You are on page 1of 12

$YHUDJH,QIRUPDWLRQ5(0/$Q(IILFLHQW$OJRULWKPIRU9DULDQFH3DUDPHWHU(VWLPDWLRQLQ

/LQHDU0L[HG0RGHOV
$XWKRU V $UWKXU5*LOPRXU5RELQ7KRPSVRQ%ULDQ5&XOOLV
5HYLHZHGZRUN V 
6RXUFH%LRPHWULFV9RO1R 'HF SS
3XEOLVKHGE\International Biometric Society
6WDEOH85/http://www.jstor.org/stable/2533274 .
$FFHVVHG

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .
http://www.jstor.org/page/info/about/policies/terms.jsp

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact support@jstor.org.

International Biometric Society is collaborating with JSTOR to digitize, preserve and extend access to
Biometrics.

http://www.jstor.org

%,20(75,&6
'HFHPEHU

5(0/ $Q(IILFLHQW
$YHUDJH,QIRUPDWLRQ $OJRULWKP
IRU
9DULDQFH3DUDPHWHU LQ/LQHDU0L[HG0RGHOV
(VWLPDWLRQ

$UWKXU5 *LOPRXU
5RELQ7KRPSVRQDQG%ULDQ5 &XOOLV

$JULFXOWXUDO5HVHDUFK DQG9HWHULQDU\&HQWUH2UDQJH1HZ 6RXWK:DOHV 
$XVWUDOLD
,$&55RWKDPVWHG +DUSHQGHQ $/ -48QLWHG.LQJGRP
$JULFXOWXUDO5HVHDUFK ,QVWLWXWH:DJJD :DJJD 1HZ 6RXWK:DOHV $XVWUDOLD

6800$5<

$VWUDWHJ\RIXVLQJDQDYHUDJHLQIRUPDWLRQ PDWUL[ LVVKRZQWREHFRPSXWDWLRQDOO\ FRQYHQLHQWDQG


HIILFLHQW
IRUHVWLPDWLQJ
YDULDQFHFRPSRQHQWV E\UHVWULFWHGPD[LPXP OLNHOLKRRG 5(0/  LQWKHPL[HG
OLQHDUPRGHO7KUHHDSSOLFDWLRQVDUHGHVFULEHG7KHPRWLYDWLRQIRUWKHDOJRULWKP ZDVWKHHVWLPDWLRQ
RIYDULDQFHFRPSRQHQWV LQWKHDQDO\VLVRIZKHDWYDULHW\PHDQVIURP H[SHULPHQWV UHSUHVHQWLQJ
\HDUVDQGORFDWLRQVLQ1HZ6RXWK:DOHV:HDOVRDSSO\WKHDOJRULWKP WRWKHDQDO\VLVRI
GHVLJQHGH[SHULPHQWV E\LQFRPSOHWH EORFNDQDO\VLVDQGVSDWLDODQDO\VLVRIILHOGH[SHULPHQWV

,QWURGXFWLRQ
7KHHVWLPDWLRQRIYDULDQFHFRPSRQHQWVLQPL[HGPRGHOVDVVXPLQJ*DXVVLDQUDQGRPWHUPVE\
UHVWULFWHGPD[LPXP OLNHOLKRRG 5(0/  KDVEHHQZLGHO\DGRSWHG7KH5(0/ SURFHGXUHPD[LPLVHV
WKHMRLQWOLNHOLKRRGRIDOOHUURUFRQWUDVWVUDWKHUWKDQRIDOOFRQWUDVWVDV LQRUGLQDU\PD[LPXP
OLNHOLKRRG6HH 6HDUOH&DVHOOD DQG0F&XOORFK  IRUGHWDLOV,QWKHRULJLQDOGHVFULSWLRQ RI
5(0/ 3DWWHUVRQDQG7KRPSVRQ  VXJJHVWWKDWWKHVFRUHHTXDWLRQVIRUWKHYDULDQFHFRPSR
QHQWVPD\EHVROYHGLWHUDWLYHO\ XVLQJWKH)LVKHUVFRULQJ )6  DOJRULWKP )RUPDQ\DSSOLFDWLRQV
SDUWLFXODUO\ LQDQLPDOEUHHGLQJ WKLVVWUDWHJ\SUHVHQWVFRPSXWDWLRQDO GLIILFXOWLHV
GXHWRWKHODUJHVL]H
RIWKHPDWULFHVWREH LQYHUWHGDQGPXOWLSOLHG7KRPSVRQ  SUHVHQWHGDQRYHUYLHZRIWKH
PHWKRGRORJ\ ZLWKSDUWLFXODUUHIHUHQFH WRDQLPDOEUHHGLQJDSSOLFDWLRQVDQGVKRZHGKRZVRPHRIWKH
FRPSXWDWLRQDO EXUGHQVRIWKH)6DOJRULWKP PD\EHRYHUFRPH+HVXJJHVWHGWKDWLQVRPHVLWXDWLRQV
XVHRIWKHREVHUYHGLQIRUPDWLRQ UDWKHUWKDQWKHH[SHFWHGLQIRUPDWLRQ PD\EHSUHIHUDEOH
9DULRXVRWKHU FRPSXWDWLRQDO VWUDWHJLHVKDYHEHHQSUHVHQWHG WRRYHUFRPHWKHVHSUREOHPV IRU
ODUJH
GDWDVHWV*UDVHU6PLWKDQG7LHU  GHVFULEHGDGHULYDWLYH IUHH ')  DOJRULWKP XVHGE\0H\HU
 LQKHUVXLWHRIDQLPDOEUHHGLQJSURJUDPV (VVHQWLDOO\WKHLUSURFHGXUHFDOFXODWHVWKH5(0/
ORJOLNHOLKRRGIURP WKHPL[HGPRGHOHTXDWLRQV7KH\REWDLQWKH5(0/ HVWLPDWHVRIWKHYDULDQFH
SDUDPHWHUVE\GLUHFWO\VHDUFKLQJWKHOLNHOLKRRGVXUIDFHXVLQJWKH1HOGHU0HDG  VLPSOH[
DOJRULWKP 7KLVSURFHGXUHSHUIRUPV DGHTXDWHO\ZKHQWKHUHDUHRQO\DIHZYDULDQFHFRPSRQHQWV
+RZHYHULWVFRQYHUJHQFHUDWHGHFOLQHVZLWKDQLQFUHDVHLQYDULDQFHFRPSRQHQWV 6HDUOHHWDO
 6RPHDXWKRUV IRUH[DPSOH6PLWK  VXJJHVWWKH(0DOJRULWKP 'HPSVWHU/DLUGDQG
5XELQ DVDQHIILFLHQW SURFHGXUHIRUREWDLQLQJ 5(0/ HVWLPDWHV RIYDULDQFHFRPSRQHQWV 7KLV
XWLOLVHVWKHVFRUHHTXDWLRQVDQGUHTXLUHVDERXWWKUHHWLPHVWKHFRPSXWLQJ QHHGHGIRUHYDOXDWLQJ WKH
5(0/ OLNHOLKRRG SHULWHUDWLRQ+RZHYHUFRQYHUJHQFHFDQVWLOOEHVORZDOWKRXJK WKHUHKDYHEHHQ
VHYHUDOLPSURYHPHQWV WRWKHRULJLQDO(0 DOJRULWKP VHH6HDUOHHWDO  IRUDGLVFXVVLRQ 
3DWWHUVRQ DQG1DEXJRRPX  UHYLHZHGWKHHVWLPDWLRQ RIYDULDQFHFRPSRQHQWVLQWKHJHQR
W\SH[ HQYLURQPHQW DQDO\VLVRIYDULHW\PHDQVIURPD VHULHVRIYDULHW\WULDOVRYHU\HDUVDQG
ORFDWLRQV7KH\UHFRPPHQG5(0/ HVWLPDWLRQDQGXVHGWKH5(0/ GLUHFWLYHLQ*(167$7
3D\QH )RUODUJHUSUREOHPVWKH\VXJJHVWYDULRXVDSSUR[LPDWHDQDO\VHVWRRYHUFRPHVL]H
OLPLWDWLRQVLQWKHVRIWZDUH7KHDOJRULWKP ZHSUHVHQWZDVGHYLVHGIRUDODUJHDQDO\VLVRIWKLVVRUWDQG
LVVXLWDEOHIRUHVWLPDWLRQ LQERWKVPDOODQGODUJHSUREOHPV
*OHHVRQDQG&XOOLV  &XOOLVHWDO  DQG&XOOLVDQG*OHHVRQ  SUHVHQW DQDSSURDFK

