You are on page 1of 87

&+$37(5

6HFWLRQ

 D D 3 UHMHFW+ ZKHQ+ LVWUXH


 

;  P   
 3 ; dZKHQP   3 d 3 =d  3 =d
V Q   
 
 
7KHSUREDELOLW\RIUHMHFWLQJWKHQXOOK\SRWKHVLVZKHQLWLVWUXHLV

;  P  
  

E E 3 DFFHSW+ ZKHQP    3 ; ! 
 ZKHQ P   3
V Q
!
  

3 =!  3 =d   


7KHSUREDELOLW\RIDFFHSWLQJWKHQXOOK\SRWKHVLVZKHQLWLVIDOVHLV

;P   

 D D 3 ; dZKHQP   3 d 3 =d  3 =d
V  Q   
  
 7KHSUREDELOLW\RIUHMHFWLQJWKHQXOOZKHQWKHQXOOLVWUXHLVZLWKDVDPSOHVL]HRI 
;  P  
  
E E 3 ; !ZKHQP   3 ! 3 =!  3 =d
V Q   
  
7KHSUREDELOLW\RIDFFHSWLQJWKHQXOOK\SRWKHVLVZKHQLWLVIDOVHLV

 )LQGWKHERXQGDU\RIWKHFULWLFDOUHJLRQLID 


F  
  3 = d
  
:KDW=YDOXHZLOOJLYHDSUREDELOLW\RI"8VLQJ7DEOHLQWKHDSSHQGL[=YDOXHLV 
F  
7KXV   F 
  

F  
   3 = d
  
:KDW=YDOXHZLOOJLYHDSUREDELOLW\RI"8VLQJ7DEOHLQWKHDSSHQGL[=YDOXHLV 
F  
7KXV   F  
  


 D D 3 ; d 3 ; !
;      ;   
  
  3 d  3 !
       
 3 =d 3 =!
   3 =d  3 =d
  
   
E E 3 d ; dZKHQP 
   ;      
 3 d d
     
 3 d=d
 3 =d 3 =d
 3 =d  3 =d
  
F E 3 d ; dZKHQP 
   ;      
 3 d d
     
 3 d=d
 3 =d 3 =d
 3 =d  3 =d
 
 

7KHSUREDELOLW\RIDFFHSWLQJWKHQXOOK\SRWKHVLVZKHQLWLVDFWXDOO\IDOVHLVVPDOOHULQSDUWFVLQFHWKHWUXH
PHDQP LVIXUWKHUIURPWKHDFFHSWDQFHUHJLRQ$ODUJHUGLIIHUHQFHH[LVWV

 8VHQ HYHU\WKLQJHOVHKHOGFRQVWDQW


D 3 ; d 3 ; !
;      ;   
  
 3 d  3 !
       
 3 =d 3 =!
  3 =d  3 =d
    
 
E E 3 d ; dZKHQP 
   ;      
 3 d d
     
 3 d=d
 3 =d 3 =d
 3 =d  3 =d
  
  
F E 3 d [ dZKHQP 
   ;      
 3 d d
     
  3 d=d
 3 =d 3 =d
 3 =d  3 =d
   
 
 


 D D 3 ; !ZKHQP 
;     
 3 !
     
 3 =!
 3 =d
 
 
E E 3 ; dZKHQP 
;     
 3 d
     
 3 =d
 3 =d
  

 D 5HMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHPHDQIRDPKHLJKWLVJUHDWHUWKDQPP
E 3 ; !ZKHQP 
;     
 3 !
     
 3 =!  3 =d
  
  
7KHSUREDELOLW\WKDWDYDOXHRIDWOHDVWPPZRXOGEHREVHUYHG LIWKHWUXHPHDQKHLJKWLVPP LV
RQO\7KXVWKHVDPSOHYDOXHRI [ PPZRXOGEHDQXQXVXDOUHVXOW

 8VLQJQ 


D D 3 ; !ZKHQP 
;     
 3 !
     
 3 =!
 3 =d
  
  
E E 3 ; dZKHQP 
;     
 3 d
     
 3 =d
 3 =d
  
  

F  

D  3 ; ! F ZKHQ P   3 = !
  
3 =t

F  
7KXV  DQGF 
  
E ,IWKHWUXHPHDQIRDPKHLJKWLVPPWKHQ
E 3 ; d ZKHQP 
  
 3 = d
  
 3 =d
 3 =d
  
F )RUWKHVDPHOHYHORIDZLWKWKHLQFUHDVHGVDPSOHVL]HELVUHGXFHG


 D D 3 ; dZKHQP  3 ; !ZKHQP 
;     ;   

 3 d  3 !
           
 3 =d 3 =!
  3 =d  3 =d
    
 
E 3RZHU E
 E 3 d ; dZKHQP 
  
 ;  
 
   
 3 d d
        
 3 d=d
 3 =d 3 =d
 3 =d  3 =d
  
 
 
E 

 8VLQJQ 


D D 3 ; dZKHQP  3 ; !ZKHQP 
;     ;   

 3 d  3 !
           
