQ

=$

SO  5G



0

E WKHGHVLJQXOWLPDWHUHVLVWDQFHRIWKHQHWFURVVVHFWLRQDWKROHVIRUIDVWHQHUV

=  $

X  5G

QHW

I
g



 :KHQFDSDFLW\GHVLJQLVUHTXHVWHGVHH(1WKHGHVLJQSODVWLFUHVLVWDQFH1  DVJLYHQLQ
D VKRXOGEHOHVVWKDQWKHGHVLJQXOWLPDWHUHVLVWDQFHRIWKHQHWVHFWLRQDWIDVWHQHUVKROHV1  DVJLYHQLQ
E 
SO5G

X5G

 ,Q FDWHJRU\ & FRQQHFWLRQV VHH SU(1     WKH GHVLJQ SODVWLF UHVLVWDQFH RI WKH QHW
VKRXOGQRWEHWDNHQDVPRUHWKDQ
VHFWLRQDWKROHVIRUIDVWHQHUV1

QHW  5G

=$

QHW

QHW5G



0

 )RUDQJOHVFRQQHFWHGWKURXJKRQHOHJVHHDOVR 3DUW   6LPLODU FRQVLGHUDWLRQ VKRXOGDOVR EH


JLYHQWRRWKHUW\SHRIVHFWLRQVFRQQHFWHGWKURXJKRXWVWDQGVVXFKDV7VHFWLRQVDQGFKDQQHOV
 &RPSUHVVLRQ


7KHGHVLJQYDOXHRIWKHFRPSUHVVLRQIRUFH1 DWHDFKFURVVVHFWLRQVKDOOVDWLVI\
(G

1
1

(G

 



F  5G

 7KH GHVLJQ UHVLVWDQFH RI WKH FURVVVHFWLRQ IRU XQLIRUP FRPSUHVVLRQ 1


IROORZV

F5G

&ODVVRUFURVVVHFWLRQV

F  5G

= $I g

&ODVVFURVVVHFWLRQV

F  5G

=$

HII

0

I g
\

 VKDOO EH GHWHUPLQHG DV

0

 )DVWHQHUKROHVQHHGQRWEHDOORZHGIRULQFRPSUHVVLRQPHPEHUVDVIDUDVWKH\DUHILOOHGE\IDVWHQHUV
H[FHSWIRURYHUVL]HDQGVORWWHGKROHV
 ,QWKHFDVHRIXQV\PPHWULFDO&ODVVVHFWLRQVWKHPHWKRGJLYHQLQVKRXOGEHXVHGWRDOORZIRU
WKH DGGLWLRQDO PRPHQW D0 GXH WR WKH HFFHQWULFLW\ RI WKH FHQWURLGDO D[LV RI WKH HIIHFWLYH VHFWLRQ VHH
  
 %HQGLQJPRPHQW


7KHGHVLJQYDOXHRIWKHEHQGLQJPRPHQW0 DWHDFKFURVVVHFWLRQVKDOOVDWLVI\
(G

0
0

(G

F  5G





3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 7KH GHVLJQ UHVLVWDQFH IRU EHQGLQJ DERXW RQH SULQFLSDO D[LV RI D FURVVVHFWLRQ ZLWKRXW KROHV IRU
IDVWHQHUVLVGHWHUPLQHGDVIROORZV
&ODVVRUFURVVVHFWLRQV 0

F  5G

= : I g

&ODVVFURVVVHFWLRQV

F  5G

=:

&ODVVFURVVVHFWLRQV

F  5G

=:

ZKHUH:

HOPLQ

DQG:

HIIPLQ

SO

HO  PLQ

0

I g

HII  PLQ

0

I g
\

0

FRUUHVSRQGVWRWKHILEUHZLWKWKHPD[LPXPHODVWLFVWUHVV

)RUEHQGLQJDERXWERWKD[HVWKHPHWKRGVJLYHQLQVKRXOGEHXVHG

)DVWHQHUKROHVLQWKHWHQVLRQIODQJHPD\EHLJQRUHGSURYLGHGWKDWIRUWKHWHQVLRQIODQJH

$

$

I  QHW

I g

I g
\

0

0



ZKHUH$ LVWKHDUHDRIWKHWHQVLRQIODQJH
I

127(7KHFULWHULRQLQ  SURYLGHVFDSDFLW\GHVLJQLQWKHUHJLRQRISODVWLFKLQJHV
 )DVWHQHUKROHVLQWHQVLRQ]RQHRIWKHZHEQHHGQRWEHDOORZHGIRUSURYLGHGWKDWWKHOLPLWJLYHQLQ 
LVVDWLVILHGIRUWKHFRPSOHWHWHQVLRQ]RQHFRPSULVLQJWKHWHQVLRQIODQJHSOXVWKHWHQVLRQ]RQHRIWKHZHE
 )DVWHQHU KROHV LQ FRPSUHVVLRQ ]RQH RI WKH FURVVVHFWLRQ QHHG QRW EH DOORZHG IRU DV IDU DV WKH\ DUH
ILOOHGE\IDVWHQHUVH[FHSWIRURYHUVL]HDQGVORWWHGKROHV
 6KHDU


7KHGHVLJQYDOXHRIWKHVKHDUIRUFH9 DWHDFKFURVVVHFWLRQVKDOOVDWLVI\
(G

9
9

(G

 



F  5G

ZKHUH9 LVWKHGHVLJQVKHDUUHVLVWDQFH)RUSODVWLFGHVLJQ9 LVWKHGHVLJQSODVWLFVKHDUUHVLVWDQFH9


DVJLYHQLQ  )RUHODVWLFGHVLJQ9 LVWKHGHVLJQHODVWLFVKHDUUHVLVWDQFHDVJLYHQLQ  
F5G

F5G

SO5G

F5G

7KHGHVLJQSODVWLFVKHDUUHVLVWDQFHLVJLYHQE\

SO  5G

=$

(I

  g



0

ZKHUH$ LVWKHVKHDUDUHD
Y

7KHVKHDUDUHD$ PD\EHWDNHQDVIROORZV
Y

D UROOHG,DQG+VHFWLRQVORDGSDUDOOHOWRZHE

$ - EW + (W + U ) W

E UROOHGFKDQQHOVHFWLRQVORDGSDUDOOHOWRZHE

$ - EW + (W + U ) W

F ZHOGHG,+DQGER[VHFWLRQVORDGSDUDOOHOWRZHE

(K Z W Z )
$ (K Z W Z )

G ZHOGHG,+FKDQQHODQGER[VHFWLRQVORDGSDUDOOHOWRIODQJHV

H UROOHGUHFWDQJXODUKROORZVHFWLRQVRIXQLIRUPWKLFNQHVV
ORDGSDUDOOHOWRGHSWK

$K EK

ORDGSDUDOOHOWRZLGWK

$E EK

I FLUFXODUKROORZVHFWLRQVDQGWXEHVRIXQLIRUPWKLFNQHVV
ZKHUH
$

LVWKHFURVVVHFWLRQDUHD

$p

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

LVWKHRYHUDOOEUHDGWK

LVWKHRYHUDOOGHSWK

LVWKHGHSWKRIWKHZHE

LVWKHURRWUDGLXV

LVWKHIODQJHWKLFNQHVV

LV WKH ZHE WKLFNQHVV ,I WKH ZHE WKLFNQHVV LQ QRW FRQVWDQW W  VKRXOG EH WDNHQ DV WKH PLQLPXP
WKLFNQHVV 

 $VDQDOWHUQDWLYHWR  F WKHVKHDUDUHD$ IRUZHOGHG,+RUER[VHFWLRQVORDGSDUDOOHOWRZHEPD\


EHWDNHQDVIROORZV
Y

$  K W

IRU66DQG6

$  K W

IRU6DQG6

Z Z

Z Z

SURYLGHGWKDWHQGSRVWVDUHXVHGDQGWKHZHOGVEHWZHHQZHEDQGIODQJHVDUHGHVLJQHGIRUWKHFRUUHVSRQGLQJ
VKHDUIORZ
'UDIWQRWH WREHFKHFNHG
 7KHGHVLJQHODVWLFVKHDUUHVLVWDQFH9
IROORZLQJFULWHULRQ

F5G

(G

g

0

)  