.H\ZRUGV(0DOJRULWKP
6SDWLDODQDO\VLV9DULDQFHFRPSRQHQWV5(0/

$Y
HL
H
,&L-
ROLO,&WL IRLL5(0/ 
WRWKHVSDWLDODQDO\VLVRIILHOGH[SHULPHQWV 7KH\DGYRFDWHHVWLPDWLRQ RIYDULDQFHDQGFRYDULDQFH
SDUDPHWHUV E\5(0/ DQGWKLVSHUIRUP[V DGHTXDWHO\ZLWKORZOHYHOVRIELD6 &XOOL6*OHHVRQDQG
7KRPVRQ
/LOO*OHHVRQDQG&XOOL6 &XOOLVDQG*OHHVRQ  GHPRQVWUDWHG DQLQFUHDVH
LQWKHHIILFLHQF\ RIHVWLPDWLRQRIYDULHW\FRQWUWOVW6X/VLQJVSDWLDODQDO\VLVUHODWLYHWRFRPSOHWHRU
LQFRPSOHWHEORFNDQDO\VLV*LOPRXU  LPSOHPHQWHG WKHVHPRGHOVLQWKH)2575$1 SURJUDP
7ZR'XVLQJD)6DOJRULWKP &RQYHUJHQFHRIWKHDOJRULWKP LVUHOLDEOHKRZHYHUSURFHVVWLPHDQG
PHPRU\ UHTXLUHPHQWWV DUHRIWHQ
SURKLELWLYHIRLODUJHU SUREOHPV RUIRUPRGHOVZLWKPDQ\FRYDULDQFH
SDUDPHWHUV 7KLVVHULR86O\OLPLWVWKHDLGRSWLRQRIWKHSURFHGXUHVSDUWLFXODUO\ LQD3&HQYLURQPHQW
,QWKLVDUWLFOHZHSUHVHQWWKUHH
DSSOLFDWLRQV RIWKHDYHUDJHLQIRUPDWLRQ $O DOJRULWKP,WLVVLPLODU
WRWKHRULJLQDO)6DOJRULWKP SURSRVHGE\3DWWHUVRQ DQG7KRPSVRQL  EXWDYRLGVWKHHYDOXOWLRQ
RIWKHWUDFHVRIODLUJH ZKLFKDSSHDLU
PDWWULFHV LQERWKWKHH[SHFWHGDQGREVHUYHG 5(0/  LQIRUPDWLRQ
PDWULFHV-RKQVRQDQG7KRPSVRQ  DSSOLHGWKH$ODOJRULWKP LQDQDQLPDOEUHHGLQJFRQWH[W
7KH\IRXQGLWSHUIRUPHG ZHOOZKHQFRPSDUHGWRWKH') DQG(0DOJRULWKPV
7KH6WOXFWXUHRIWKHSDSHULVDVIROORZV,Q6HFWLRQZHSUHVHQW WKHPRGHOVDQGEURDGO\GHVFULEH
WKHDOJRULWKP ,Q6HFWLRQZHDSSO\WKHDOJRULWKP WRYDULDQFHFRPSRQHQWVHVWLPDWLRQ XVLQJWZR
H[DPSOHV,Q6HFWLRQZHLOOXVWUDWH LW6XVHLQ5(0/ HVWLPQDWLRQ IRUPL[HGPRGHOVZLWKFRUUHODWHG
HUURUV

 'HVFULSWLRQ
RI0RGHOVDQG$O$OJRULWKP
:HFRQVLGHUWKHPRGHO

\X
,H&  ;7 =8CH&

ZKHUH\LVDQ
YHFWRURIGDWD;DQLG=DUHGHVLJQPDWULFHV7DQGXDLHWDQGEYHFWRUVRIIL[HG
DQG
UDQGRP HIIHFWV
DQGHLVWKHUHVLGXDOHUURU
:HDVVXPHWKDOW ;KDVIXOOFROXPQUDQNDQG=  >=  
=M@ ZKHUHHDFK=UHSUHVHQWV WKHGHVLJQPDWUL[ IRUWKHLWKUDQGRPIDFWRU DQGX  >X
 XS
ZKHUHXLVDEYHFWRU1RWHE  (E :HDV6/XPHIXUWKHU WKDW

WX 1 UA* \  " @

ZKHUH\LVWKHTYHFWRURIYDULDQFHSDUDPHWHUV WRXDQG LVWKHVYHFWRURIYDULDQFHDQG


UHODWLQJ
FRYDULDQFHSDUDPHWHUV 5 7KHGLPHQVLRQRI\PD\H[FHHG ,LIWKHUDQGRP
WRH WKURXJK
UHODWLQJ
WHUPV )RUPDQ\DSSOLFDWLRQVLWLVFRQYHQLHQW
DUHFRUUHODWHG WRDVVXPHWKHTFRPSRQHQWVRIXDUH
LQGHSHQGHQW
PXWX/DOO\ ZLWKYDULDQFHPDWULFHV  DQGVR*  H^ LMM` LVDEORFNGLDJRQDO
PDWUL[7\SLFDOO\ V LVPXFKVPDOOHUWKDQQ    A

LQILHOGH[SHOLPHQWV
3DFUWLFXODUO\ WKHGDWDYHF\PD\EHWKHYHFWRURIDPDWUL[ DQU
LHSLHVHQWLQJ
[FUHFWDQJXOD JULGRISORWV,QWKHVHDSSOLFDWLRQV
5LVVRPHWLPHV DVVXPHGWREHSURSRUWLRQDOWRWKH
YDLLDQFH
PDWUL[ RIDVHSDUDEOHHUURUSURFHVVVXFKWKDW5  5 5 VHH6HFWLRQ :HQRWHWKDW
 FDQEHHDVLO\H[WHQGHGWRLQFRUSRUDWH GLIIHUHQFLQJ VHH&XOOLVDQG*OHHVRQ  IRUGHWDLOV 
7KHPL[HGPRGHOHTXDWLRQVDUH

;
5
; 5 =
;
5 >7 ;
5 <
>=
5
; =
5
=  *
M8M /=
5\M<
7KHVROXWLRQRI  UHTXLUHVYDOXHVIRU\DQGV ,QSUDFWLFHZHUHSODFH\DQGV E\WKHLU5(0/
HVWLPDWHVM DQG ZKLFKPD[LPLVHWKHOLNHOLKRRGRIHUURU
FRQWUDVWV
7KHORJ5(0/ OLNHOLKRRGFDQEHZULWWHQ DV

   ORJGHW;
+
;  ORJGHW+ YORJX \
3\OX 

 ORJGHW&  ORJGHW5  ORJGHW*  YORJXU  \


3\ U  

ZKHUH Y  WQ +  5  =*=


 & LVWKHFRHIILFLHQWPDWUL[LQ  

3 +
"+ ; ;
+ ;  ;
+



D,QG: >; =@ /HWWLQJ. \   WKH5(0/ HVWLPDWHVRIUDQG. VDOWLVI\


 'HFHPEHU
%LRPHWULFV

DBHODR   9R B \


S\   

D D. L   >WU 3+L  \


3+L3\R@   

ZKHUH+L  D+OD .L


7KXV
JLYHQ +RZHYHU
.   \
3\Y LQJHQHUDO
WKHVROXWLRQ
WR  UHTXLUHV
DQLWHUDWLYH
VFKHPH
DQLQLWLDO
*LYHQ HVWLPDWH DQXSGDWH
RI. XVLQJ
WKH)6DOJRULWKP
LV
.F "   %DD. .   