3 =d 3 =!
 3 =d  3 =d
 3 =d
 
 

E E 3 d ; dZKHQP 
  
 ;  
  
  
 3 d d
        
 3 d=d  3 =d 3 =d
 3 =d  3 =d
  
 
 
E 


D 3 ; d F / 3 ; ! F +

 3 ; d F /  3 ; ! F +
F  F/  
3 / WKXV  F / 
     
F  F+  
3 + WKXV  F + 
     


3  d ; d 



 2SHUDWLQJFKDUDFWHULVWLFFXUYH
[ 
[P   P
E 3 = d 3 = d
     

  P
P 3 = d E E
  
 3 =d   
 3 =d   
 3 =d   
 3 =d   
 3 =d   
 3 =d   
 3 =d   
 3 =d   

2SHUDWLQJ&KDUDFWHULVWLF&XUYH



E 






     
P

3RZHU)XQFWLRQ&XUYH




E





     
P



 7KHSUREOHPVWDWHPHQWLPSOLHV+ S + S!DQGGHILQHVDQDFFHSWDQFHUHJLRQDV S d 

 

DQGUHMHFWLRQUHJLRQDV S ! 



D D 3 3 t  ZKHQ S  3 = t

  
 
3 = t    3 =  
  


E E 3 3 dZKHQS   3 =d  

 ;aELQ  ,PSOLFLWO\+ S DQG+ S


 

Q 
$FFHSWUHJLRQ S ! 
5HMHFWUHJLRQ S d 
8VHWKHQRUPDODSSUR[LPDWLRQIRUSDUWVD E DQGF 



  
D :KHQS D  3 S   3 = d
 


3 = d 





  
E :KHQS E 3 S !  3 = !
 


3 = ! 
   3 =  


F 3RZHU E  

 ;aELQ  + S DQG+ Sz


 

   

$FFHSW5HJLRQ  d S d 


5HMHFW5HJLRQ S d  RU S ! 

8VHWKHQRUPDODSSUR[LPDWLRQIRUSDUWVD DQGE

D :KHQS  D 3 S d   3 S ! 




     
3 = d  3 = !
   

 
3 = d 
  3 = ! 
 3 = d 
    3 =  
  





     
E :KHQS  E 3   S d  3 =d
   

 
3   = d 
3 = d   3 =  
 
  


6HFWLRQ

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQEUHDNLQJVWUHQJWK P
 + P 


 + P!


 D 


[P
 ]
V Q
 5HMHFW+ LI] !]DZKHUH]  
  

  [  V 
  
] 
 
 6LQFHGRQRWUHMHFW+ DQGFRQFOXGHWKDWWKHILEHUZRXOGQRWEHMXGJHGDFFHSWDEOHDW 


D 
E 3YDOXH 3 =t   )   

F )RUD DFFHSW+ LI ;    
 


  

 3 ; d 
 ZKHQ P 
3 = d


 
3 = d  )  # 

7KHSUREDELOLW\LVRIDFFHSWLQJWKHQXOOK\SRWKHVLVLIWKHWUXHPHDQEUHDNLQJVWUHQJWKLVSVLZLWKD
OHYHORIVLJQLILFDQFHRID 
G ]D  ]

 


V V
 [  ] dP d []

Q

Q
 
    d P d   

 
dPd
 :LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQEUHDNLQJVWUHQJWKLVEHWZHHQSVLDQGSVL

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQ\LHOGP
 + P 


 + Pz


 D 


[P
 ] 
V Q
 5HMHFW+ LI] ] D ZKHUH]
 
 RU] !]D ZKHUH]
 
 
  

  [  V 


  
] 

 
 6LQFHGRQRWUHMHFW+ DQGFRQFOXGHWKH\LHOGLVQRWVLJQLILFDQWO\GLIIHUHQWIURP


DWD 
E 3YDOXH >  )  @ >  @ 


]D


F Q 

 ]E V 
] 
]  


   


G 
   
 

Q#
     
G E ) ]   )  ] 


 

 
 )  ) 
 )  ) 
 )   ) 
  
 
H )RUD ]D  ]    

V V
 [  ]  dP d []
Q

Q
 
    d P d   
 
dPd
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQ\LHOGRIWKHFKHPLFDOSURFHVVLVEHWZHHQDQG


 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQKROHGLDPHWHUP
 + P 


 + Pz


 D 


[P
 ]

V Q
 5HMHFW+ LI] ]D ZKHUH]
 
 RU] !]D ZKHUH]

 
   

  [ 
 V 

  

] 
 
  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQKROH
GLDPHWHULVQRWVLJQLILFDQWO\GLIIHUHQWIURPLQDWD 
E 3YDOXH > )  @#>@ 
F 6HWE  
]D    ]E V  
 ] V #  
     
Q    ]  

 
G 

   


Q#
 
    
  
G E ) ]   )  ] 


  

  
#)  ) 
 )  ) 
 
E#
H )RUD ]D  ]    

V V
 [  ] dP d []

Q

Q
 
 
   d P d 
  
 
dPd


7KHFRQILGHQFHLQWHUYDOFRQVWUXFWHGFRQWDLQVWKHYDOXHWKXVWKHWUXHPHDQKROHGLDPHWHUFRXOG
SRVVLEO\EHLQXVLQJDOHYHORIFRQILGHQFH6LQFHDWZRVLGHGFRQILGHQFHLQWHUYDOLV
HTXLYDOHQWWRDWZRVLGHGK\SRWKHVLVWHVWDWD WKHFRQFOXVLRQVQHFHVVDULO\PXVWEHFRQVLVWHQW