ZKHUH t VKDOOEHREWDLQHGIURP t (G =
(G

ZKHUH 9

(G

VKRXOGEHVXFKWKDWDOOSRLQWVLQWKHFURVVVHFWLRQVDWLVI\WKH

9(G 6
,W



LV WKHGHVLJQYDOXHRIWKHVKHDUIRUFH

LV ILUVWPRPHQWRIDUHD

LV VHFRQGPRPHQWRIDUHD

LV WKHWKLFNQHVVDWWKHH[DPLQHGSRLQW

 )RU,RU+3URILOHVZKHUHWKHOLQHRIDSSOLFDWLRQRIWKHWUDQVYHUVHIRUFHFRPSOLHVZLWKWKHFHQWUHOLQH
RIWKHZHEWKHVKHDUVWUHVVLQWKHZHEPD\EHWDNHQDV

t PG =

9(G
LI $  $  
$Z
IO



ZKHUH $

IO

LVWKHDUHDRIRQHIODQJH

LVWKHDUHDRIWKHZHE$

K W 
Z

'UDIWQRWH 7KHIROORZLQJFODXVHVKDYHWREHXSGDWHGDFFRUGLQJWRSU(1


,QDGGLWLRQWKHVKHDUEXFNOLQJUHVLVWDQFHVKDOOEHYHULILHGDVVSHFLILHGDFFRUGLQJWR(1

KZ
e
> 
Nt 
WZ
h



)RUZHEVZLWKRXWLQWHUPHGLDWHVWLIIHQHUV  FDQEHVSHFLILHGDVIROORZV

K
e
 Z >  
WZ

ZKHUH Nt LVWKHEXFNOLQJIDFWRUIRUVKHDUVHH(1



3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

h = 

g 0
g 0

IRU66DQG6

h = 

g 0
g 0

IRU6DQG6


I

e=

 )DVWHQHUKROHVQHHGQRWWREHDOORZHGIRULQWKHVKHDUYHULILFDWLRQH[FHSWLQYHULI\LQJWKHGHVLJQVKHDU
UHVLVWDQFHDWFRQQHFWLRQ]RQHVDVJLYHQLQ(1
 7RUVLRQ


7KHGHVLJQYDOXHRIWKHWRUVLRQDOPRPHQW7 DWHDFKFURVVVHFWLRQVKRXOGVDWLVI\
(G

7(G
 
75G




7KHWRWDOLQWHUQDOWRUTXH7 DWDQ\FURVVVHFWLRQVKRXOGJHQHUDOO\EHGLYLGHGLQWRWZRSDUWVVXFKWKDW
(G

7  7
(G

Y(G

7



Z(G

ZKHUH
7

LVWKH6W9HQDQWWRUVLRQ

LVWKHZDUSLQJWRUVLRQ

Y(G

Z(G

'UDIWQRWH )RU WKH 6W 9HQDQW WRUVLRQWKHLQGH[ Y VKRXOG EHUHSODFHG LQ RUGHU WR DYRLG PL[XSV ZLWK WKH
LQGH[IRUVKHDU
 7KH YDOXHV RI 7 DQG 7
DW DQ\ FURVVVHFWLRQ PD\ EH GHWHUPLQHG IURP 7  E\ HODVWLF DQDO\VLV
WDNLQJ DFFRXQW RI WKH VHFWLRQ SURSHUWLHV RI WKH PHPEHU WKH FRQGLWLRQV RI UHVWUDLQW DW WKH VXSSRUWV DQG WKH
GLVWULEXWLRQRIWKHDFWLRQVDORQJWKHPHPEHU
Y(G

Z(G

(G

 $VDVLPSOLILFDWLRQLQWKHFDVHRIDPHPEHUZLWKDFORVHGKROORZFURVVVHFWLRQVXFKDVDVWUXFWXUDO
KROORZVHFWLRQLWPD\EHDVVXPHGWKDWWKHHIIHFWVRIZDUSLQJFDQEHQHJOHFWHG


7KHIROORZLQJVWUHVVHVGXHWRWRUVLRQVKRXOGEHWDNHQLQWRDFFRXQW


WKHVKHDUVWUHVVHVt

WKHGLUHFWVWUHVVHVs
7

Y(G

GXHWR6W9HQDQWWRUVLRQ

Z(G

GXHWRWKHELPRPHQW %  DQG VKHDUVWUHVVHV t


(G

Z(G

GXH WR ZDUSLQJ WRUVLRQ

Z(G

)RUSODVWLFUHVLVWDQFHRQO\WRUVLRQQHFHVVDU\IRUHTXLOLEULXPVKRXOGEHFRQVLGHUHG

)RUWKHFDOFXODWLRQRIWKHUHVLVWDQFH7 DGHVLJQVKHDUVWUHVVRI I
5G

0

 VKRXOGEHDVVXPHG

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 )RU FRPELQHG VKHDU IRUFHV DQG WRUVLRQDO PRPHQWV LQ &ODVV  RU  VHFWLRQV WKH SODVWLF VKHDU VWUHVV
 WR FRPELQHG VKHDU IRUFH DQG
VKRXOG EH OLPLWHG E\ YHULI\LQJ WKH UHVLVWDQFH RI WKH FURVVVHFWLRQ 9
WRUVLRQDOPRPHQWXVLQJ
SO7(G5G

(G



SO  7(G  5G

LQZKLFK9

SO7(G5G

LVJLYHQE\WKHIROORZLQJ

IRUDQ,RU+VHFWLRQ

SO  7(G  5G

= -

Y(G

 I   
\



SO  5G

0

IRUDFKDQQHOVHFWLRQ

SO  7(G  5G

=  I   

Y(G

0

(I   ) 
Z  (G



SO  5G

0

IRUDVWUXFWXUDOKROORZVHFWLRQ

SO 7(G  5G

=  I   

Y(G



SO  5G

0

 %HQGLQJDQGVKHDU


:KHQWKHVKHDUIRUFHLVSUHVHQWDOORZDQFHVKDOOEHPDGHIRULWVHIIHFWRQWKHPRPHQWUHVLVWDQFH

 :KHQWKHVKHDUIRUFHLVOHVVWKDQKDOIWKHSODVWLFVKHDUUHVLVWDQFHWKHHIIHFWRQWKHPRPHQWUHVLVWDQFH
PD\EHQHJOHFWHG
127()RUVPDOOYDOXHVRIVKHDUIRUFHWKHUHGXFWLRQRIWKHSODVWLFUHVLVWDQFHPRPHQWLVVRVPDOOWKDW
LWLVFRXQWHUEDODQFHGE\VWUDLQKDUGHQLQJDQGPD\EHQHJOHFWHG
 2WKHUZLVH WKH UHGXFHG UHVLVWDQFH VKRXOG EH WDNHQ DV WKH GHVLJQ UHVLVWDQFH RI WKH FURVVVHFWLRQ
FDOFXODWHGXVLQJDUHGXFHGVWUHQJWK r I IRUWKHVKHDUDUHDEXWQRWPRUHWKDQ0 
\

9
9

ZKHUH r =

(G

SO  5G

F5G

-  DQG9

SO5G

LVREWDLQHGIURP  

9
,QWKHSUHVHQFHRIWRUVLRQrVKRXOGEHREWDLQHGIURP r =
9

(G

SO  7(G  5G

-  VHH

 7KH UHGXFHG GHVLJQ SODVWLF UHVLVWDQFH PRPHQW DOORZLQJ IRU WKH VKHDU IRUFH PD\ DOWHUQDWLYHO\ EH
REWDLQHGIRUFURVVVHFWLRQVZLWKHTXDOIODQJHVDQGEHQGLQJDERXWWKHPDMRUD[LVDVIROORZV

9  5G

ZKHUH 0

F5G

r$
= : W


Y

SO

EXW 0

0

LVREWDLQHGIURP  

9  5G

F  5G



3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 %HQGLQJDQGD[LDOIRUFH


&ODVVDQGFURVVVHFWLRQV

:KHQDQD[LDOIRUFHLVSUHVHQWDOORZDQFHVKDOOEHPDGHIRULWVHIIHFWRQWKHSODVWLFPRPHQWUHVLVWDQFH

)RUFODVVDQGFURVVVHFWLRQVWKHIROORZLQJFULWHULRQVKRXOGEHVDWLVILHG
0  0
(G



15G

)RUDSODWHZLWKRXWEROWKROHVWKHUHGXFHGGHVLJQSODVWLFUHVLVWDQFHPRPHQW0

1  5G

=0

SO  5G

[ - (1

(G

1

15G

) ] 


SO  5G

LVJLYHQE\


 )RU EHQGLQJ DERXW WKH \\D[LV DOORZDQFH VKRXOG EH PDGH IRU WKH HIIHFW RI WKH D[LDO IRUFH RQ WKH
SODVWLFUHVLVWDQFHPRPHQWZKHQWKHIROORZLQJFULWHULDDUHVDWLVILHG

>  1

RU



1 (G >  K Z W Z I \G ZKLFKHYHULVVPDOOHU



(G

SO  5G

6LPLODUO\IRUEHQGLQJDERXWWKH]]D[LVDOORZDQFHVKRXOGEHPDGHIRUWKHHIIHFWRIWKHD[LDOIRUFHZKHQ

1 (G > K Z W Z I \G 



 )RUFURVVVHFWLRQVZLWKRXWEROWKROHVWKHIROORZLQJDSSUR[LPDWLRQVPD\EHXVHGIRUVWDQGDUGUROOHG,
RU+VHFWLRQVDQGIRUZHOGHG,RU+VHFWLRQVZLWKHTXDOIODQJHV
0