%UHSUHVHQWV
ZKHUH WKH WR. RIWKH
UHOHYDQW
SDUWLWLRQ LQYHUVH
RIWKH LQIRUPDWLRQ
H[SHFWHG RI
PDWUL[
R
. 
7KHHOHPHQWV
RIWKHREVHUYHG
LQIRUPDWLRQ DUH
PDWUL[
GDBD   \
S3\
 9

DB&D.LD  \
3++3\R

 .LG.M   MWU 3+L3+M 


WU 3+LM 

\
3+L3+M3\R
  <
3+3\R
  
ZKHUH+L  G +OD .LG.M
7KHHOHPHQWV
RIWKHH[SHFWHG
LQIRUPDWLRQ DUH
PDWUL[

( DHR   9

( D B&
D.LDG   WU 3+L R

( GD.LG .M   WU 3+L3+M   

7KHHYDOXDWLRQ RIVRPHWUDFHV
LQHLWKHU
 RU  FDQEHHLWKHUQRWIHDVLEOH
RUYHU\
FRPSXWHU
:HWKHUHIRUH
LQWHQVLYH FRQVLGHU
WKHPDWUL[
GHQRWHG E\$ ZKLFKLVDVLPSOLILHG RIWKH
DYHUDJH WHUPV
LQ  DQG  7KHHOHPHQWV
RI $ DUH

$      <3S\R

$   .L   \
3+L3\R

-$ .L .M   \<3+L3+M3\RI  

7KHILUVW
HOHPHQW -$ R   LV WKHDYHUDJH RIWKHWHUPV LQ  DQG  7KHVHFRQG WHUPLVREWDLQHG
E\FRQVLGHULQJRQO\WKH GDWDSDUW GLYLGHGE\R   RIWKH
VFRUHIRU .L RU
HTXLYDOHQWO\DSSUR[LPDWLQJ
WU 3+L E\\
3+L3\R VLQFH WKHVH WHUPVDUHHTXDODWWKH VROXWLRQ WR  7KLVDSSUR[LPDWLRQ HQVXUHV
WKDW$ ZLOOEHSRVLWLYH VHPLGHILQLWH -$ .L .M  LVREWDLQHG E\DYHUDJLQJ  DQG  DQGDSSUR[L
PDWLQJ\
3+LM3\RE\LWVH[SHFWDWLRQWU 3+LM LQWKRVHFDVHV ZKHQ+LM ;  )RUYDULDQFH
FRPSRQHQWV PRGHOV LHWKRVH LQ+ WKHWHUPV
OLQHDU LQ $ H[FHSW$  D .L  DUHH[DFWDYHUDJHV
RIWKRVH
LQ  DQG   $ LVWKHDYHUDJH
IRUWKHVHPRGHOV LISDUDPHWHUL]HGLQWHUPV RIFRPSRQHQWV
UDWKHUWKDQUDWLRV
-RKQVRQ DQG7KRPSVRQ  :HFDOOWKLVPDWUL[
WKH$OPDWUL[ DQGXVHLWLQ
SODFHRIWKHH[SHFWHG LQIRUPDWLRQ PDWUL[WRXSGDWH.
7KHa$PDWUL[
LVWKH VFDOHG UHVLGXDOVXPVRIVTXDUHVDQGSURGXFWVPDWUL[
RI<  ><R
<L 
<T"V@ ZKHUH<LL! LVWKHZRUNLQJYDULDWHIRU.L DQGLVJLYHQE\

<L  +L3\  5H

ZKHUHH  \ ;L =XODQGXLDUHVROXWLRQVWR  DQG<R  \WKHGDWDYHFWRU


$YHUDJH ,QIRUQDWLRQ 5(0/ 
9DULDQFH&RPSRQHQWV 0RGHOV
,QWKLVVHFWLRQZHFRQVLGHUWKHFRPPRQDQGZLGHO\DSSOLFDEOHPRGHOLQZKLFKWKHPDWUL[ 5WKH
YDULDQFHVWUXFWXUHIRUWKHUHVLGXDOWHUP GLDJRQDO,QWKLVFDVH
HLVFRQVLGHUHGNQRZQDQGW\SLFDOO\
FUHGXFHVWR\DQGIRU+  5 ( \==
 WKHVFRUHIRU\LV

&F\M   >E'\ WU & \ LLLL X\ @  

ZKHUH&LVSDUWLWLRQHG ZLWK:LQZKLFKWKHSDUWLWLRQ
FRQIRUPDEO\ IRU;LVGHQRWHGE\&2)XUWKHU
GHWDLOVDUHLQ$SSHQGL[$
ZHIRUP
$VDQLQLWLDOLVDWLRQ WKHPDWUL[

)
\
5O\ \
5
; \
5
=
0  ;
5
\ ;
5
; ;
5
=  
>=
5\ =
5
; =
5O=

6LQFH0LVW\SLFDOO\
VSDUVHHVSHFLDOO\LQ=
5=LWVKRXOGEHVWRUHGFRPSDFWO\DQGRUGHUHGVRWKDW
FRPSXWDWLRQDO HIILFLHQF\LVPD[LPLVHG$OJRULWKPV IRUGHWHUPLQLQJWKHRSWLPDORUGHULQJ
DUHUHDGLO\
DYDLODEOH 6HH'XII(ULVPDQDQG5HLG  
$QRXWOLQHRIWKHVWHSVLQWKHLWHUDWLRQ JLYHQDQLQLWLDOYDOXHRI\  \ 2 IROORZV)XUWKHU
FRPSXWDWLRQDO GHWDLOLVSUHVHQWHGLQ$SSHQGL[%
3HUIRUP DEVRUSWLRQ *DXVVLDQ(OLPLQDWLRQ *ROXEDQG9DQ/RDQ  RI:RQWR\DIWHU
DGGLQJ*WR=
5 =LQ  7KHLQWHUPHGLDWH WHUPVIRUPHG QHHGWREHKHOGIRUXVHLQVWHSV
DQG7KHORJOLNHOLKRRGLVFDOFXODWHG
 %DFNVXEVWLWXWH WRREWDLQLDQGXLXVLQJWKHLQWHUPHGLDWH WHUPVIRUPHG LQVWHS
 &DOFXODWHWHUPV LQYROYLQJ \QDPHO\;
5O\L=
5\L\
5\L  \ 5\MDQG\M5
\L $OO
WKHVHWHUPVFDQEHFDOFXODWHGGLUHFWO\ IURPWKHHOHPHQWVRI0VLQFHIRUH[DPSOH

=
5O\L  =
5 =LXL\M
 3HUIRUP DEVRUSWLRQRI:RQWRWKHPXOWLYDULDWH ZRUNLQJYDULDWH<  >\<L  <T@WR
SURGXFHWKHWHUPVHVVHQWLDOIRUWKHPDWUL[ $
 (YDOXDWHVXIILFLHQWO\&C WRREWDLQWU & $OOHOHPHQWVRI& RUWKRVHSHUWDLQLQJ WR;
UHTXLUHGIRUFRQGXFWLQJ VLJQLILFDQFH PD\EHFDOFXODWHGLQWKHILQDO
WHVWVRQHIIHFWV LWHUDWLRQ
 &DOFXODWHWKHXSGDWH\ O   \   MFB&D\ZKHUH L6 WKHSDUWLWLRQ
RIWKHLQYHUVHRI-$
SHUWDLQLQJWR\([LWRUUHWXUQ WRVWHSEDVHGRQFRQYHUJHQFHFULWHULD
WKH')DOJRULWKP
:HQRWHWKDW RQO\VWHSIRU
UHTXLUHV ZKLOVW
HDFKLWHUDWLRQ DQLWHUDWLRQ
RIWKH(0
RUHQKDQFHG(0 DOJRULWKP
UHTXLUHVVWHSVDQG6WHSVDQGDUHWKHWLPHFRQVXPLQJ VWHSV

,QFRPSOHWH%ORFN$QDO\VLVZLWK 5HFRYHU\RI,QWHUEORFN ,QIRUPDWLRQ


,QWKLVVHFWLRQZHLOOXVWUDWH
WKHFRQYHUJHQFHSHUIRUPDQFH RIWKH$O DOJRULWKP UHODWLYHWRWKH)6
DOJRULWKPDVLPSOHPHQWHG LQ*(167$7 3D\QH IRU WKHDQDO\VLVRIDVSULQJ
ZKHDWYDULHW\ WULDO
FRQGXFWHGDW6ODWH+DOO)DUP8. LQ7KHH[SHULPHQW ZDVGHVLJQHGWRFRPSDUHWKH\LHOGVRI
DQGWKHVHYDULHWLHVZHUHODLGRXWLQVL[UHSOLFDWHVDFFRUGLQJWRDEDODQFHGODWWLFHVTXDUH
YDULHWLHV
GHVLJQ7KHILHOGOD\RXWDQGSORW\LHOGVDUHSUHVHQWHGLQ7DEOHVDQG

7DEOH
WULDO
)LHOGOD\RXWRIWKH6ODWH+DOOZKHDWYDULHW\
              
              
              
              
              
              
              
              
              
              
 %LRPHWULFV
'HFHPEHU
7DEOH
<LHOGV JUDPVP
 IRU WKH
6ODWH+DOOZKHDW
YDULHW\
WULDO






 
   