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQSLVWRQULQJGLDPHWHUP
 + P 


 + Pz


 D 


[P
 ]

V Q
 5HMHFW+ LI] ]D ZKHUH]
  
 RU] !]D ZKHUH]
   
 
  [  V 
  
] 

  

 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQSLVWRQULQJGLDPHWHULVQRW
PP
E 3YDOXH > )  @ >@ 
$JDLQVLQFHWKH3YDOXHLVOHVVWKDQWKHOHYHORIVLJQLILFDQFHDZHZRXOGUHMHFWWKHQXOOK\SRWKHVLV
F )RUD ]D  ]

 


V V
 [  ]
 dP d []
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQSLVWRQULQJGLDPHWHULVEHWZHHQDQGPP

G )RUD ]D ]  




V
[] 
dP
Q


   dP

dP

:LWKFRQILGHQFHWKHWUXHPHDQSLVWRQULQJGLDPHWHULVDWOHDVWPP


 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQEXOEOLIHP
 + P 


 + P!


 D 


[P
 ]
V Q
 5HMHFW+ LI] !]DZKHUH]  
  

 [ V 


  
] 

  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRVXSSRUWWKH
FODLPWKHEXOEOLIHH[FHHGVKUVDWD 
E 3YDOXH 3 =!  3 =d   )    
   
F E ) ]  )   )   



]D  ]E V


G Q

] 
]  
V 
     


G 
   
 

Q#
H )RUD ]D  ]  
 

V V
 [  ]
 dP d []
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQEXOEOLIHLVEHWZHHQKUVDQGKUV
V
I  [  ] 
dP
Q

   
 dP

dP

:LWKFRQILGHQFHWKHWUXHPHDQEXOEOLIHLVDWOHDVWKUV

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKP
 + P 


 + Pz


 D 


[P
 ]
V Q
 5HMHFW+ LI] ]D ZKHUH]
  
 RU] !]D ZKHUH]
   
 
  [  V 
  
] 


  

 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLV
VLJQLILFDQWO\GLIIHUHQWIURPDWD 

E 6PDOOHVWOHYHORIVLJQLILFDQFH 3YDOXH > )  @ >@ 


7KHVPDOOHVWOHYHORIVLJQLILFDQFHDWZKLFKZHDUHZLOOLQJWRUHMHFWWKHQXOOK\SRWKHVLVLV


F ]D  ]
 
 
V V
 [  ]  dP d []
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQSVLDQG
SVL

G ]D  ]
 
 
V V
 [  ]  dP d []
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQSVLDQG
SVL
7KHFRQILGHQFHLQWHUYDOLVZLGHUWKDQWKHFRQILGHQFHLQWHUYDO7KHFRQILGHQFHLQWHUYDOZLWKWKH 
ODUJHUOHYHORIFRQILGHQFHZLOODOZD\VUHVXOWLQDZLGHUFRQILGHQFHLQWHUYDOZKHQ [ V DQGQDUHKHOG

FRQVWDQW

 ]D  ]
 
 ( 
 



 Q#  Q#





 ]D  ]  ( VLQFHWKHGHVLUHGZLGWKLVVHW(  

 

 



 Q#  Q#




 ]D  ]
 
 ( 
 


 Q  Q#




6HFWLRQ

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQOLIHP
 + P 


 + P!


 D 


[P
 W  


V Q
 5HMHFW+ LIW !WD ZKHUHW
  Q
  

  [ V Q 


  
W  

  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWR
LQGLFDWHWKDWWKHPHDQOLIHRIWKLVQHZWLUHLVLQH[FHVVRINPDWD 


G PP   
E G  

V V 

8VLQJWKH2&FXUYH&KDUW9,F IRUD G DQGQ ZHJHWE#DQGSRZHURI


:LWKWKHSRZHUEHLQJVPDOOHUWKDQWKHDFFHSWDEOHOHYHOLVQRWDQDGHTXDWHVDPSOHVL]HIRU 
GHWHFWLQJDGLIIHUHQFHZLWKSUREDELOLW\RIDWOHDVW
F WD  W
Q
 


V V
 [  W dPd [W

Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQWLUHOLIHLVEHWZHHQNPDQGNP

 ,QRUGHUWRXVHWVWDWLVWLFVLQK\SRWKHVLVWHVWLQJZHQHHGWRDVVXPHWKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
  7KHSDUDPHWHURILQWHUHVWLVWKHWUXH,]RGLPSDFWVWUHQJWKP
 + P 


 + P!