1\5G

SO\5G

Q  D EXW0

IRUQ D0

 0

IRUQ!D0

 0

1]5G

1]5G

1\5G

 0

SO\5G



SO]5G

SO]5G



Q - D 
 -

 - D



ZKHUH Q 1 1
(G

SO5G

D  $EW  $EXWD 


I

)RUFURVVVHFWLRQVZLWKRXWEROWKROHVWKHIROORZLQJDSSUR[LPDWLRQVPD\EHXVHGIRUUHFWDQJXODU VWUXFWXUDO
KROORZVHFWLRQVRIXQLIRUPWKLFNQHVVDQGIRUZHOGHGER[VHFWLRQVZLWKHTXDOIODQJHVDQGHTXDOZHEV
0

1\5G

1]5G

Q  D EXW0

0

Q  D  EXW0

0

SO\5G

SO]5G

1\5G

1]5G

SO\5G

SO]5G

ZKHUH D   $EW $ EXW D  IRUKROORZVHFWLRQV


Z

D   $EW $ EXW D   IRUZHOGHGER[VHFWLRQV


Z

D   $KW $ EXW D   IRUKROORZVHFWLRQV


I

D   $KW  $ EXW D   IRUZHOGHGER[VHFWLRQV


I




)LQDOGUDIW
6HSWHPEHU


3DJH
SU(1[[

)RUELD[LDOEHQGLQJWKHIROORZLQJDSSUR[LPDWHFULWHULRQPD\EHXVHG

\  (G

1\  5G

0
+
0

]  (G

1]  5G





LQZKLFKaDQGbDUHFRQVWDQWVZKLFKPD\FRQVHUYDWLYHO\EHWDNHQDVXQLW\RWKHUZLVHDVIROORZV
,DQG+VHFWLRQV

a =   b =  Q EXW b 
FLUFXODUKROORZVHFWLRQV

a = b= 
UHFWDQJXODUKROORZVHFWLRQV



a =b=


 EXW a = b 
 -  Q 

ZKHUH

Q 1 1
(G

SO5G



&ODVVFURVVVHFWLRQV

 ,QWKHDEVHQFHRIVKHDUIRUFHIRU&ODVVFURVVVHFWLRQVWKHPD[LPXPORQJLWXGLQDOVWUHVVVKDOOVDWLVI\
WKHFULWHULRQ

[  (G

ZKHUH s


I g
\

0





LVWKHGHVLJQYDOXHRIWKHORFDOORQJLWXGLQDOVWUHVVGXHWRPRPHQWDQGD[LDOIRUFH

[  (G

&ODVVFURVVVHFWLRQV

 ,Q WKH DEVHQFH RI VKHDU IRUFH IRU &ODVV  FURVVVHFWLRQV WKH PD[LPXP ORQJLWXGLQDO VWUHVV s
FDOFXODWHGXVLQJWKHHIIHFWLYHZLGWKVRIWKHFRPSUHVVLRQHOHPHQWV VHH  VKDOOVDWLVI\WKHFULWHULRQ

[(G

[  (G

ZKHUH s


I g
\

0



LVWKHGHVLJQYDOXHRIWKHORFDOORQJLWXGLQDOVWUHVVGXHWRPRPHQWDQGD[LDOIRUFH

[  (G

)RUFURVVVHFWLRQVZLWKRXWKROHVIRUIDVWHQHUVWKHDERYHFULWHULRQEHFRPHV

1
$ I g

(G

HII

0

0
:

\  (G

+1

HII  \  PLQ

(G

I g
\

1\

0

0
:

]  (G

+1

HII  ]  PLQ

(G

I g
\

1]



0

ZKHUH
$

HII

LVWKHHIIHFWLYHDUHDRIWKHFURVVVHFWLRQZKHQVXEMHFWHGWRXQLIRUPFRPSUHVVLRQ

LV WKH HIIHFWLYH VHFWLRQ PRGXOXV RI WKH FURVVVHFWLRQ ZKHQ VXEMHFWHG RQO\ WR PRPHQW DERXW WKH
UHOHYDQWD[LVFRUUHVSRQGLQJWRWKHILEUHZLWKWKHPD[LPXPHODVWLFVWUHVV

LV WKH VKLIW RI WKH UHOHYDQW FHQWURLGDO D[LV ZKHQ WKH FURVVVHFWLRQ LV VXEMHFWHG WR XQLIRUP
FRPSUHVVLRQVHH 

HIIPLQ

 %HQGLQJVKHDUDQGD[LDOIRUFH
 :KHQVKHDUDQGD[LDOIRUFHDUHSUHVHQWDOORZDQFHVKDOOEHPDGHIRUWKHHIIHFWRIERWKVKHDUIRUFHDQG
D[LDOIRUFHRQWKHUHVLVWDQFHPRPHQW

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 3URYLGHGWKDWWKHGHVLJQYDOXHRIWKHVKHDUIRUFH9 GRHVQRWH[FHHGRIWKHGHVLJQSODVWLFVKHDU
UHVLVWDQFH9 QRUHGXFWLRQQHHGEHPDGHLQFRPELQDWLRQVRIPRPHQWDQGD[LDOIRUFHWKDWPHHWWKHFULWHULD
LQ
(G

SO5G

 :KHQ9 H[FHHGVRI9 WKHGHVLJQUHVLVWDQFHRIWKHFURVVVHFWLRQWRFRPELQDWLRQVRIPRPHQW


DQGD[LDOIRUFHVKRXOGEHFDOFXODWHGXVLQJDUHGXFHG\LHOGVWUHQJWK
(G

SO5G

r I IRUWKHVKHDUDUHD
\

ZKHUHr  9 9
(G

 DQG9


SO5G

SO5G

LVREWDLQHGIURP  

 %XFNOLQJUHVLVWDQFHRIPHPEHUV
 &RPSUHVVLRQPHPEHUV



%XFNOLQJUHVLVWDQFH

$FRPSUHVVLRQPHPEHUVKDOOEHYHULILHGDJDLQVWEXFNOLQJDVIROORZV

1
1

 

(G



E  5G

LVWKHGHVLJQYDOXHRIWKHFRPSUHVVLRQIRUFH

ZKHUH 1

(G

E5G

LVWKHGHVLJQEXFNOLQJUHVLVWDQFHRIWKHFRPSUHVVLRQPHPEHU

127()RUKRWUROOHGDQGZHOGHGVWHHOPHPEHUVZLWKWKHW\SHVRIFURVVVHFWLRQDFFRUGLQJWR7DEOH
WKHUHOHYDQWEXFNOLQJPRGHLVJHQHUDOO\IOH[XUDOEXFNOLQJ,QFDVHRIWRUVLRQDORUIOH[XUDOWRUVLRQDO
EXFNOLQJVHH
127(,IWKHEXFNOLQJUHVLVWDQFHFRQVLGHUVQRQXQLIRUPVHFWLRQVDORQJWKHPHPEHURUQRQXQLIRUP
GLVWULEXWLRQ RI WKH FRPSUHVVLRQ IRUFH WKH YHULILFDWLRQ PD\ EH DSSOLHG DFFRUGLQJO\ IRU WKH VHFWLRQ
FRQVLGHUHG
 )RU PHPEHUV ZLWK QRQV\PPHWULF &ODVV  VHFWLRQV DOORZDQFH VKRXOG EH PDGH IRU WKH DGGLWLRQDO
PRPHQWD0GXHWRWKHHFFHQWULFLW\RIWKHFHQWURLGDOD[LVRIWKHHIIHFWLYHVHFWLRQVHHDOVR  