,QWKHQRWDWLRQ
RI:LONLQVRQ DQG5RJHUV WKH
  EORFNLQJ
VWUXFWXUH
IRUWKLV
GHVLJQ
LVUHSOLFDWH
URZFROXPQ  ZKHUH URZDQGFROXPQ DUHERWKIDFWRUV
ZLWKILYH
OHYHOV
QHVWHGZLWKLQ
UHSOLFDWHV
7KXV \
  \O\ \  DQG R\UHSUHVHQWVWKHYHFWRURIYDULDQFHFRPSRQHQWVIRUUHSOLFDWH
UHSOLFDWHURZDQGUHSOLFDWHFROXPQ 7KH5(0/ HVWLPDWHVRIWKHYDULDQFHFRPSRQHQWVDUH
DQGUHVSHFWLYHO\ 7KHUHVLGXDOYDULDQFHLV
7DEOHSUHVHQWVWKHFRQYHUJHQFHVHTXHQFHIRUWKH)6DQG$ODOJRULWKPV 7KH)6DOJRULWKP ILUVW
VWHSLVFORVHUWRWKHILQDOVROXWLRQDOWKRXJKFRQYHUJHQFHLVDWWDLQHGLQWKUHHLWHUDWLRQV
IRUERWK
DOJRULWKPV1RWLPLQJ FRPSDULVRQV ZHUHPDGH7KHPHDQVDQGDYHUDJHVWDQGDUG HUURU
RIGLIIHUHQFH
6('  IURP WKLVDQDO\VLVDUHSUHVHQWHGLQ7DEOH

7DEOH
&RQYHUJHQFHVHTXHQFHVIRUWKHLQWHUEORFN
DQDO\VLVRIWKH6ODWH+DOOZKHDWYDULHW\
WULDOXVLQJWKH
)6 DQG$,DOJRULWKPVVWDUWLQJYDOXHVDOOVHWWR
)6 $O
,WHUDWLRQ <L < < L <
<
        
        
        

7DEOH
PHDQVDQGVWDQGDUGHUURURIGLIIHUHQFH
9DULHW\ JUDPVP WKHLQWHUEORFN
  IURP DQDO\VLVRIWKH
6ODWH+DOOZKHDWYDULHW\WULDO6WDQGDUGHUURURIGLIIHUHQFH
LV
         
         
         
         
         

9DULDQFH&RPSRQHQW(VWLPDWLRQLQ1RQRUWKRJRQDO*HQRW\SH[(QYLURQPHQW 'DWD
7RLOOXVWUDWH
WKHSHUIRUPDQFH RIWKH$ODOJRULWKP IRU
ODUJHSUREOHPVZHSUHVHQW DFRPELQHGDQDO\VLV
RIWKH16:ZKHDWYDULHW\WULDOVIURP WRLQFOXVLYH%ULHIO\WKHGDWDFRQVLVWVRIJHQRW\SH
* PHDQ\LHOGVIURPH[SHULPHQWV (  7KHH[SHULPHQWV ZHUHFODVVLILHGE\\HDU <  DQG
ORFDWLRQ /ZLWKOHYHOV 7KHJHQRW\SHV DWOHDVW\HDUV6LQFH
LQWKHGDWDZHUHHDFKWHVWHGIRU
H[SHULPHQWV ZHUHQRWVRZQDWHDFKORFDWLRQLQHDFK\HDUDQGRIWHQ PRUHWKDQRQHH[SHULPHQW ZDV
VRZQDWDORFDWLRQLQD\HDUWKH* [< [/WDEOHLVLQFRPSOHWH DQGXQEDODQFHG
7KHDLPRIWKLVDQDO\VLVLVWRHVWLPDWH WKHYDULDQFHFRPSRQHQWV IRU**<*/DQG*</ :H
FRQVLGHUDFRPSOH[PRGHOZKLFKDOVR LQFOXGHVUDQGRPLQWHUDFWLRQ WHUPVIRUWKHLQWHUDFWLRQ RI
H[SHULPHQWV ZLWKJHQRW\SHFRYDULDWHV$FLG $ :LQWHU : DQG0DWXULW\ 0 7KHVHDUHVRXUFHV
RIJHQRW\SH[ HQYLURQPHQW YDULDWLRQZKLFKFDQEH WDNHQLQWRDFFRXQWE\WKHEUHHGHUV$FLG
LQGLFDWHVWKHWROHUDQFHRIWKHJHQRW\SHWRVRLODFLGLW\7KH:LQWHUIDFWRULQGLFDWHVZKHWKHUWKH
YDULHW\LVDZLQWHURUVSULQJ W\SHVLQFHERWKW\SHVDUHVRZQLQWKHVDPHWULDOVLQ16:0DWXULW\ LV
DPHDVXUHRIJHQRW\SHPDWXULW\ 7KHUHDUHVL[YDULDQFHFRPSRQHQWV 7DEOH ([SHULPHQW ( 
ILWWHG
DVIL[HGVXEVXPHV<HDU/RFDWLRQ<HDU/RFDWLRQDQGVRZLQJGDWHRIWKHWULDO
$YHUDJH ,QIRUPDWLRQ5(0/ 
7DEOH
6XPPDL\RIWKHSHLIRUPDQFHRIWKUHHDOJRWLWKPVIRUWKH5(0/ HVWLPDWLRQ
RIVL[YDWLDQFH
SDUDPHWHUVXVLQJWKH16:ZKHDWYDULHW\ GDWDEDVH
\ ') (0 $O
*HQRW\SH   
*HQR<HDU   
*HQR/RFQ   
([SW$FLG   
([SW:LQWHU   
([SW0DWXULW\   

   


&38 WLPH PPVV    
,WHUDWLRQV   
7LPHLWHUDWLRQ
VHFRQGV    

7KLVH[DPSOHSURYLGHGWKHVWLPXOXVIRUWKHGHYHORSPHQWRIWKH$O DOJRULWKP 7KHVL]HRIWKH


SUREOHPSUHFOXGHGXVLQJWKH)6 DOJRULWKP DQGLQLWLDODQDO\VHVZHUHDWWHPSWHGZLWKWKH')
DOJRULWKP 7KHVHZHUHXQVDWLVIDFWRU\ DV FRQYHUJHQFHZDV H[WUHPHO\ VORZEHFDXVHRIWKHODUJH
QXPEHU RIYDULDQFHFRPSRQHQWVLQWKHPRGHO7RLPSOHPHQW WKH') DOJRULWKP WKHHTXDWLRQVZHUH
RUGHUHG$:0**< >*/ ( $( :( 0(@ ZLWKWKHHTXDWLRQVLQ>@QHVWHGZLWKLQ
H[SHULPHQW ZLWKLQ
ORFDWLRQ%\SURFHVVLQJ WKHHTXDWLRQVE\H[SHULPHQW ZLWKLQ ORFDWLRQWKHZRUNLQJ
VL]HRI&UHPDLQHGEHORZHTXDWLRQVDOWKRXJK WKHUHDOVL]HZDVHTXDWLRQV VHH$SSHQGL[
&IRUGHWDLOV 
7KHLPSOHPHQWDWLRQ RIWKH$ODOJRULWKP XVHGWKHVDPHRUGHULQJ RIHTXDWLRQVDVWKH') LPSOH
PHQWDWLRQ VRWKDWWKHQXPEHU RIRSHUDWLRQVLQYROYHGLQVWHSVDQGZDVPLQLPLVHG )RUFRPSDU
LVRQZHDOVRXVHGWKH(0DOJRULWKP DVGHVFULEHGE\6HDUOHHWDO  LQZKLFKWKHHTXDWLRQV  
DUHVROYHGGLUHFWO\IRU\L7KHVWRSSLQJ UXOHIRUERWK$ODQG(0ZDVEDVHGRQDSHUFHQWDJH FKDQJH
LQWKHORJOLNHOLKRRGZKLFKFDXVHG WKH(0 DOJRULWKP WRVWRSSUHPDWXUHO\ UHODWLYHWRWKH$O
DOJRULWKP 7KHVWRSSLQJ UXOHIRUWKH') DOJRULWKP ZDVWKDWWKHVDPSOHYDULDQFHRIWKH5(0/ ORJ
OLNHOLKRRGDWWKHFXUUHQW VHWRIYHUWLFHVRIWKHVLPSOH[QRWH[FHHG 1HOGHUDQG0HDG 
6WDUWLQJYDOXHVIRUWKHYDULDQFHSDUDPHWHUV ZHUH   
7DEOHSUHVHQWVWKHVXPPDU\ RIWKHSHUIRUPDQFHV RIWKHWKUHHDOJRULWKPV 7KH(0 DOJRULWKP
WRRNLWHUDWLRQVWRUHDFKDORJOLNHOLKRRGRIFRPSDUHGWRWKH$ODOJRULWKP ZKLFKWRRN
VHYHQLWHUDWLRQVWRUHDFKDORJOLNHOLKRRGRI7KH')DOJRULWKP WRRNLWHUDWLRQVWRUHDFK
DORJOLNHOLKRRGRI7KH&38WLPHVJLYHQDUHIRUD63$5& DQGVKRXOGRQO\EHWDNHQ
DVDJXLGHKRZHYHUWKH&38 WLPHSHULWHUDWLRQ IURP WKHVHUXQVDUHLQOLQHZLWKWKHDSSUR[LPDWH
WLPLQJV SUHVHQWHGLQ$SSHQGL[% 7KH$O DOJRULWKP WRRNORQJHUSHULWHUDWLRQ WKDQWKH')
DOJRULWKP ZKLOHWKH(0DOJRULWKP WRRNORQJHU SHULWHUDWLRQ FRPSDUHGWRWKH')DOJRULWKP 7KH
$OWLPHVDUHLQIODWHGEHFDXVHWKHSURJUDP GLGQRWUHXVHWKHUHVXOWV IURP VWHSLQVWHSEXWUHSHDWHG
WKHZKROHDEVRUSWLRQ7KHFRUUHFWIDFWRU LVDERXW