 D 
[P
 W  


V Q
 5HMHFW+ LIW !WD ZKHUHW
 
 
Q 

  [ V Q 



   
W   

  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRLQGLFDWHWKDWWKH
WUXH,]RGLPSDFWVWUHQJWKLVJUHDWHUWKDQIWOELQDWD 

 ,QRUGHUWRXVHWVWDWLVWLFVLQK\SRWKHVLVWHVWLQJZHQHHGWRDVVXPHWKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQDPRXQWRIFXUUHQWP
 + P 


 + Pz


 D 


[P
 W   

V Q
 5HMHFW+ LIW WD

ZKHUHW

 RUW!WD
Q
ZKHUHW

 
Q 

  [ V Q 


  
W   

  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRLQGLFDWHWKDW
WKHDPRXQWRIFXUUHQWQHFHVVDU\LVQRWPLFURDPSVDWD 

3YDOXH 3 W IRUGHJUHHVRIIUHHGRPRIZHREWDLQ


  3YDOXH  3YDOXH



1RUPDO 3UREDELOLW\ 3ORW





FXPXODWLYH SHUFHQW










     

)DWW\ $FLG

7KHQRUPDOLW\DVVXPSWLRQDSSHDUVWREHVDWLVILHG7KLVLVHYLGHQWE\WKHIDFWWKDWWKHGDWDIDOODORQJD
VWUDLJKWOLQH

D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQOHYHORISRO\XQVDWXUDWHGIDWW\DFLGP
 + P 


 + Pz


 D 


[P
 W  


V Q
 5HMHFW+ LIW WD
 
ZKHUHW
Q
 RUW!WD ZKHUHW

 Q 

  [ V Q 


  
W  

  
 6LQFHDFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQOHYHOLVQRW
VLJQLILFDQWO\GLIIHUHQWIURPDWD 

E 3YDOXH 3 W! IRUGHJUHHVRIIUHHGRPRIZHREWDLQ


  3YDOXH
3YDOXH


F 8VLQJWKH2&FXUYHVRQ&KDUW9,EZLWKG Q ZKHQE#7KHUHIRUHWKHFXUUHQW

VDPSOHVL]HRILVLQDGHTXDWH

G )RUD WD  W  


Q 

V V
 [  W
 dPd [W
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQOHYHORISRO\XQVDWXUDWHGIDWW\DFLGLVEHWZHHQ
DQG


 D $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWWKHGDWDDSSHDUWRIROORZDQRUPDOGLVWULEXWLRQ7KLVLVHYLGHQW
E\WKHIDFWWKDWWKHGDWDIDOODORQJDVWUDLJKWOLQH
1RUPDO 3UREDELOLW\ 3ORW





&XPXODWLYH SHUFHQW










      

&RPSUHVVLYH 6WUHQJWK


E  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKP
 + P 


 + Pz


 D 


[P
 W  


V Q
 5HMHFW+ LIW WD
  Q
ZKHUHW  RUW!WD ZKHUHW

  Q 

  [ V Q 


  
W 


  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFH
WRLQGLFDWHWKDWWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVVLJQLILFDQWO\GLIIHUHQWIURPSVLDWD 

F )RUD DQGQ WD  W


Q
  

V V
 [  W
 dP d [W
Q

Q
 

    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQSVLDQG
SVL

G )RUD DQGQ WD Q


 W 
 
V
 [  W
 dP
Q

    dP

dP
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKWREHDWOHDVWSVL


 D $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWWKHUHGRHVQRWVHHPWREHDVHYHUHGHYLDWLRQIURPQRUPDOLW\IRU
WKLVGDWD7KLVLVHYLGHQWE\WKHIDFWWKDWWKHGDWDDSSHDUVWRIDOODORQJDVWUDLJKWOLQH
1RUPDO 3UREDELOLW\ 3ORW







&XPXODWLYH SHUFHQW








     


; 
5RG 'LDPHWHU

E  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQURGGLDPHWHUP
 + P 


 + P!


 D 


[P
 W  


V Q
 5HMHFW+ LIW !WD ZKHUHW
  Q
  

  [ V Q 


  
W  

  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQURGGLDPHWHUH[FHHGV
PPDWWKHOHYHORIVLJQLILFDQFH

F 3YDOXH 3 W! IRUGHJUHHVRIIUHHGRPRI3YDOXH

G )RUD DQGQ WD  W  


Q 

V V
 [  W
 dP d [W
Q

Q
 
    d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQURGGLDPHWHULVEHWZHHQPPDQGPP

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQZDOOWKLFNQHVVP
 + P 


 + P!


 D 


[P
 W  


V Q
 5HMHFW+ LIW !WD ZKHUHW
  Q
  

  [ V Q 


  
W  


  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRLQGLFDWH
WKDWWKHWUXHPHDQZDOOWKLFNQHVVLVJUHDWHUWKDQPPDWD 


3YDOXH 3 W! 3YDOXH
E WD Q
 W  


V V
 [  W  dP d [W
Q

Q
 
    d P d   
 
dPd
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQZDOOWKLFNQHVVLVEHWZHHQPPDQGPP

 D

1RUPDO 3UREDELOLW\ 3ORW




FXPXODWLYH SHUFHQW











    

3HUFHQW (QULFKPHQW

7KHQRUPDOLW\DVVXPSWLRQDSSHDUVWREHUHDVRQDEOH7KLVLVHYLGHQWE\WKHIDFWWKDWWKHGDWDDSSHDUWR
IDOODORQJDVWUDLJKWOLQH
E  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQSHUFHQWHQULFKPHQWP
 + P 


 + Pz


 D 


[P
 W  


V Q
 5HMHFW+ LIW WD

ZKHUHW
 Q
 RUW!WD ZKHUHW

  Q 

  [ V Q 


  
W  



  
 6LQFHDFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVQRVWURQJHYLGHQFH
WRLQGLFDWHWKDWWKHWUXHPHDQSHUFHQWHQULFKPHQWLVVLJQLILFDQWO\GLIIHUHQWIURPDWD 
F )RUD DQGQ WD  W  
Q 