7KHGHVLJQEXFNOLQJUHVLVWDQFHRIDFRPSUHVVLRQPHPEHUVKRXOGEHWDNHQDV

1
1

E  5G

E  5G

ZKHUH c

= c$
= c$

IRU&ODVVDQGFURVVVHFWLRQV

0

I
HII


\

IRU&ODVVFURVVVHFWLRQV

0

LVWKHUHGXFWLRQIDFWRUIRUWKHUHOHYDQWEXFNOLQJPRGH

127(1 LVWKHPLQLPXPRI1
5G

DQG1

SO5G

E5G

)LQDOGUDIW
6HSWHPEHU


3DJH
SU(1[[

%XFNOLQJFXUYHV

 )RUD[LDOFRPSUHVVLRQLQPHPEHUVWKHYDOXHRIcIRUWKHDSSURSULDWHQRQGLPHQVLRQDOVOHQGHUQHVV`l
VKRXOGEHGHWHUPLQHGIURP

c=




f+ f -l

EXW c 

ZKHUH f =   + a l -  + l

l=
l=
a

$I \



IRU&ODVVDQGFURVVVHFWLRQV

1 FU
$ HII I \
1 FU

IRU&ODVVFURVVVHFWLRQV

LVDQLPSHUIHFWLRQIDFWRU

FU

LVWKHHODVWLFFULWLFDOIRUFHIRUWKHUHOHYDQWEXFNOLQJ PRGHEDVHGRQWKHJURVVFURVVVHFWLRQDO
SURSHUWLHV

 7KHLPSHUIHFWLRQIDFWRUaFRUUHVSRQGLQJWRWKHDSSURSULDWH EXFNOLQJ FXUYH VKRXOG EH REWDLQHGIURP


7DEOHDQG7DEOH

7DEOH,PSHUIHFWLRQIDFWRUVIRUEXFNOLQJFXUYHV
%XFNOLQJFXUYH
,PSHUIHFWLRQIDFWRUa

D



D


E


F


G


 9DOXHVRIWKHUHGXFWLRQIDFWRUcIRUWKHDSSURSULDWHQRQGLPHQVLRQDOVOHQGHUQHVV`lPD\EHREWDLQHG
IURP)LJXUH

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

7DEOH6HOHFWLRQRIEXFNOLQJFXUYHIRUDFURVVVHFWLRQ
%XFNOLQJFXUYH

&URVVVHFWLRQ

%XFNOLQJ

/LPLWV

DERXWD[LV

6
6
6

6

6

5ROOHG,VHFWLRQV

KE!
]

WI

PP

PPWPP
I

D

D

\\

]]

PP

KE
W

]
E

W!PP
I

:HOGHG,VHFWLRQV
]

WPP
I
W

WI
\

\\
]]

\\

]]

\\

]]

\\

]]

\
\\

]]

KRWUROOHG

DQ\

FROGIRUPHG

DQ\

DQ\

DQ\

W!PP
I
]

+ROORZVHFWLRQV

:HOGHGER[VHFWLRQV

WI

JHQHUDOO\
H[HSWDVEHORZ

\
WZ
]

WKLFNZHOGVD!W

EW
I
KW

87DQGVROLGVHFWLRQV

DQ\

/VHFWLRQV

DQ\

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[





D
D
E
F
G



5HGXFWLRQIDFWRUc








































B
1RQGLPHQVLRQDOVOHQGHUQHVVl











)LJXUH%XFNOLQJFXUYHV



)OH[XUDOEXFNOLQJ

7KHQRQGLPHQVLRQDOVOHQGHUQHVV`lLVJLYHQE\

l=

l=
ZKHUH /

FU

$I \
1 FU

$ HII I \
1 FU

/ FU 
L l

IRU&ODVVDQGFURVVVHFWLRQV

b$
/
= FU
L l

IRU&ODVVFURVVVHFWLRQV



LVWKHEXFNOLQJOHQJWK
LV WKH UDGLXV RI J\UDWLRQ DERXW WKH UHOHYDQW D[LV GHWHUPLQHG XVLQJ WKH SURSHUWLHV RI WKH JURVV
FURVVVHFWLRQ

b$ =

$ HII
$

(
= e
I\

l = p
e=


I

I LQ1PP


 7KHEXFNOLQJOHQJWK/ RIDFRPSUHVVLRQPHPEHUZLWKERWKHQGVHIIHFWLYHO\KHOGLQSRVLWLRQODWHUDOO\
PD\EHWDNHQDVHTXDOWRLWVV\VWHPOHQJWK/
FU

)RUIOH[XUDOEXFNOLQJWKHDSSURSULDWHEXFNOLQJFXUYHVKRXOGEHGHWHUPLQHGIURP7DEOH

3DJH
SU(1[[


)LQDOGUDIW
6HSWHPEHU

7RUVLRQDODQGWRUVLRQDOIOH[XUDOEXFNOLQJ

 )RUPHPEHUVZLWKRSHQFURVVVHFWLRQVDFFRXQWVKDOOEHWDNHQRIWKHSRVVLELOLW\WKDWWKHUHVLVWDQFHRID
PHPEHU WR HLWKHU WRUVLRQDO RU WRUVLRQDOIOH[XUDO EXFNOLQJ PLJKW EH OHVV WKDQ LWV UHVLVWDQFH WR IOH[XUDO
EXFNOLQJ


7KHQRQGLPHQVLRQDOVOHQGHUQHVV`l IRUWRUVLRQDORUWRUVLRQDOIOH[XUDOEXFNOLQJLVJLYHQE\
7

$I \

l7 =



$ HII I \

l7 =
ZKHUH 1

IRU&ODVVDQGFURVVVHFWLRQV

1 FU

IRU&ODVVFURVVVHFWLRQV

1 FU
=1

FU

EXW1 < 1

FU  7)

FU

FU7

LVWKHHODVWLFWRUVLRQDOIOH[XUDOEXFNOLQJIRUFH

LVWKHHODVWLFWRUVLRQDOEXFNOLQJIRUFH

FU7)

FU7

 )RUWRUVLRQDORUWRUVLRQDOIOH[XUDOEXFNOLQJWKHDSSURSULDWHEXFNOLQJFXUYHUHODWHGWRWKH]D[LVPD\EH
GHWHUPLQHGIURP7DEOH
 /DWHUDOWRUVLRQDOEXFNOLQJRIEHDPV


%XFNOLQJUHVLVWDQFH

 $ODWHUDOO\XQUHVWUDLQHGEHDPVXEMHFWWRPDMRUD[LVEHQGLQJVKDOOEHYHULILHGDJDLQVWODWHUDOWRUVLRQDO
EXFNOLQJDVIROORZV

0
0

 

(G



E  5G

ZKHUH 0
0

(G

LVWKHGHVLJQYDOXHRIWKHPRPHQW

E5G

LVWKHGHVLJQEXFNOLQJUHVLVWDQFHPRPHQW

 %HDPV ZLWK VXIILFLHQW UHVWUDLQW WR WKH FRPSUHVVLRQ IODQJH DUH QRW VXVFHSWLEOH WR ODWHUDOWRUVLRQDO
EXFNOLQJ,QDGGLWLRQEHDPVZLWKFHUWDLQW\SHVRIFURVVVHFWLRQVVXFKDVVTXDUHRUFLUFXODUKROORZVHFWLRQV
IDEULFDWHGFLUFXODUWXEHVRUVTXDUHER[VHFWLRQVDUHQRWVXVFHSWLEOHWRODWHUDOWRUVLRQDOEXFNOLQJ


7KHGHVLJQEXFNOLQJUHVLVWDQFHPRPHQWRIDODWHUDOO\XQUHVWUDLQHGEHDPVKRXOGEHWDNHQDV

E  5G

=c :
/7

I
g



0

ZKHUH : LVWKHDSSURSULDWHVHFWLRQPRGXOXVRIWKHFRPSUHVVLRQIODQJHDVIROORZV
\

/7

:  :

IRU&ODVVRUFURVVVHFWLRQV

:  :

IRU&ODVVFURVVVHFWLRQV

:  :

IRU&ODVVFURVVVHFWLRQV

SO\

HO\

HII\

LVWKHUHGXFWLRQIDFWRUIRUODWHUDOWRUVLRQDOEXFNOLQJ

)LQDOGUDIW
6HSWHPEHU


3DJH
SU(1[[

/DWHUDOWRUVLRQDOEXFNOLQJFXUYHV

 )RUEHQGLQJPHPEHURIFRQVWDQWFURVVVHFWLRQWKHYDOXHRIc IRUWKHDSSURSULDWHQRQGLPHQVLRQDO
VOHQGHUQHVV`l VKDOOEHGHWHUPLQHGIURP
/7

/7

c /7 =


f /7 + f


/7

-l


/7

EXWc /7 

ZKHUH f /7 =   + a /7 l /7 -  + l /7


a

/7

FU

LVDQLPSHUIHFWLRQIDFWRU

:\ I \

l /7 =
0



0 FU

LVWKHHODVWLFFULWLFDOPRPHQWIRUODWHUDOWRUVLRQDOEXFNOLQJ

'UDIWQRWH $QDOWHUQDWLYHSURSRVDOLVJLYHQEHORZZKLFKKRZHYHUFDQQRWEHMXVWLILHGE\WHVWV

c /7 =

/7




f /7 + f /7 - bl /7

=   + a

b 

/7

(l

/7

c /7 

EXWc  
/7 l 
/7

-  + bl


/7

7KHIROORZLQJUHTXLUHPHQWVDUHQRWIXOILOOHG
 DSODWHDXOHQJWKRILVQRWDFFHSWDEOHIRUWKHDSSOLFDWLRQIRUEULGJHV
 WKHSURSRVDOLVQRWLQOLQH ZLWK WKH JHQHUDODQDO\WLFDO H[SUHVVLRQ RI WKH (XURSHDQ EXFNOLQJ
FXUYHVWKDWDUHEDVHGRQWKH$\UWRQ3HUU\HTXDWLRQWKDWZULWHVDVIROORZV

c=




f + f - bl

f =  b + a l - l  + bl

 0 LVEDVHGRQJURVVFURVVVHFWLRQDOSURSHUWLHVDQGWDNHVLQWRDFFRXQWWKHORDGLQJFRQGLWLRQVWKHUHDO
PRPHQWGLVWULEXWLRQWKHODWHUDOUHVWUDLQWVDQGIRUQRQXQLIRUPVHFWLRQVWKHYDULDWLRQRIWKHFURVVVHFWLRQ
FU