 0L[HG0RGHOVZLWK8QNQRZQ 1RQGLDJRQDO 5


,QWKLVVHFWLRQZHSUHVHQWDQLPSOHPHQWDWLRQ RIWKH$ODOJRULWKP
IRUWKHDQDO\VLVRI*DXVVLDQPL[HG
OLQHDUPRGHOVZLWKFRUUHODWHGHUURUV7KLVLQFOXGHVD ZLGHFODVV RISUREOHPVLQFOXGLQJVSDWLDO
DQDO\VLVRIILHOGH[SHULPHQWV &XOOLVDQG*OHHVRQ DQGUHSHDWHGPHDVXUHVDQDO\VLV 'LJJOH
/DLUGDQG:DUH0F*LOFKULVW DQG&XOOLV9HUE\ODDQG&XOOLV ,QJHQHUDO

+  5    ( \=M=L=

ZKHUH"  N  2  LVWKHYHFWRURIFRYDULDQFHSDUDPHWHUVUHSUHVHQWLQJ VSDWLDODQGRU


7KXVD+DL  5L5L  D25DLDQGVRWKHVFRUH
YDULDQFHDQGFRYDULDQFHSDUDPHWHUV
WHPSRUDO
IRU LV

GL  a>WU 35L 


G  \
W35L3\I@ 

  >WU 55L   WU &&   D3U@


 'HFHPEHU
%LRPQHWULFV
ZKHUH&L  :
5
5L 
:DQG<TL  5L3\  5M5O 7KHVFRUHIRU\LLVWKHVDPHDVEHIRUH VHH
LLVWKHZRUNLQJ
 ,Q  <T YDULDWHIRUL DQG&LLVWKHZHLJKWHG
FRHIILFLHQW IRUPHG
PDWUL[ XVLQJ
ZHLJKWV5
5L5 LQVWHDGRI5 ,WIROORZVWKDWWKHHOHPHQWVRI$ IRU.  \N DUH

ZKHUH\L DQG\TLO L  5M5 H


_\L  =LLL\L
7KHVWHSVLQWKHLWHUDWLYHVROXWLRQWRWKHVFRUHHTXDWLRQVDUHVLPLODU
WRWKRVHGHVFULEHGLQ6HFWLRQ
7KHUHDUHDGGLWLRQDOWHUPV UHTXLUHGLQWKHVFRUHIRUDQGDQDGGLWLRQDO
VZRUNLQJYDULDWHV*LYHQ
YDOXHIRU.  .  ZHSURFHHGDVIROORZV
DQLQLWLDO
3HUIRUP IRUPDWLRQ RI55DQG5LDQGFDOFXODWH0
 3HUIRUP DEVRUSWLRQRI: RQWR\XVLQJ0 DIWHUDGGLWLRQRI* WR=
5
= LQ0VDYLQJ
LQWHUPHGLDWH WHUPVUHTXLUHGLQVWHSVDQG
 %DFNVXEVWLWXWH WRHYDOXDWHDQGLLDQGFDOFXODWH&
 &DOFXODWHWKHZRUNLQJ YDULDWHV\LDQG&L
 $EVRUE:RQWRWKHPXOWLYDULDWHGHSHQGHQW YDULDWH><R<L  <TV@ DQG
 &DOFXODWHWKHXSGDWHIRU. 5HWXUQWRLIQRWFRQYHUJHG
:HQRWHWKDWWKHLQYHUVLRQRI5DQGVXEVHTXHQWFDOFXODWLRQRIPDWUL[SURGXFWV 5 FDQ
LQYROYLQJ
EH FRPSXWHULQWHQVLYH IRUPRGHUDWHDQGODUJHQ $VVXPLQJVHSDUDELOLW\RIWKHHUURUSURFHVV
.URQHFNHUSURGXFWVDQGYHF  UHVXOWV VHH
DOOHYLDWHVPXFKRIWKLVEXUGHQXVLQJUHVXOWVFRQFHUQLQJ
&XOOLVDQG*OHHVRQ  DQG0DUWLQ  IRUFRPSXWDWLRQDO GHWDLOV 

6SDWLDO
$QDO\VLV
RI6ODWH+DOO6SULQJKHDW7ULDO
,QWKLVVHFWLRQZHSUHVHQWDFRPSDULVRQRIWKH$ODQG)6 DOJRULWKPV IRUWKHHVWLPDWLRQ
RIVRPH
FRPPRQO\XVHGVSDWLDOPRGHOVIRUILHOGH[SHULPHQWV XVLQJWKHGDWDGHVFULEHGLQ6HFWLRQ:H
DVVXPHWKURXJKRXW WKDWWKHWUHQG RIDVHSDUDEOHSURFHVV,QWKHQRWDWLRQ
SURFHVVLVDUHDOLVDWLRQ RI
&XOOLVDQG*OHHVRQ  ZHPRGHOWUHQG HUURU  I  TE\WKHIROORZLQJ
D $5,0$   [ $5,0$   WKHVWDQGDUGILUVW
GLIIHUHQFH
PRGHO %HVDJ DQG.HPSWRQ
 LQWZRGLPHQVLRQVSURSRVHGE\&XOOLVDQG*OHHVRQ  
E $5,0$   [ $5,0$    ZKLWHQRLVH DQLQWHUHVWLQJ DOWHUQDWHWZRGLPHQVLRQDO
H[WHQVLRQRIWKH%HVDJDQG.HPSWRQ  PRGHO
F $5,0$   [ $5,0$  WKHDXWRJUHVVLYHPRGHOSURSRVHGE\=LPPHUPDQ DQG+DU
YLOOH  DQG
G$5,0$  [$5,0$   ZKLWHQRLVHDQH[WHQVLRQWR F ILWWLQJDQXJJHWHIIHFW

9DULHW\HIIHFWV DUHWDNHQDVIL[HGDQGQRDGGLWLRQDOWHUPVDUHLQFOXGHGLQ;7DEOHSUHVHQWVD
VXPPDU\ RIWKHFRQYHUJHQFHVHTXHQFHVIRUWKH)6 DQG$O DOJRULWKPV IRUWKHIRXUPRGHOV7KH
FRQYHUJHQFHVHTXHQFHVIRUWKHWZRDOJRULWKPV DUHYHU\VLPLODUIRUDOOPRGHOVDOWKRXJKWKH$O
DOJRULWKP FRQYHUJHGLQRQHOHVVLWHUDWLRQ $GGLWLRQDOO\ WKHUHLVDVLJQLILFDQW LQ&38 DQG
UHGXFWLRQ
PHPRU\ XVLQJWKH$OLPSOHPHQWDWLRQ RI7ZR'
7KHORJOLNHOLKRRGV FRPSDUDEOHIRUPRGHOV D DQG E DQGIRUWKHLQWHUEORFN
DUHGLUHFWO\ DQDO\VLV
6HFWLRQ ZLWKPRGHOV F DQG G :HFRQFOXGHWKDWWKHYDULDQFHPRGHO E KDVKLJKHU SDUVLPRQ\
WKDQ D DQGWKDW G LVEHWWHUWKDQ F ZKLFKLVEHWWHUWKDQWKHLQWHUEORFN DQDO\VLV
7DEOHSURYLGHVDFRPSDULVRQRIWKHYDULHW\HIIHFWV DPRQJWKHILYHPRGHOV0RGHOV D  E DQG
G JLYHYHU\VLPLODU IROORZHGE\ F DQGWKHQWKHLQWHUEORFN
UHVXOWV WKHQXJJHW
DQDO\VLV%\LJQRULQJ
HIIHFWPRGHO F DSSHDUVWRXQGHUHVWLPDWH WKHVWDQGDUGHUURURIGLIIHUHQFH +RZHYHUWKHQXJJHW
HIIHFWLVRIWHQQRWVLJQLILFDQW