V V
 [  W
 dP d [W
Q

Q
 
   
 d P d   

 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQSHUFHQWHQULFKPHQWLVEHWZHHQDQG
6LQFHWKHLQWHUYDOFRQWDLQVWKHYDOXHZLWKDODUJHOHYHORIFRQILGHQFHZHFRQFOXGHWKDWWKHPHDQ
SHUFHQWHQULFKPHQWLVQRWVLJQLILFDQWO\GLIIHUHQW


 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQTXDQWLW\RIV\UXSP
 + P 


 + Pz


 D 


[P
 W  


V Q
 5HMHFW+ LIW WD
 
ZKHUHW
Q
 RUW!WD

ZKHUHW
Q
 


  [ V Q 



  
W  

  
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHPHDQTXDQWLW\RIV\UXSLV
VLJQLILFDQWO\GLIIHUHQWIURPIOR]DWD 

E  + P 


 + P!


 D 


[P
 W  


V Q
 5HMHFW+ LIW!WD ZKHUHW
 Q
 


 W  


 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRVXSSRUWWKH
FODLPWKDWWKHPHDQTXDQWLW\RIV\UXSGLVSHQVHGH[FHHGVIOR]DW D 

F 8VLQJWKH2&FXUYHLQ&KDUW9,H ZLWKG  DQGQ ZHJHWE#7KXVWKHSRZHU


LVJLYHQE\E 7KHVDPSOHVL]HLVDGHTXDWHIRUWKHH[SHULPHQW

G )RUD DQGQ WD  W Q 


 
V V
 [  W
 dP d [W
Q

Q
 
 
   d P d 
  
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQTXDQWLW\LVEHWZHHQIOR]DQGIOR]

 7KHSDUDPHWHURILQWHUHVWLVWKHWUXHPHDQQDWXUDOIUHTXHQF\P
)RUD DQGQ WD  W
Q
 


V V
[W
 dPd [W
Q

Q

 

   d P d   
 
dPd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQIUHTXHQF\LVEHWZHHQ+]DQG+]
7KHFODLPWKDWWKHPHDQQDWXUDOIUHTXHQF\LV+]FDQQRWEHVXSSRUWHGZLWKDOHYHORIFRQILGHQFHRI
VLQFHWKLVLQWHUYDOGLGQRWFRQWDLQWKHYDOXH


6HFWLRQ

 D ,QRUGHUWRXVHF VWDWLVWLFLQK\SRWKHVLVWHVWLQJDQGFRQILGHQFHLQWHUYDOFRQVWUXFWLRQZHQHHGWRDVVXPH




WKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
 7KHSDUDPHWHURILQWHUHVWLVWKHWUXHVWDQGDUGGHYLDWLRQRIWKHGLDPHWHUV+RZHYHUWKHDQVZHUFDQ
EHIRXQGE\SHUIRUPLQJDK\SRWKHVLVWHVWRQV  

 + V  





 + V !





 D 


Q   V 

  F 


V 

 5HMHFW+ LI F ! FD  ZKHUH F






Q 



 Q V   

  Q   V  

 F 



V 

 6LQFHGRQRWUHMHFW+ DQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWRLQGLFDWHWKHWUXH




VWDQGDUGGHYLDWLRQRIWKHGLDPHWHUH[FHHGVDWD 
E 3YDOXH 3 F ! IRUGHJUHHVRIIUHHGRP3YDOXH


F ORZHUFRQILGHQFHLQWHUYDORQV  

)RUD DQGQ  FD  


Q 
F 



  

 V 


V 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIWKHKROHGLDPHWHULVPRUHWKDQPP

 D ,QRUGHUWRXVHF VWDWLVWLFLQK\SRWKHVLVWHVWLQJDQGFRQILGHQFHLQWHUYDOFRQVWUXFWLRQZHQHHGWRDVVXPH




WKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
 7KHSDUDPHWHURILQWHUHVWLVWKHWUXHYDULDQFHRIWKHVXJDUFRQWHQWV  

 + V  





 + V z





 D 


Q   V 

  F 


V 

 5HMHFW+ LI F  F  D 





   Q  ZKHUH F  RU F ! F D



 Q  ZKHUH F  
 Q V   

  Q   V 

F 

 


V 

 6LQFHDFFHSW+ DQGFRQFOXGHWKHHYLGHQFHLQGLFDWHVWKHWUXHYDULDQFHRIWKH 

VXJDUFRQWHQWLVQRWVLJQLILFDQWO\GLIIHUHQWIURPPJ DWD  

E 3YDOXH 3 F ! IRUGHJUHHVRIIUHHGRP




3 F !  

3YDOXH
F FRQILGHQFHLQWHUYDOIRUV
)LUVWILQGDFRQILGHQFHLQWHUYDOIRUV  

)RUD DQGQ  F D DQG F  D 


F
 Q   F 


   Q 



   
dV d 

 
dV d 

7DNHWKHVTXDUHURRWRIWKHHQGSRLQWVRIWKLVLQWHUYDOWRILQGWKHFRQILGHQFHLQWHUYDOIRUV
dVd
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHVWDQGDUGGHYLDWLRQRIWKHVXJDUFRQWHQWLVEHWZHHQPJDQG
PJ


 D ,QRUGHUWRXVHF VWDWLVWLFLQK\SRWKHVLVWHVWLQJDQGFRQILGHQFHLQWHUYDOFRQVWUXFWLRQZHQHHGWRDVVXPH


WKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
 7KHSDUDPHWHURILQWHUHVWLVWKHVWDQGDUGGHYLDWLRQRIWLUHOLIHV+RZHYHUWKHDQVZHUFDQEHIRXQG
E\SHUIRUPLQJDK\SRWKHVLVWHVWRQV  

 + V  





 + V !