 7KHLPSHUIHFWLRQIDFWRUa FRUUHVSRQGLQJ WRWKH DSSURSULDWH EXFNOLQJ FXUYH VKDOO EH REWDLQHGIURP


7DEOH
/7

7DEOH,PSHUIHFWLRQIDFWRUVIRUODWHUDOWRUVLRQDOEXFNOLQJFXUYHV
%XFNOLQJFXUYH
,PSHUIHFWLRQIDFWRUa


E


F


G


7KHDSSURSULDWHEXFNOLQJFXUYHVKRXOGEHGHWHUPLQHGIURP7DEOH

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

7DEOH6HOHFWLRQRIODWHUDOWRUVLRQDOEXFNOLQJFXUYHIRUDFURVVVHFWLRQ
&URVVVHFWLRQ

/LPLWV
KE
KE!
KE
KE!


5ROOHG,VHFWLRQV
:HOGHG,VHFWLRQV
2WKHUFURVVVHFWLRQV

%XFNOLQJFXUYH
E
F
F
G
G

 9DOXHV RI WKH UHGXFWLRQ IDFWRU c  IRU WKH DSSURSULDWH QRQGLPHQVLRQDO VOHQGHUQHVV`l  PD\ EH
REWDLQHGIURP)LJXUH%XFNOLQJFXUYHV
/7

/7

'UDIWQRWH $)LJXUH[/DWHUDOWRUVLRQDOEXFNOLQJFXUYHVZLOOEHDGGHGLIWKHDOWHUQDWLYHSURSRVDO ZLWK


PRGLILFDWLRQV LVDFFHSWHG


6LPSOLILHGPHWKRG

 0HPEHUV ZLWK ,VHFWLRQV VXEMHFW WR ODWHUDOWRUVLRQDO EXFNOLQJ PD\ EH YHULILHG E\ WKH FRPSUHVVLRQ
IODQJHDVDQHTXLYDOHQWFRPSUHVVLRQPHPEHU
 /DWHUDOWRUVLRQDOEXFNOLQJRIIUDPHV


*HQHUDOPHWKRG

 )RU IUDPHV FRPSRVHG RI EHDPV RU FROXPQV RU EHDPFROXPQV VXEMHFW WR PRQRD[LDO EHQGLQJ DQG
FRPSUHVVLRQWKHDVVHVVPHQWIRUODWHUDOWRUVLRQDOEXFNOLQJRXWRIWKHSODQHRIWKHIUDPHPD\EHSHUIRUPHGLQ
WKHIROORZLQJZD\
D )RUWKHGLVWULEXWLRQRIDFWLRQHIIHFWVRQWKHIUDPH 1 0 9 UHVXOWLQJIURPWKHDQDO\VLVRIWKHIUDPH
IRUWKHGHVLJQORDGVWKHPXOWLSOLHUa RIWKHVHGHVLJQORDGVWRUHDFKWKHHODVWLFFULWLFDOUHVLVWDQFHRIWKH
IUDPHZLWKUHJDUGWRODWHUDOGHIRUPDWLRQVVKRXOGEHGHWHUPLQHG
(G

(G

(G

FULW

127(,QWKLVGHWHUPLQDWLRQWKHGLVWRUVLRQDOGHIRUPDWLRQVRIWKHFURVVVHFWLRQDQGWKHHIIHFWVRIDQ\
UHVWUDLQW HJE\VWLIIHQHUVRUVLQJOHRUFRQWLQXRXVFRQQHFWLRQVWRIODQJHV PD\EHFRQVLGHUHG
E )RU WKH VDPH GLVWULEXWLRQ RI DFWLRQ HIIHFWV WKH PLQLPXP PXOWLSOLHU a  RI WKH GHVLJQ ORDGV WR UHDFK WKH
FKDUDFWHULVWLF UHVLVWDQFH RI WKH IUDPH ZLWKRXW WDNLQJ ODWHUDO WRUVLRQDO EXFNOLQJ LQWR DFFRXQW VKRXOG EH
GHWHUPLQHG
X

127(%RWKWKHGHWHUPLQDWLRQRIa DQGa PD\EHSHUIRUPHGE\)(0


FULW

F 7KHUHODWLYHVOHQGHUQHVVUHSUHVHQWDWLYHIRUWKHIUDPHLV

l=

aX
a FULW



7KLV VOHQGHUQHVV VKRXOG EH XVHG WR GHWHUPLQH WKH UHGXFWLRQ IDFWRU c  IRU WKH UHOHYDQW ODWHUDO WRUVLRQDO
EXFNOLQJFXUYHVHH
/7

G 7KHSDUWLDOIDFWRUDSSOLFDEOHWRWKHIUDPHUHVLVWDQFHLV
g  c a
0X

/7



H 7KHSDUWLDOIDFWRUg VKRXOGVDWLVI\
0X

g g
0X

0



)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

127(7KLVPHWKRGPD\DOVREHXVHGIRUPHPEHUVLQVWHDGRIWKHPHWKRGVJLYHQLQDQG
ZKHQWKHVXSSRUWFRQGLWLRQVRIWKHPHPEHUVDUHLUUHJXODURUWKHPHPEHULVQRWXQLIRUP
 %HQGLQJDQGD[LDOFRPSUHVVLRQ
 )RUFDVHVQRWFRYHUHGE\DQGXQOHVVVHFRQGRUGHUDQDO\VLVLVFDUULHGRXWXVLQJWKHLPSHUIHFWLRQV
DVJLYHQLQWKHVWDELOLW\RIPHPEHUVZLWKGRXEOHV\PPHWULFFURVVVHFWLRQVVKRXOGEHFKHFNHGDVJLYHQ
LQWKHIROORZLQJVHFWLRQVZKHUHDGLVWLQFWLRQLVPDGHIRU


PHPEHUV WKDW DUH QRW VXVFHSWLEOH WR WRUVLRQDO GHIRUPDWLRQV HJ KROORZ VHFWLRQV RU VHFWLRQV
UHVWUDLQWIURPWRUVLRQ

PHPEHUVWKDWDUHVXVFHSWLEOHWRWRUVLRQDOGHIRUPDWLRQVHJRSHQFURVVVHFWLRQV

 ,Q DGGLWLRQ WKH UHVLVWDQFH RI WKH FURVVVHFWLRQV DW HDFK HQG RI WKH PHPEHU VKRXOG VDWLVI\ WKH
UHTXLUHPHQWVDFFRUGLQJWR
 0HPEHUVQRWVXVFHSWLEOHWRWRUVLRQDOGHIRUPDWLRQVZKLFKDUHORDGHGE\FRPELQHGEHQGLQJDQGD[LDO
FRPSUHVVLRQVKRXOGVDWLVI\

1
c 1

+N

(G

&

P\

\  (G

\\

5N

\  (G

+N

&

P]

]  (G

\]

\  5N

0

+ D0

0

+ D0

]  (G

]  5N

0



1
c 1

+N

(G

&

P\

\  (G

]\

5N

0

ZKHUH 1 0
(G

\(G

DQG0

](G

+ D0

\  (G

+N

&

P]

]  (G

]]

\  5N

0

+ D0

]  (G

]  5N

0

DUHWKHGHVLJQYDOXHVRIWKHFRPSUHVVLRQIRUFHDQGWKHPRPHQWVDERXWWKH\\
DQG]]D[LVUHVSHFWLYHO\

D0 D0 

DUHWKHPRPHQWVGXHWRWKHVKLIWRIWKHFHQWURLGDOD[LVDFFRUGLQJWRVHH
7DEOH

c DQGc 

DUHWKHUHGXFWLRQIDFWRUVGXHWRIOH[XUDOEXFNOLQJIURP

N N N N 

DUHWKHLQWHUDFWLRQIDFWRUV

& DQG& 

DUHWKHHTXLYDOHQWXQLIRUPPRPHQWIDFWRUV

\\

P\

\]

]\

P]

]]

7DEOH9DOXHVIRU1  I $0
5N

&ODVV
$
:
:
D0
D0


$
:
:



HO\

HO]

5NL

 I : DQGD0
\


$
:
:
H 1
H 1

L(G

HII

HII\
HII]

1\

(G

1]