'LVFXVVLRQ
,QWKLVSDSHUZHKDYHSUHVHQWHGDQLPSURYHGGHULYDWLYHEDVHG SURFHGXUHIRUWKHHVWLPDWLRQ RI
YDULDQFHDQGFRYDULDQFHSDUDPHWHUV E\5(0/ 7KHDOJRULWKP DSSHDUVWRKDYHVLPLODUFRQYHUJHQFH
SURSHUWLHVWRWKH)6DOJRULWKP \HWDYRLGVWKHFRPSXWLQJ EXUGHQVRIWKDWDSSURDFK$VIRUWKH)6
DOJRULWKPLWPD\EHXVHGWRHVWLPDWHQHJDWLYHYDULDQFHFRPSRQHQWV E\UHPRYLQJ WKHUHVWULFWLRQ
WKDW
WKHFRPSRQHQWV EHSRVLWLYH:HKDYHWHVWHGLWVSHUIRUPDQFH RQDPXFKZLGHUFODVVRIPRGHOVDQG
GDWDVHWVDQGKDYHLPSOHPHQWHG WKHDOJRULWKP LQWKH7ZR' VRIWZDUH *LOPRXU DQ6SOXV
URXWLQH ZKLFKLVDYDLODEOHIRUPWKHWKLUGDXWKRURQUHTXHVW DQGD)2575$1 SURJUDPIRU
YDULDQFHFRPSRQHQW HVWLPDWLRQLQODUJHJHQRW\SH[HQYLURQPHQW SUREOHPV
)RUODUJHSUREOHPV W\SLFDOO\
HQFRXQWHUHG LQDQLPDODQGSODQWEUHHGLQJ
SUREOHPV WKH$ODOJRULWKP
LVDYLDEOHDOWHUQDWLYHWRERWKWKH') RU(0 DOJRULWKPV%RWKRIWKHVHKDYHJUHDWGLIIFXOW\ ZKHQ
$YHUDJH ,QIRUPDWLRQ5(0/ 
7DEOH
6XLPPDU\ IRUIROXU
RIFRQYHLJHQFHVHTXLHQFHV WRWKH6ODWH+DOOZKHDWYDWLHW\
VSDWLDOPRGHOVILWWHG
WULDO
YDOXHV
D $5,0$  [$5,0$   6WDUWLQJ   H  
$O )6
,WHUDWLRQ O H  H
O      
      
   

YDOXHV
E $5,0$  [$5,0$   ZKLWHQRLVH 6WDUWLQJ  H  

$O )6
,WHUDWLRQ H H
    
    
  

F $5,0$   [$5,0$   6WDUWLQJ


YDOXHV     H  

$O )6
,WHUDWLRQ  H H
      
      
   

G $5,0$   [$5,0$   ZKLWHQRLVH 6WDUWLQJ


YDOXHV   
   H  
$O )6
,WHUDWLRQ   H   H
        
        
        
    

7DEOH
&RWUHODWLRQVDPRQJVROXWLRQVIRUYDULHW\ DQGDYHUDJHVWDQGDUGHUURUVRIGLIIHUHQFH
HIIHFWV
JUDPV,P DQGIRXUVSDWLDODQDO\VHVRIWKH6ODWH+DOOZKHDWYDULHW\
WKHLQWHUEORFN
  IURP WULDO
$QDO\VLV ,QWHUEORFN D  E  F  G 
D $5,0$   [ $5,0$    
E $5,0$   [ $5,0$   ZKLWHQRLVH   
F $5,0$   [ $5,0$      
G $5,0$   [ $5,0$   ZKLWHQRLVH     
DYHUDJHVWDQGDUGHUURURIGLIIHUHQFH     

WKHUHDUHPDQ\FRUUHODWHGFRPSRQHQWV7KHFRPSXWDWLRQDO UHTXLUHPHQW WR(0DQG


$OLVVLPLODU
IRU
WKUHHWLPHVWKDW
RIWKH')DOJRULWKP LQ6HFWLRQ
E\WKHUHVXOWV
VHH$SSHQGL[% DQGWKLVZDVYHULILHG
*LYHQWKHUHGXFWLRQLQWKHQXPEHU DGYDQWDJHWRXVLQJ
WKHUHVKRXOGEHDVLJQLILFDQW
RILWHUDWLRQV
WKH$ODOJRULWKP RYHUERWK') DQG(0

5(680(

1RXV SUHVHQWRQVXQHVWUDWHJLHXWLOLVDQWXQHPDWULFHPR\HQQHG
LQIRUPDWLRQ TXLHVWDL ODIRLV
DLVHPHQWFDOFXODEOHHWHIILFDFH SRXUO
HVWLPDWLRQGHVFRPSRVDQWHVGHYDULDQFHSDUODPHWKRGHGX
PD[LPXP GHYUDLVHPEODQFH UHVWUHLQW VRQWGHFULWHV
GDQVOHPRGHOHOLQHDLUHPL[WH7URLVDSSOLFDWLRQV
/HEXWGHFHWDOJRULWKPH HWDLWO
HVWLPDWLRQGHVFRPSRVDQWHVGHYDULDQFHGDQVXQHFRPSDUDLVRQGH
YDULHWHVGHEOHLVVXHGHHVVDLVTXLFRXYUDLHQWDQVHWOLHX[G
H[SHULPHQWDWLRQ HQ1RXYHOOH
 %LRPHWULFV
'HFHPEHU
*DOOHVGX6XG1RXVDSSOLTXRQV
O
DOJRULWKPHSRXU HQEORFVLQFRPSOHWV
XQSODQG
H[SULHQFH HWSRXU
XQHDQDO\VHVSDWLDOH
G
XQFKDPSG
HVVDLV

5()(5(1&(6

%HVDJ-DQG.HPSWRQ5$  6WDWLVWLFDODQDO\VLVRIILHOGH[SHULPHQWV XVLQJQHLJKERXULQJ


SORWV%LRPHWULFV
&XOOLV%5DQG*OHHVRQ$&  7KHHIILFLHQF\ RIQHLJKERXU DQDO\VLVIRUUHSOLFDWHGYDULHW\
WULDOVLQ$XVWUDOLD-RXUQDORI$JULFXOWXUDO 6FLHQFH&DPEULGJH
&XOOLV%5DQG*OHHVRQ$&  6SDWLDODQDO\VLVRIILHOG H[SHULPHQWV$QH[WHQVLRQWRWZR
GLPHQVLRQV %LRPHWULFV
&XOOLV%5*OHHVRQ$&/LOO:-)LVKHU-$DQG5HDG%-  $QHZSURFHGXUH IRU
WKHDQDO\VLVRIHDUO\JHQHUDWLRQ YDULHW\WULDOV
$SSOLHG6WDWLVWLFV
&XOOLV%5*OHHVRQ$&DQG7KRPVRQ) 0  7KHUHVSRQVHWRVHOHFWLRQRIGLIIHUHQW
SURFHGXUHVIRUWKHDQDO\VLVRIHDUO\JHQHUDWLRQ YDULHW\WULDOV
-RXUQDORI$JULFXOWXUDO 6FLHQFH
&DPEULGJH
'HPSVWHU $3/DLUG10DQG5XELQ'%  0D[LPXPOLNHOLKRRG IURP LQFRPSOHWH GDWD
YLDWKH(0$OJRULWKP -RXUQDORIWKH5R\DO6WDWLVWLFDO6RFLHW\6HULHV%
'LJJOH3-  $QDSSURDFKWRWKHDQDO\VLVRIUHSHDWHGPHDVXUHPHQWV %LRPHWULFV 
'XII ,6(ULVPDQ$0DQG5HLG-.  'LUHFW0HWKRGVIRU6SDUVH0DWULFHV2[IRUG
&ODUHQGRQ3UHVV
(ULVPDQ$0DQG7LQQH\:)  2QFRPSXWLQJ FHUWDLQHOHPHQWV RIWKHLQYHUVHRIDVSDUVH
PDWUL[&RPPXQLFDWLRQV $&0 
*LOPRXU$ 5  7ZR'$3URJUDPWR)LWD 0/[HG/LQHDU0RGHOZLWK7ZR'LPHQVLRQDO
6SDWLDO$GMXVWPHQW IRU/RFDO 7UHQG16:$JULFXOWXUH %LRPHWULF%XOOHWLQ1R SS
*OHHVRQ$ & DQG&XOOLV% 5  5HVLGXDOPD[LPXPOLNHOLKRRG 5(0/  HVWLPDWLRQ RID
QHLJKERXU PRGHOIRUILHOGH[SHULPHQWV %LRPHWULFV
*ROXE+*DQG9DQ/RDQ&)  0DWUL[&RPSXLWDWLRQV 2[IRUG1RUWK2[IRUG $FDGHPLF
*UDVHU+86PLWK63DQG7LHU%  $GHULYDWLYHIUHH DSSURDFKIRUHVWLPDWLQJ YDULDQFH
FRPSRQHQWV LQDQLPDOPRGHOVE\UHVWULFWHGPD[LPXP OLNHOLKRRG-RXUQDORI$$QLPDO 6FLHQFH