 D 


Q   V 

  F 


V 

 5HMHFW+ LI F ! FD  ZKHUH F






Q 



 Q V   
 

  Q   V  

F





V 

 6LQFH!UHMHFW+ DQGFRQFOXGHWKHUHLVVWURQJHYLGHQFHWRLQGLFDWHWKHWUXHVWDQGDUG




GHYLDWLRQRIWLUHOLIHH[FHHGVNPDWD 
E 3YDOXH 3 F ! IRUGHJUHHVRIIUHHGRP3YDOXH


F ORZHUFRQILGHQFHLQWHUYDOIRUV  

)RUD DQGQ  FD  


Q 
F 



  

 V 


V 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIWLUHOLIHLVPRUHWKDQNP 

 D ,QRUGHUWRXVHF VWDWLVWLFLQK\SRWKHVLVWHVWLQJDQGFRQILGHQFHLQWHUYDOFRQVWUXFWLRQZHQHHGWRDVVXPH




WKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
 7KHSDUDPHWHURILQWHUHVWLVWKHWUXHVWDQGDUGGHYLDWLRQRI,]RGVWUHQJWKV+RZHYHUWKHDQVZHUFDQ
EHIRXQGE\SHUIRUPLQJDK\SRWKHVLVWHVWRQV  

 + V  





 + V z





 D 


Q   V 

  F 


V 

 5HMHFW+ LI F  F  D






   Q  ZKHUH F 

RU F ! F D



 Q  ZKHUH F 


 Q V 
  Q   V  

F 



V 

 6LQFH!ZHZRXOGUHMHFW+ DQGFRQFOXGHWKHWUXHVWDQGDUGGHYLDWLRQRI,]RGVWUHQJWKLV 

VLJQLILFDQWO\GLIIHUHQWIURPIWOELQDWD 
E 3YDOXH 3 F ! IRUGHJUHHVRIIUHHGRP


3 F !  

3YDOXH
F FRQILGHQFHLQWHUYDOIRUV  

)RUD DQGQ  F D 


 Q  F 

DQG F  D
   Q  F 



  
  

 dV d 

 
dV d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRI,]RGVWUHQJWKLVEHWZHHQ IWOELQ DQG 

 IWOELQ 


 D ,QRUGHUWRXVHF VWDWLVWLFLQK\SRWKHVLVWHVWLQJDQGFRQILGHQFHLQWHUYDOFRQVWUXFWLRQZHQHHGWRDVVXPH


WKDWWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
 7KHSDUDPHWHURILQWHUHVWLVWKHWUXHVWDQGDUGGHYLDWLRQRIWLWDQLXPSHUFHQWDJHV+RZHYHUWKH
DQVZHUFDQEHIRXQGE\SHUIRUPLQJDK\SRWKHVLVWHVWRQV  

  + V   



 

 + V z 



 

 D 


Q   V 

  F 


V 

 5HMHFW+ LI F  F  D






   Q  ZKHUH F 

RU F ! F D



 Q  ZKHUH F 


 Q V 
Q   V 
  

F 



V   

 6LQFH!ZHZRXOGUHMHFW+ DQGFRQFOXGHWKHUHLVVXIILFLHQWHYLGHQFHWRLQGLFDWHWKHWUXH




VWDQGDUGGHYLDWLRQRIWLWDQLXPSHUFHQWDJHLVVLJQLILFDQWO\GLIIHUHQWIURPDWD 
E FRQILGHQFHLQWHUYDOIRUV
)LUVWILQGWKHFRQILGHQFHLQWHUYDOIRUV  

)RUD DQGQ  F D 


 Q  F 

DQG F  D
   Q  F 



  
  

 dV d 

 
 

dV d 

7DNLQJWKHVTXDUHURRWRIWKHHQGSRLQWVRIWKLVLQWHUYDOZHREWDLQ
V
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHVWDQGDUGGHYLDWLRQRIWLWDQLXPSHUFHQWDJHLVEHWZHHQDQG


 8VLQJWKHDSSURSULDWHFKDUWLQWKH$SSHQGL[ZLWKQ DQGO WKHSUREDELOLW\RIGHWHFWLQJ


WKLVGLIIHUHQFHLV


 8VLQJWKHDSSURSULDWHFKDUWLQWKH$SSHQGL[ZLWK O  DQGE ZHILQGQ 



6HFWLRQ


 S  Q )RUD ]D  ]  

 

  


 dSd  

 
dSd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHSURSRUWLRQRIGHDWKVUHVXOWLQJIURPFDQFHULVEHWZHHQDQG


 ( D ]D  ]  


 DQG S DVWKHLQLWLDOHVWLPDWHRIS
]D 




Q S   S     


 


( 
Q#



 Q [  S  D ]D  ]  

 