(G

 7KH LQWHUDFWLRQ IDFWRUV N  N  N  DQG N  DQG WKH HTXLYDOHQW XQLIRUP PRPHQW IDFWRUV &  DQG &
PD\EHREWDLQHGIURP7DEOHDQG7DEOH
\\

\]

]\

]]

P\

P]

127(7KHLQWHUDFWLRQIDFWRUVN N N DQGN DQGWKHHTXLYDOHQWXQLIRUPPRPHQWIDFWRUV& DQG


& KDYHEHHQGHULYHGIRUHODVWLFGHVLJQ LHIRUFODVVDQGFODVVVHFWLRQ 7KH\PD\DOVREHDSSOLHG
WRFODVVDQGFODVVVHFWLRQVZKHQIRUWKHVHVHFWLRQVHODVWLFUHVLVWDQFHVDUHXVHG,QWHUDFWLRQIDFWRUV
IRUXVLQJSODVWLFUHVLVWDQFHVRIFURVVVHFWLRQVPD\EHJLYHQLQWKH1DWLRQDO$QQH[5HFRPPHQGDWLRQV
IRUVXFKIDFWRUVDUHJLYHQLQWKHLQIRUPDWLYHDQQH[$
\\

P]

\]

]\

]]

P\

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

7DEOH$PSOLILFDWLRQIDFWRUV
m
1
1
\

\\

(G

FU 

m
1
1

\]

(G

FU  ]

m
1
1
]

]\

(G

FU 

m
1
1

]]

(G

FU  ]

1
1
+HUHE\ m =
1
- c
1
-

1
1
 m =
1
- c
1
-

(G

FU  \

(G

FU  ]

(G

(G

FU 

FU  ]

7DEOH(TXLYDOHQWXQLIRUPPRPHQWIDFWRUV
&

0RPHQWGLDJUDP
0

y0

&

P L

P L

=  + y +  y - 


L

- y 

p (, d
1
= +
- 
/ 0
1

1
1

(G

FU L

&

0 [

P L

0 [

(G

FU L

0 [ LVWKHPD[LPXPILUVWRUGHUPRPHQW
d LVWKHPD[LPXPILUVWRUGHUPHPEHUGLVSODFHPHQW
[

&
&

P L

P L

=  - 
=  + 

1
1

(G

FU L

1
1

(G

FU L

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 0HPEHUV VXVFHSWLEOH WR WRUVLRQDO GHIRUPDWLRQV ZKLFK DUH ORDGHG E\ FRPELQHG EHQGLQJ DQG D[LDO
FRPSUHVVLRQVKRXOGVDWLVI\

1
c 1
\

&

+N

(G

P  /7

\\

5N

0
+ D0
c 0
\  (G

/7

& 0
P]

]  (G

\]

\  5N

0

+N

\  (G

0

+ D0

\  (G

]  5N

0



1
c 1
g

+N

(G

&

P  /7

]\

5N

0
+ D0
c 0
\  (G

/7

0

& 0

+N

\  (G

P]

]  (G

]]

\  5N

0

+ D0

\  (G

]  5N

0

ZKHUH V\PEROVDUHDVLQ  DQG


c 

LVWKHUHGXFWLRQIDFWRUGXHWRODWHUDOWRUVLRQDOEXFNOLQJIURP

&

LVWKHHTXLYDOHQWPRPHQWIDFWRUIRU/7EXFNOLQJ

/7

P/7

7KHHTXLYDOHQWPRPHQWIDFWRU&

P/7

&

=N

P  /7

/7

&

P \

+ ( - &

P \

VKRXOGEHREWDLQHGIURP

e D
\

/7

+ e D
\

/7



ZKHUH &  LVWKHUHOHYDQWIDFWRUREWDLQHGIURP7DEOH


P\

ZLWK

VHFRQGPRPHQWRIDUHDDERXWWKH\\D[LV

6W9HQDQWWRUVLRQFRQVWDQW

/7

=&


P \

 - 1
1

(G

FULW ]

ZLWK

/7

 - 1
1

(G

FULW 7

FULW]

HODVWLFIOH[XUDOEXFNOLQJIRUFHDERXWWKH]]D[LV

FULW7

HODVWLFWRUVLRQDOEXFNOLQJIRUFH

e =
\

e =
\

\  (G

1
0

(G

\  (G

(G

$
:

IRUFODVVDQGFURVVVHFWLRQV

HO\

$
:

IRUFODVVFURVVVHFWLRQV

HII

HII 

127(7KHLQWHUDFWLRQIDFWRUVN N N DQGN DQGWKHHTXLYDOHQWXQLIRUPPRPHQWIDFWRUV&


DQG& KDYHEHHQGHULYHGIRUHODVWLFGHVLJQ LHIRUFODVVDQGFODVVVHFWLRQV 7KH\PD\DOVREH
DSSOLHGWRFODVVDQGFODVVVHFWLRQZKHQIRUWKHVHVHFWLRQVHODVWLFUHVLVWDQFHVDUHXVHG,QWHUDFWLRQ
IDFWRUV IRU XVLQJ SODVWLF UHVLVWDQFHV RI FURVV VHFWLRQV PD\ EH JLYHQ LQ WKH 1DWLRQDO $QQH[
5HFRPPHQGDWLRQVIRUVXFKIDFWRUVDUHJLYHQLQWKHLQIRUPDWLYHDQQH[$
\\

P]

\]

]\

]]

P/7

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 %XLOWXSFRPSUHVVLRQPHPEHUV
 *HQHUDO
 %XLOWXS FRPSUHVVLRQ PHPEHUV WKDW DUH XQLIRUP PD\ EH GHVLJQHG ZLWK WKH IROORZLQJ PRGHO VHH
)LJXUH
 7KHPHPEHUPD\EHFRQVLGHUHGDVDFROXPQZLWKDERZLPSHUIHFWLRQ H  =

l


 7KH HODVWLF GHIRUPDWLRQV RI ODFLQJV RU EDWWHQLQJV VHH )LJXUH  PD\ EH FRQVLGHUHG E\ D
FRQWLQXRXV VPHDUHG VKHDUVWLIIQHVV6 RIWKHFROXPQ
9

7KHPRGHORIDXQLIRUPEXLOWXSFRPSUHVVLRQPHPEHUDSSOLHVZKHQ
 WKHODFLQJVRUEDWWHQLQJVFRQVLVWRIHTXDOPRGXOHVZLWKSDUDOOHOFKRUGV
 WKHPLQLPXPQXPEHUVRIPRGXOHVLQDFROXPQLVWKUHH
127(  7KLV DVVXPSWLRQ DOORZV WKH VWUXFWXUH WR EH UHJXODU DQG VPHDULQJ WKH GLVFUHWH VWUXFWXUH WR D
FRQWLQXXP

 7KHGHVLJQSURFHGXUHLVDSSOLFDEOHWREXLOWXSPHPEHUVZLWKODFLQJVLQWZRGLUHFWLRQVVHH
)LJXUH


7KHFKRUGVPD\EHVROLGPHPEHUVRUPD\WKHPVHOYHVEHODFHGRUEDWWHQHGLQWKHSHUSHQGLFXODUSODQH

)LJXUH8QLIRUPEXLOWXSFROXPQVZLWKODFLQJVDQGEDWWHQLQJV

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

 D

 D

 D

)LJXUH/DFLQJVLQWZRGLUHFWLRQVDQGEXFNOLQJOHQJWK IRIFKRUGV
 &KHFNVVKRXOGEHSHUIRUPHGIRUFKRUGVXVLQJWKHGHVLJQFKRUGIRUFHV1
1 DQGPRPHQWV0 DWPLGVSDQRIWKHEXLOWXSPHPEHU

IURPFRPSUHVVLRQIRUFHV

I(G

(G

I(G

)RUDPHPEHUZLWKWZRVLPLODUFKRUGVWKHGHVLJQIRUFH1

PD\EHGHWHUPLQHGIURP

I(G

=  1

I  (G

ZKHUH 0

I  (G

(G

I  (G

,

1 H +0
1
1
1
6
(G

p (,

K $




HII

(G

(G

(G

FU

1
1

(G

0
K

(G

FU

HII

LVWKHHIIHFWLYHFULWLFDOIRUFHRIWKHEXLOWXSPHPEHU

LVWKHGHVLJQYDOXHRIWKHFRPSUHVVLRQIRUFHWRWKHEXLOWXSPHPEHU
LVWKHGHVLJQYDOXHRIWKHPRPHQWDWPLGOHQJWKRIWKHEXLOWXSPHPEHU
LVWKHGLVWDQFHEHWZHHQWKHFHQWURLGVRIFKRUGV
LVWKHFURVVVHFWLRQDODUHDRIRQHFKRUG