-RKQVRQ ' / DQG7KRPSVRQ5  5HVWULFWHG PD[LPXP OLNHOLKRRGHVWLPDWLRQ RIYDULDQFH
FRPSRQHQWVIRUXQLYDULDWH DQLPDOPRGHOVXVLQJVSDUVHPDWUL[ WHFKQLTXHVDQGDTXDVL1HZWRQ
SURFHGXUH-RXUQDORI'DLW\6FLHQFH
/DLUG1DQG:DUH-  5DQGRPHIIHFWV PRGHOVIRUORQJLWXGLQDO GDWD%LRPHWULFV 
/LOO:-*OHHVRQ$&DQG&XOOLV%5  5HODWLYHDFFXUDF\RIDQHLJKERXU PHWKRGIRU
ILHOGH[SHULPHQWV -RXUQDORI$JULFXOWXUDO 6FLHQFH&DPEULGJH
0DUWLQ 5-  7KHXVHRIWLPHVHULHVPRGHOVDQGPHWKRGVLQWKHDQDO\VLVRIDJULFXOWXUDO ILHOG
WULDOV&RPPXQLFDWLRQV LQ6WDWLVWLFV7KHRU\DQG0HWKRGV
0F*LOFKULVW& $ DQG&XOOLV% 5  5(0/ HVWLPDWLRQ IRUUHSHDWHGPHDVXUHVDQDO\VLV
-RXUQDORI6WDWLVWLFDO&RPSXWDWLRQV DQG6LPXODWLRQ
0H\HU.  5HVWULFWHGPD[LPXPOLNHOLKRRGWRHVWLPDWHYDULDQFHFRPSRQHQWVRIDQLPDO
PRGHOVZLWKVHYHUDOUDQGRPHIIHFWV XVLQJDGHULYDWLYHIUHHDOJRULWKP *HQHWLF6HOHFWLRQDQG
(YROXWLRQ
0LV]WDO,&  5HVWULFWHG PD[LPXP OLNHOLKRRGHVWLPDWLRQ RIYDULDQFHFRPSRQHQWV LQDQLPDO
PRGHOXVLQJVSDUVHPDWUL[LQYHUVLRQDQGD VXSHUFRPSXWHU -RXUQDORI'DLU\6FLHQFH 

0LV]WDO, & DQG3HUH](QFLVR0  6SDUVHPDWUL[LQYHUVLRQIRU5HVWULFWHG0D[LPXP
/LNHOLKRRGHVWLPDWLRQ RIYDULDQFHFRPSRQHQWVE\H[SHFWDWLRQ PD[LPL]DWLRQ -RXUQDORI'DLU\
6FLHQFH
1HOGHU-$DQG0HDG5  $VLPSOH[PHWKRGIRUIXQFWLRQ PLQLPL]DWLRQ &RPSOXWHU -ROUQDO

3DWWHUVRQ + ' DQG1DEXJRRPX)  5(0/ DQGWKHDQDO\VLVRIDVHULHVRIFURSYDULHW\
WULDOV,Q3URFHHGLQJVRIWKHWK,QWHUQDWLRQDO %LRPHWULF&RQIHUHQFH +DPLOWRQ1HZ
=HDODQG$J5HVHDUFK
3DWWHUVRQ +'DQG7KRPSVRQ5  5HFRYHU\RILQWHUEORFN LQIRUPDWLRQ ZKHQEORFNVL]HVDUH
XQHTXDO%LRPHWULND 
3D\QH5:  *(167$75HOHDVH5HIHUHQFH0DQXDO 2[IRUG&ODUHQGRQ3UHVV
6HDUOH65&DVHOOD*DQG0F&XOORFK&(  9DULDQFH&RPSRQHQWV -::LOH\1HZ
<RUN
6PLWK 63  (VWLPDWLRQ RIJHQHWLFSDUDPHWHUV LQQRQOLQHDUPRGHOV$GYDQFHVLQ6WDWLVWLFDO
0HWKRGVIRU*HQHWLF,PSURYHPHQW RI/LYHVWRFN'*LDQRODDQG.+DPPRQG HGV 
1HZ<RUN6SULQJHU9HUODJ
7DNDKDVKL.)DJDQ-DQG&KLQ06  )RUPDWLRQRIVSDUVHEXVLPSHGDQFHPDWUL[ DQG
LWVDSSOLFDWLRQWRVKRUWFLUFXLWWKHRU\3URFHHGLQJVRIWKHWK,QWHUQDWLRQDO 3,&$ &RQIHUHQFH
0LQQHDSROLV
$YHUDJH,QIRUPDWLRQ
5(0/ 
7KRPSVRQ5  7KHHVWLPDWLRQ RIKHULWDELOLW\
ZLWKXQEDODQFHGGDWD,2EVHUYDWLRQV DYDLODEOH
RQSDUHQWVDQGRIIVSULQJ %LRPHWULFV 
7KRPSVRQ5:UD\15DQG&UXPS5(  &DOFXODWLRQRISUHGLFWLRQ HUURU YDULDQFHV
XVLQJVSDUVHPDWUL[ PHWKRGV-RXOUQDO RI$QLPDO%UHHGLQJDQG*HQHWLFV
9HUE\OD$ 3 DQG&XOOLV% 5  7KHDQDO\VLVRIPXOWLVWUDWXP DQGVSDWLDOO\FRUUHODWHG
UHSHDWHGPHDVXUHVGDWD%LRPHWULFV
*1DQG5RJHUV&(  6\PEROLFGHVFULSWLRQ
:LONLQVRQ RIIDFWRULDOPRGHOVIRUDQDO\VLVRI
YDULDQFH$SSOLHG6WDWLVWLFV
=LPPHUPDQ '/DQG+DUYLOOH'$  $UDQGRPILHOGDSSURDFKWRWKHDQDO\VLVRIILHOGSORW
H[SHULPHQWV DQGRWKHUVSDWLDOH[SHULPHQWV %LRPHWULFV

5HFHLYHG0DUFKUHYLVHG6HSWHPEHUDFFHSWHG-DQXDW\

$33(1',; $
LQ  /HW=L  :6LDQG& :
5
: * ZKHUH* LV*
,QWKLVDSSHQGL[ZHGHULYHWKHWHUPV
DXJPHQWHG ZLWK]HURVFRUUHVSRQGLQJ WR;LQ:

WU +L3   WU>=L=
5  5
:&  :
5

 WU>6
:
5 
:& 
&  :
5 
: 6L@

 WU>6
&  * &
* 6L@

 WU 6
* 6L   WU 6
* &
* 6L 

 ELOL  WU &LL \

YDULDWHIRU\LIROORZVE\XVLQJWKHUHVXOW=
3\  * X
ZRUNLQJ
7KHPRGLILHG

$33(1',; %

,QWKLVDSSHQGL[ZHGHILQHWKHUHFXUVLYHSURFHGXUHVRIDEVRUSWLRQEDFNVXEVWLWXWLRQDQGSDUWLDO
LQYHUVLRQ WRLQ6HFWLRQVDQG:HUHSUHVHQW
RI&UHIHUUHG LQ  ZLWK*
 DGGHG
0 GHILQHG
WR=
5
= E\WKHPDWUL[

I 1 @ F
E 1  & 1 

/G 1  H 1  L I 1 

ZKHUH1 LVWKHRUGHURIWKHFRHIILFLHQW
PDWUL[
&SDUWLWLRQHGLQWR& 1  H 1  DQGI 1  DQGD 1 
E 1  DQGG 1  UHSUHVHQW FROXPQRI0WKHWHUPVLQYROYLQJ
WKHILUVW \
IRULGHFUHPHQWHG
7KHDEVRUSWLRQUHFXUVLRQUHTXLUHGLQVWHSLVGHILQHG IURP 1 WRE\