D    dSd  


 
dSd

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHSURSRUWLRQRIKHOPHWVGDPDJHGOLHVZLWKLQDQG
]D 





E  Q S   S      Q#




( 

]D




F  Q S   S

     Q#
( 

 7KHZRUVWFDVHZRXOGEHIRUS WKXVZLWK( DQGD ]D  ]  


 ZHREWDLQD
VDPSOHVL]HRI
]D 
 

  Q S   S

     Q#
( 


 S  Q D ]D ]  



7KHSDUDPHWHURILQWHUHVWLVWKHWUXHIUDFWLRQGHIHFWLYHS

Sd  



Sd
:LWKFRQILGHQFHWKHWUXHIUDFWLRQGHIHFWLYHLVDWPRVW

 ( D ]D  ]  


 
]D




Q S   S

    
 Q#
( 

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHIUDFWLRQRIGHIHFWLYHLQWHJUDWHGFLUFXLWVS
 + S 


 + Sz


 D 


[  QS S  S
  ] RU ] 
(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] ]D ZKHUH]D  ]
    
 RU] !]D ZKHUH]D  ]
   
 

 [ Q  S 

[  QS    
] 

QS   S


 
  
 6LQFHDFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHIUDFWLRQRIGHIHFWLYH
LQWHJUDWHGFLUFXLWVLVQRWVLJQLILFDQWO\GLIIHUHQWIURPDWD 
E 3YDOXH  )    )      
$JDLQVLQFHWKH3YDOXHLVJUHDWHUWKDQWKHOHYHORIVLJQLILFDQFHZHZRXOGQRWUHMHFWWKHQXOOK\SRWKHVLV


 D 8VLQJWKHLQIRUPDWLRQIURP([HUFLVHWHVW
  + S 


 + S


 D 


[  QS S  S
  ] RU ]

(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] ]DZKHUH]D ]  
  


 [ Q  S 

[  QS    
] 

QS   S



  


 6LQFH!DFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHIUDFWLRQRIGHIHFWLYHLQWHJUDWHG
FLUFXLWVLVQRWVLJQLILFDQWO\OHVVWKDQDWD 
E 3YDOXH )   

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHSURSRUWLRQRIHQJLQHHUVZKRFRQWLQXHWKHLUHGXFDWLRQS
 + S 


 + Sz


 D 


[  QS S  S
  ] RU ]

(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] ]D ZKHUH]D  ]
    
 RU] !]D ZKHUH]D  ]
   
 

 [ Q  S 

S  S   
] 


S   S


 
   
Q 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHGDWDIURP(QJLQHHULQJ+RUL]RQV
\LHOGUHVXOWVVLJQLILFDQWO\GLIIHUHQWIURPWKHFODLPUHSRUWHGE\)RUWXQHDWD 
E 3YDOXH  )      

 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHSHUFHQWDJHRISROLVKHGOHQVHVWKDWFRQWDLQVXUIDFHGHIHFWVS
 + S 


 + S


 D 


[  QS S  S
  ] RU ]

(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] ]DZKHUH]D ]  
  


 [ Q  S 

S  S   
] 

S   S



   


Q 
 6LQFH!DFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPDFKLQHFDQQRWEHTXDOLILHGDWWKH
OHYHORIVLJQLILFDQFH
E 3YDOXH )   


 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHSHUFHQWDJHRIIRRWEDOOKHOPHWVWKDWKDYHIODZVS
 + S 


 + S!


 D 


[  QS S  S
  ] RU ] 
(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] !]DZKHUH]D ]
  
 

 [ Q  S 

[  QS    
] 

QS   S


 
  
 6LQFHDFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWRVXSSRUW
WKHFODLPWKDWDWOHDVWRIDOOIRRWEDOOKHOPHWVKDYHPDQXIDFWXULQJIODZVWKDWFRXOGSRWHQWLDOO\
FDXVHLQMXU\WRWKHZHDUHUDWD 
E 3YDOXH )   )   


 7KHSUREOHPVWDWHPHQWLPSOLHV+ S + S!DQGGHILQHVDQDFFHSWDQFHUHJLRQDV S d 

 

DQGUHMHFWLRQUHJLRQDV S ! 



D D 3 3 t  ZKHQ S  3 = t

  
 
3 = t    3 =  
  


E E 3 3 dZKHQS   3 =d  

  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHSHUFHQWDJHRIEDWWHULHVWKDWZLOOIDLOGXULQJWKHZDUUDQW\SHULRGS
 + S 


 + S


 D 
[  QS S  S
  ] RU ] 
(LWKHUDSSURDFKZLOO\LHOGWKHVDPHFRQFOXVLRQ


QS   S S   S
 

   

Q
 5HMHFW+ LI] ]DZKHUH]D ]  
  


 [ Q  S 

[  QS    
] 


QS   S

    

 6LQFH!GRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWR
VXSSRUWWKHFODLPWKDWOHVVWKDQSHUFHQWRIWKHFRPSDQ\VEDWWHULHVZLOOIDLOGXULQJWKHZDUUDQW\
SHULRGZLWKSURSHUFKDUJLQJSURFHGXUHVDWD 