, HII = K  $ I + m, I LVWKHHIIHFWLYHVHFRQGPRPHQWRIDUHDRIWKHEXLOWXSPHPEHUVHHDQG



6

LVWKHVKHDUVWLIIQHVVRIWKHODFLQJVRUEDWWHQHGSDQHOVHHDQG

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 7KHFKHFNVIRUWKHODFLQJVRIODFHGEXLOWXSPHPEHUVRUIRUWKHIUDPHPRPHQWVDQGVKHDUIRUFHVRIWKH
EDWWHQHGSDQHOVRIEDWWHQHGEXLOWXSPHPEHUVVKRXOGEHSHUIRUPHGIRUWKHHQGSDQHOWDNLQJDFFRXQWRIWKH
VKHDUIRUFHLQWKHEXLOWXSPHPEHU

(G

=p



I  (G

 /DFHGFRPSUHVVLRQPHPEHUV


&RQVWUXFWLRQDOGHWDLOV

 6LQJOHODFLQJV\VWHPVRQRSSRVLWHVLGHRIWKHPHPEHUVKRXOGEHFRUUHVSRQGLQJV\VWHPVDVVKRZQLQ
)LJXUH D DUUDQJHGVRWKDWRQHLVWKHVKDGRZRIWKHRWKHU
 ,QFDVHWKHVLQJOHODFLQJV\VWHPVRQ RSSRVLWH VLGHV RIWKH PDLQFRPSRQHQW DUH PXWXDOO\ RSSRVHG LQ
GLUHFWLRQDVVKRZQLQ)LJXUH E WKHUHVXOWLQJWRUVLRQDOGHIRUPDWLRQRIWKHPHPEHUVKRXOGEHWDNHQLQWR
DFFRXQW
 7LHSDQHOVVKRXOGEHSURYLGHGDWWKHHQGVRIODFLQJV\VWHPVDWSRLQWVZKHUHWKHODFLQJLVLQWHUUXSWHG
DQGDWMRLQWVZLWKRWKHUPHPEHUV

/DFLQJRQIDFH$

/DFLQJRQIDFH%

D &RUUHVSRQGLQJODFLQJV\VWHP
5HFRPPHQGHGV\VWHP

/DFLQJRQIDFH$

/DFLQJRQIDFH%

E 0XWXDOO\RSSRVHGODFLQJV\VWHP
1RWUHFRPPHQGHG

)LJXUH6LQJOHODFLQJV\VWHPRQRSSRVLWHVLGHVRIPDLQFRPSRQHQWV

)LQDOGUDIW
6HSWHPEHU


3DJH
SU(1[[

5HVLVWDQFHRIFRPSRQHQWVRIODFHGFRPSUHVVLRQPHPEHUV

7KHFKRUGVDQGGLDJRQDOODFLQJVVXEMHFWWRFRPSUHVVLRQVKRXOGEHGHVLJQHGIRUEXFNOLQJ

)RUFKRUGVWKHEXFNOLQJYHULILFDWLRQPD\EHSHUIRUPHGDVIROORZV

I  (G

E  5G

ZKHUH 1

I(G

DQG

E5G





LVWKHGHVLJQFRPSUHVVLRQIRUFHDWPLGOHQJWKRIWKHEXLOWXSPHPEHUDFFRUGLQJWR 
LVWKHGHVLJQYDOXHRIWKHEXFNOLQJUHVLVWDQFHRIWKHFKRUGWDNLQJWKHV\VWHPOHQJWK DVWKH
EXFNOLQJOHQJWKVHH)LJXUH
I

7KHVKHDUVWLIIQHVVRIWKHODFLQJVPD\EHWDNHQIURP)LJXUH

7KHHIIHFWLYHVHFRQGRUGHUPRPHQWRIDUHDRIODFHGEXLOWXSPHPEHUVPD\EHWDNHQDV

, HII = K  $ I


6\VWHP

Q($ DK
G
G




Q($ DK
G
G




Q($ G DK 
$ G K 

G  +

$ 9G

QLVWKHQXPEHURISODQHVRIODFLQJV
$ DQG$ UHIHUWRVLQJOHSODQH
G

)LJXUH6KHDUVWLIIQHVVRIODFLQJVRIEXLOWXSPHPEHUV

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

 &RPSRQHQWVRIEDWWHQHGFRPSUHVVLRQPHPEHUV



&RQVWUXFWLRQDOGHWDLOV

%DWWHQVVKRXOGEHVXSSOLHGDWHDFKHQGRIDPHPEHU

 :KHUHSDUDOOHOSODQHVRIEDWWHQVDUHVXSSOLHGWKHEDWWHQVLQHDFKSODQHVKRXOGEHDUUDQJHGRSSRVLWH
HDFKRWKHU
 %DWWHQV VKRXOG DOVR EH VXSSOLHG DWLQWHUPHGLDWH SRLQWV ZKHUHORDGV DUH DSSOLHG RU ODWHUDO UHVWUDLQW LV
VXSSOLHG


5HVLVWDQFHRIFRPSRQHQWVRIEDWWHQHGFRPSUHVVLRQPHPEHUV

 7KHFKRUGVDQGWKHEDWWHQVDQGWKHLUMRLQWVWRWKHFKRUGVVKRXOGEHFKHFNHGIRUWKHPRPHQWVDQGIRUFHV
LQDQHQGSDQHODQGDWPLGVSDQDVLQGLFDWHGLQ)LJXUH
127(  )RU VLPSOLFLW\ WKH PD[LPXP FKRUG IRUFHV 1
IRUFH9 

 PD\ EH FRPELQHG ZLWK WKH PD[LPXP VKHDU

I(G

(G

)LJXUH0RPHQWVDQGIRUFHVLQDQHQGSDQHORIDEDWWHQHGEXLOWXSPHPEHU


7KHVKHDUVWLIIQHVV6 PD\EHWDNHQIURP7DEOH

7KHHIIHFWLYHVHFRQGPRPHQWVRIDUHDRIEDWWHQHGEXLOWXSPHPEHUVPD\EHWDNHQDV

, HII = K  $ I + m, I

ZKHUH ,  LQSODQHVHFRQGPRPHQWRIDUHDRIRQHFKRUG
I

,  LQSODQHVHFRQGPRPHQWRIDUHDRIRQHEDWWHQ
E

m  HIILFLHQF\IDFWRUIURP7DEOH



)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

7DEOH(IILFLHQF\IDFWRUm
FULWHULRQ
l=

l
 L 
L

HIILFLHQF\IDFWRU

,
$ I

,  = K  $ I + , I


l
l

m=-

l




l

7DEOH6KHDUVWLIIQHVV69
FULWHULRQ

Q,
,

K
D
E

6Y =

p  (, I

Q, E
,
<  I
K
D

D

p  (, I
6Y =

D
, I K 

D  +

Q, E D
(, I

 &ORVHO\VSDFHGEXLOWXSPHPEHUV
 %XLOWXS FRPSUHVVLRQ PHPEHUV ZLWK PDLQ FRPSRQHQWV LQ FRQWDFW RU FORVHO\ VSDFHG DQG FRQQHFWHG
WKURXJKSDFNLQJSODWHVVHH)LJXUHRUVWDUEDWWHQHGDQJOHPHPEHUVFRQQHFWHGE\SDLUVRIEDWWHQVLQWZR
SHUSHQGLFXODUSODQHVVHH)LJXUHPD\EHFKHFNHGIRUEXFNOLQJDVDVLQJOHLQWHJUDOPHPEHULJQRULQJWKH
HIIHFWRIVKHDUVWLIIQHVV 6   ZKHQWKHFRQGLWLRQVLQ7DEOHDUHPHW
9

)LJXUH&ORVHO\VSDFHGEXLOWXSPHPEHUV

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

)LJXUH6WDUEDWWHQHGDQJOHPHPEHUV
7DEOH0D[LPXPVSDFLQJVIRUEDWWHQVIRUFORVHO\VSDFHGEXLOWXSRUVWDU
EDWWHQHGDQJOHPHPEHUV

&ORVHO\VSDFHGEXLOWXSPHPEHUV
DFFRUGLQJWR)LJXUH
6WDUEDWWHQHGDQJOHPHPEHUV

0D[LPXPVSDFLQJ
EHWZHHQEDWWHQV
L

PLQ

L

PLQ

7KHVKHDUIRUFHVWREHWUDQVPLWWHGE\WKHEDWWHQVPD\EHGHWHUPLQHGIURP  

,QWKHFDVHRIXQHTXDOOHJDQJOHVVHH)LJXUHEXFNOLQJDERXWWKH\\D[LVPD\EHYHULILHGZLWK

L\ =

L




ZKHUH L LVWKHPLQLPXPUDGLXVRIJ\UDWLRQRIWKHEXLOWXSPHPEHU


 6HUYLFHDELOLW\OLPLWVWDWHV
 $VWHHOVWUXFWXUHVKDOOEHGHVLJQHGDQGFRQVWUXFWHGVXFKWKDWDOOUHOHYDQWVHUYLFHDELOLW\OLPLWVWDWHVDUH
VDWLVILHG