D L D GL G
G
,I


B  E
 H
G
,I


> LO  I L  - &L


H E
 H ,,I0

ZKHUHD G DQGI L  DUHVFDODUVE L  DQGH L  DUHYHFWRUVRIOHQJWK L  DQG& L  LVD


V\PPHWULFPDWUL[ZLWKL  URZV7KHWHUPVD L  E L  & L  G L  H L DQGI L  DUHVXPVRI
VTXDUHVDQGFURVVSURGXFWVDGMXVWHGIRUURZVL   1 7KHVFDODUI L
LVRIWHQUHIHUUHGWRDV
WKHSLYRWDQG ORJGHW&  <  ORJ I
 DQG\
3\  D 2 
$VVXPLQJZHDYRLGPXOWLSOLFDWLRQ E\]HURDQGWKDWH L  KDVQLQRQ]HURYDOXHVWKHQXPEHU RI
PXOWLSOLFDWLRQV LV QL  QL   7KXVRSHUDWLRQVFDQEHDYRLGHGE\RUGHULQJ WKHHTXDWLRQVWR
PLQLPLVH QLDWHDFKVWDJH,QWKHUHFXUVLRQ D E DQG& L DUHRYHUZULWWHQ ZKLOVW G L  H  DQG
I L  DUHWKHLQWHUPHGLDWH WHUPVUHWDLQHG
,QVWHSZH EDFNVXEVWLWXWH IRU%
   X
 VWDUWLQJZLWKI    3  G O,I  WKHQFH

  G L   H L  L ,I L 


 %LRPHWULFV
'HFHPEHU
ZKHUHS L  UHSUHVHQWV L  HOHPHQWVRIIDQGLLVWKHLWKHOHPHQWRI%%\DYRLGLQJ
WKHILUVW
XQQHFHVVDU\ RSHUDWLRQVLQYROYLQJ ]HURHOHPHQWVWKHUHDUHQLRSHUDWLRQVDWWKHLWKUHFXUVLRQ
,QVWHSZHXVHWKHVROXWLRQIRUXZLWK0WRIRUP WKHFURVVSURGXFWV RIWKHZRUNLQJ YDULDEOHV
\
5=LXL\LX-5=LXL \L\M  ;
5
=LXL\L DQG=M5
=LXL\L
,QVWHSZHUHSHDWWKHDEVRUSWLRQRI:RQWRWKHPXOWLYDULDWHGHSHQGHQW YHFWRU><R<L
<T"V@'HILQH$ 1  DVWKHFURVVSURGXFWV RIWKHZRUNLQJYDULDWHVQDPHO\ \
5\MLDQGM ; % 1 
DVWKHFURVVSURGXFWV RIWKHZRUNLQJ YDULDWHVDQDODJRXVWRE 1  EXWZLWK\5
\LQWKHILUVW
URZDQG
' 1  DVWKHFURVVSURGXFW RIWKHZRUNLQJ YDULDWHDQDODJRXVWRG 1  7KHUHFXUVLRQLVWKHQ
$ L

  $
' 92L72

 %   H L ' L W- L 


8  

1RWHWKDWWKHH DQGI  ZHUHIRUPHG


LQVWHS7KHWHUPV
UHTXLUHGIRU $ " % " DQG
M$ DUHWKHQ

,QVWHSZHIRUP LQWKHVFRUHHTXDWLRQIRU\L
WKHHOHPHQWVRI& UHTXLUHGIRUWKHWUDFHWHUPV
/HWI     I

,I &  O )RULIURP,WR
1  WKHQ

 B
& H O L 
H  IN L @Y

ZKHUHH L   &  L H L I L DQGI  L   OI L   H L  H 


I L 
,QWKHFDVHFRQVLGHUHGLQWKLVSDSHURQO\I L  WHUPV DUHLQYROYHGLQWKHWUDFHVDQGVRZHFKRRVH
WRHYDOXDWHRQO\WKRVHWHUPV LQH  L ZKLFKDUHVXEVHTXHQWO\ QHHGHG6LQFHH  & N  IRU N!
E\HON  LWLVQRWQHHGHGLIH N  LV]HURIRUDOON! L7KLVFRQGLWLRQ
LLVPXOWLSOLHG LVVDWLVILHG LI&L OM
ZDVDOZD\V]HURGXULQJ WKHDEVRUSWLRQ SKDVH8VLQJVSDUVHVWRUDJHWHFKQLTXHV 'XII HWDO ZH
ZRXOGQRWDFWXDOO\IRUPWKLVFHOOGXULQJDEVRUSWLRQ (ULVPDQDQG7LQQH\0LV]WDO
0LV]WDODQG3HUH](QFLVR7DNDKDVKL)DJDQDQG&KLQ7KRPSVRQ:UD\DQG&UXPS
 DQGVRGRQRWQHHGWRIRUP LWQRZ XQOHVVZHDFWXDOO\ZDQWWKLVSRUWLRQ RIWKHZKROHLQYHUVH
IRUVRPHRWKHUSXUSRVH 7KXVWKHSDUWLDO& FDQEHIRUPHG WRRYHUZULWHWKHPDWUL[ H[LVWLQJ DIWHU
DEVRUSWLRQ7KHHOHPHQWV &-1  DUHSURSRUWLRQDO WRWKHFRYDULDQFHEHWZHHQLDQGM 7KH
QXPEHU RIPXOWLSOLFDWLRQV LQYROYHGLQIRUPLQJ & 1  DWWKHLWKVWDJHLVQL QL  

$33(1',; &

8WLOLVLQJ LQRXUJHQRW\SH[HQYLURQPHQW
VSDUVLW\ VWXG\ZLWKORFDWLRQVDQGH[SHULPHQWVZH
RQO\KROGRQHORFDWLRQDQGRQHH[SHULPHQW DWDWLPH7KXVZHRSHUDWHRQDPDWUL[RIRUGHUDERXW
UDWKHUWKDQRQHRIRUGHUVLQFH;KDVHTXDWLRQV/LKDVXSWRDQG(LKDVHTXDWLRQV
&RQVLGHUWKHUHGXFHGFRHIILFLHQW PDWUL[
)[
[
/ ; //
(; (
/ (
(
(
; (
/  ((
/
;    /
/
(
;    (
/ (
(
(;    (
/  (
(
ZKHUH;UHODWHVWRWKHHTXDWLRQVQRWLQYROYLQJ /RFDWLRQ /  RU([SHULPHQW (  /LKDVXSWR
JHQRW\SHORFDWLRQ HTXDWLRQVDQG(LKDVIRXUH[SHULPHQW HTXDWLRQVDVGHVFULEHGLQ6HFWLRQ
:HUHDGLQWKHGDWDIURPH[SHULPHQWDFFXPXODWLQJ LQWR;
;/$;DQG/
/O DQGIRUPLQJ
(
>; /, (@6LQFHWKHVSDFHVSDQQHGE\WKHPDWUL[ (O LVRUWKRJRQDO WRDOORWKHU(LZHDGMXVW
;
;/,;DQG/
/O IRU(DQGZULWH(
>; / (O@WRGLVN:HUHSHDWWKLVSURFHVVIRUH[SHULPHQW
 LQJHQHUDOZHUHSHDWWKLVSURFHVVIRUDOOH[SHULPHQWVZLWKLQ ORFDWLRQ 1RZ;
4;LVDGMXVWHG
IRU/ZKLFKDUHQRZRIWKHIRUP /
4; DQG/M4/O DQGZULWHWKHPWRGLVN:HUHSHDWWKLVSURFHVV
IRUORFDWLRQ DQGVRRQLQWKHJHQHUDOFDVH 
7RIRUP WKHLQYHUVHHOHPHQWVUHTXLUHGIRUWKHWUDFHWHUPVLQWKHVFRUHZHUHYHUVHWKHSURFHVV
7KDWLVILUVWLQYHUW;
4; DQGWKHQUHDGEDFN/DQGIRUP LWVLQYHUVH5HDGEDFN(DQGIRUP LWV
LQYHUVH 8VHDQGGLVFDUGWKH(LQYHUVHLIUHTXLUHG
EHIRUHUHDGLQJEDFN(DQGIRUPLQJ LWVLQYHUVH
7KHQERWKWKH/DQG(LQYHUVHVPD\EHGLVFDUGHGDQGWKHSURFHVVUHSHDWHGIRUWKHQH[WORFDWLRQ
WKDWLVORFDWLRQ 

You might also like