7KHEDVLFUHTXLUHPHQWVIRUVHUYLFHDELOLW\OLPLWVWDWHVDUHJLYHQLQRISU(1

 $Q\VHUYLFHDELOLW\OLPLWVWDWHDQGWKHDFFRFLDWHGORDGLQJDQGDQDO\VLVPRGHOVKRXOGEHVSHFLILHGLQWKH
SURMHFWGRFXPHQWV
 :KHQ SODVWLF JOREDO DQDO\VLV LV XVHG IRU WKH XOWLPDWH OLPLW VWDWH SODVWLF UHGLVWULEXWLRQ RI IRUFHV DQG
PRPHQWVDWWKHVHUYLFHDELOLW\OLPLWVWDWHPD\EHDOORZHG,IVRWKHHIIHFWVKDYHWREHFRQVLGHUHG

)LQDOGUDIW
6HSWHPEHU

 )DVWHQHUVZHOGVFRQQHFWLRQVDQGMRLQWV


)RUWKHGHVLJQRIIDVWHQHUVZHOGFRQQHFWLRQVDQGMRLQWVVHH(1

3DJH
SU(1[[

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

$QQH[ $ >LQIRUPDWLYH@  5HFRPPHQGDWLRQV IRU DOWHUQDWLYH LQWHUDFWLRQ


IDFWRUVLQ  DQG 
$ *HQHUDO
 ,QWKLVDQQH[DOWHUQDWLYHPHWKRGV$DQG%DUHUHFRPPHQGHGIRUGHWHUPLQLQJDOWHUQDWLYHYDOXHVRIWKH
LQWHUDFWLRQIDFWRUVN N N DQGN LQ  DQG  
\\

\]

]\

]]

 0HWKRG$UHIHUVWRWKHYDOXHVLQ7DEOHDQGJLYHVDSSUR[LPDWHPRGLILFDWLRQVRIWKHVHYDOXHVWKDW
PD\EHDSSOLHGIRUFODVVDQGFODVVFURVVVHFWLRQZKHQSODVWLFUHVLVWDQFHVDUHXVHG
 0HWKRG%JLYHVDSSUR[LPDWHYDOXHVIRUN N N DQGN WKDWPD\EHDSSOLHGLQVWHDGRIWKHYDOXHVLQ
7DEOHIRUFODVVDQGFODVVFURVVVHFWLRQVDQGDOVRIRUFODVVDQGFODVVFURVVVHFWLRQV
\\

\]

]\

]]

127(  $Q\ RI WKHVH DOWHUQDWLYH PHWKRGV JLYHQ LQ WKLV DQQH[ PDNHV WKH LQWHUDFWLRQ GHSHQGDQW RQ
1DWLRQDO'HWHUPLQHG3DUDPHWHUV

$ 0HWKRG$0RGLILFDWLRQRIWKHLQWHUDFWLRQIDFWRUVIRUN\\N\]N]\DQGN]]IRU
FODVVDQGFODVVFURVVVHFWLRQV
 )RUFODVVDQGFODVVFURVVVHFWLRQVWKHLQWHUDFWLRQIDFWRUVIRUN N N DQGN DFFRUGLQJWR7DEOH
PD\EHPRGLILHGWRN
N
N
DQGN
DFFRUGLQJWR7DEOH$
\\

\\PRG

,Q7DEOH$ l

/7  

\]PRG

]\PRG

\]

]\

]]

]]PRG

=  DSSOLHVIRUPHPEHUVQRWVXVFHSWLEOHWRWRUVLRQDOGHIRUPDWLRQV

)LQDOGUDIW
6HSWHPEHU

3DJH
SU(1[[

7DEOH$0RGLILFDWLRQRILQWHUDFWLRQIDFWRUV
N
N


 + (Z - )  &
Z

\\PRG


P\


&
Z

PD[




P \

P ]

Q -F


PD[

SO


N

N





Z
Z

SO

/7

]\


&
Z

P ]

PD[

ZKHUH

Z =
\

SO  \

HO 

Z =
]



SO  ]

=  D

/7



/7

=  D

Q =
SO

l PD[

F  5N

(G

g

SO

/7

=D

l
/7

QRQGLPHQVLRQDOVOHQGHUQHVVIRU
ODWHUDOWRUVLRQDOEXFNOLQJGXHWR
XQLIRUPEHQGLQJPRPHQWLHy
LQ7DEOH
\

/7

=   D

&

P\

&


]

SO  ]

P \

&

P \

HO  ]

SO  ]  5G

/7

/7 

 + l

:
]]

\ (G

/7

SO  \  5G

\  (G

0


] (G

/7 

 + l

/7

/7 

HO

/7

SO  \  5G

SO  \

PD[

\  (G


/7 

+l

0

l \
= PD[
l ]



/7 

l
/7

HO  ]

Q - H

0
0
c 0
0
l


P ]

/7

/7

HO ]

]]

]]PRG

SO ]

/7

Q -G

PD[

P \

HO  \

\]

]\

&
l
 + (Z - )  - 
Z


&
 + (Z - )  l Z

]\PRG

/7

SO  \




\]

&
l
 + (Z - )  - 
Z

\]PRG

SO

:
\\

Q -E


PD[

Z
N
Z

\\

0
& 0

] (G

SO  \  5G

\  (G

/7

SO  \  5G

P ]

SO  ]  5G

3DJH
SU(1[[

)LQDOGUDIW
6HSWHPEHU

$ 0HWKRG%$OWHUQDWLYHLQWHUDFWLRQIDFWRUVN\\N\]N]\DQGN]]
 )RUPHPEHUVQRWVXVFHSWLEOHWRWRUVLRQDOGHIRUPDWLRQVZLWKFODVVFODVVFODVVDQGFODVVFURVV
VHFWLRQ DOWHUQDWLYH LQWHUDFWLRQ IDFWRUV N   N   N  DQG N  DFFRUGLQJ WR    PD\ EH GHWHUPLQHG IURP
7DEOH$
\\

\]

]\

]]

7DEOH$,QWHUDFWLRQIDFWRUVIRUPHPEHUVQRWVXVFHSWLEOHWRWRUVLRQDO
GHIRUPDWLRQV
&URVV
VHFWLRQDO
FODVV

,VHFWLRQV

 + l - 
\

) c 11
\

\\

 + 

1
c 1
\

DQG

N
N

F  5N

g

0

VHH,VHFWLRQV

(G

g

F  5N

0

N
VHH,VHFWLRQV

]]

]]

\\

 + l - 
]

)c 11
]

]]

 + 

c 1
]

 + l

F  5N

c 1
\

c 1
\

N
N

0

g

0

c 1
]

c 1

F  5N

g

F  5N

g

0

VHH,VHFWLRQV

0

(G

g

0

(G

F  5N

g

0

g

(G

VHH,VHFWLRQV
VHH,VHFWLRQV

F  5N

]]

 + 

c 1

(G

(G

\\

 + l

]]

]\

0

)c 11

(G

F  5N

N
N

\]

 + 

F  5N

\\

 + 

g

(G

g

 + l - 

(G

F  5N

1
\

DQG

(G

N
N

\]

]\

5+6VHFWLRQV

VHH,VHFWLRQV

0

)LQDOGUDIW
6HSWHPEHU


3DJH
SU(1[[

7KHHTXLYDOHQWXQLIRUPPRPHQWIDFWRUV& & DQG&


P\

P]

P/7

PD\EHWDNHQIURP7DEOH$

7DEOH$(TXLYDOHQWXQLIRUPPRPHQWIDFWRUV&P\&P]DQG&P/7
0RPHQWGLDJUDP

& & DQG&


XQLIRUPORDGLQJ
FRQFHQWUDWHGORDG

UDQJH

P\

P]

P/7

a 
V

y
a 

a 

a 

y
y 
a 

a 
a 

a 
a 

y
a 

a

a

y
y 

a
a

a
a

y

y

 )RU PHPEHUV VXVFHSWLEOH WR WRUVLRQDO GHIRUPDWLRQV ,VHFWLRQV  WKH LQWHUDFWLRQ IDFWRUV PD\ EH WDNHQ
IURP7DEOH$ZKHUHE\&  & 
P/7

P\

7DEOH$,QWHUDFWLRQIDFWRUVIRUPHPEHUVVXVFHSWLEOHWRWRUVLRQDO
GHIRUPDWLRQV
&URVV
VHFWLRQDO
FODVV

\\

DQG

1
l
(& - ) c 1  g
]

\]

-

(G

P  /7

F  5N

0

\\

DQG

\]

-

1
l
(& - ) c 1  g
]

P  /7

F  5N

0

(&

1

- ) c 1
g
(G

P  /7

F  5N

0

\\

-

(G

\\

1

(& - ) c 1  g
(G

P  /7

F  5N

0

You might also like