6HFWLRQ


9DOXH     
2EVHUYHG)UHTXHQF\     
([SHFWHG)UHTXHQF\     

6LQFHYDOXHKDVDQH[SHFWHGIUHTXHQF\OHVVWKDQFRPELQHWKLVFDWHJRU\ZLWKWKHSUHYLRXVFDWHJRU\

9DOXH    
2EVHUYHG)UHTXHQF\    
([SHFWHG)UHTXHQF\    

7KHGHJUHHVRIIUHHGRPDUHNS  

D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRU;
 + 7KHIRUPRIWKHGLVWULEXWLRQLV3RLVVRQ


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRW3RLVVRQ


 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F




R





F 
   


  




 



 6LQFHGRQRWUHMHFW+ :HDUHXQDEOHWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHGLVWULEXWLRQRI




;LV3RLVVRQ
E 3YDOXH  IRXQGXVLQJ0LQLWDE

 (VWLPDWHGPHDQ 

9DOXH        
2EVHUYHG)UHTXHQF\        
([SHFWHG)UHTXHQF\        

6LQFHWKHILUVWFDWHJRU\KDVDQH[SHFWHGIUHTXHQF\OHVVWKDQFRPELQHLWZLWKWKHQH[WFDWHJRU\

9DOXH       
2EVHUYHG)UHTXHQF\       
([SHFWHG)UHTXHQF\       

7KHGHJUHHVRIIUHHGRPDUHNS  

D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIIODZV
 + 7KHIRUPRIWKHGLVWULEXWLRQLV3RLVVRQ


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRW3RLVVRQ


 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F




R







F 
   

 
   

 


 6LQFHGRQRWUHMHFW+ :HDUHXQDEOHWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHGLVWULEXWLRQ




RIWKHQXPEHURIIODZVLV3RLVVRQ

E 3YDOXH  IRXQGXVLQJ0LQLWDE

 (VWLPDWHGPHDQ 

9DOXH          
5HO)UHT          
2EVHUYHG          
'D\V
([SHFWHG          
'D\V

6LQFHWKHUHDUHVHYHUDOFHOOVZLWKH[SHFWHGIUHTXHQFLHVOHVVWKDQWKHUHYLVHGWDEOHZRXOGEH

9DOXH     


2EVHUYHG     
'D\V
([SHFWHG     
'D\V

7KHGHJUHHVRIIUHHGRPDUHNS  
D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIFDOOVDUULYLQJWRDVZLWFKERDUG
IURPQRRQWRSPGXULQJEXVLQHVVGD\V
 + 7KHIRUPRIWKHGLVWULEXWLRQLV3RLVVRQ


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRW3RLVVRQ


 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F




R





F 
   

 
   


 


 6LQFHGRQRWUHMHFW+ :HDUHXQDEOHWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHGLVWULEXWLRQ




IRUWKHQXPEHURIFDOOVLV3RLVVRQ
E 3YDOXH  IRXQGXVLQJ0LQLWDE

 0HDQ QS    

9DOXH     
2EVHUYHG     
([SHFWHG     

7KHH[SHFWHGIUHTXHQF\IRUYDOXHLVOHVVWKDQ&RPELQHWKLVFHOOZLWKYDOXH

9DOXH    
2EVHUYHG    
([SHFWHG    

7KHGHJUHHVRIIUHHGRPDUHNS  


D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHUDQGRPYDULDEOH;
 + 7KHIRUPRIWKHGLVWULEXWLRQLVELQRPLDOZLWKQ DQGS 


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRWELQRPLDOZLWKQ DQGS 




 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F




R





F 
   


   


 


 6LQFH!UHMHFW+ :HFDQFRQFOXGHWKDWWKHGLVWULEXWLRQLVQRWELQRPLDOZLWKQ DQGS 




DWD 
E 3YDOXH  IRXQGXVLQJ0LQLWDE

 7KHYDOXHRISPXVWEHHVWLPDWHG/HWWKHHVWLPDWHEHGHQRWHGE\ S VDPSOH

          
VDPSOHPHDQ 

VDPSOH PHDQ 
 S 
Q 
VDPSOH

9DOXH    
2EVHUYHG    
([SHFWHG    

6LQFHYDOXHKDVDQH[SHFWHGIUHTXHQF\OHVVWKDQFRPELQHWKLVFDWHJRU\ZLWKWKDWRIYDOXH

9DOXH   
2EVHUYHG   
([SHFWHG   

7KHGHJUHHVRIIUHHGRPDUHNS  
D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIXQGHUILOOHGFDUWRQV;
 +7KHIRUPRIWKHGLVWULEXWLRQLVELQRPLDO
 +7KHIRUPRIWKHGLVWULEXWLRQLVQRWELQRPLDO
 D 
 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+LI F ! F 
R





 F 
   
  

    


  




 6LQFHGRQRWUHMHFW+:HDUHXQDEOHWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHGLVWULEXWLRQ
RIWKHQXPEHURIXQGHUILOOHGFDUWRQVLVELQRPLDODWD 

E 3YDOXH  IRXQGXVLQJ0LQLWDE


 (VWLPDWHGPHDQ 
$OOH[SHFWHGIUHTXHQFLHVDUHJUHDWHUWKDQ
7KHGHJUHHVRIIUHHGRPDUHNS  

D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIFDUVSDVVLQJWKURXJKWKH
LQWHUVHFWLRQ
 +7KHIRUPRIWKHGLVWULEXWLRQLV3RLVVRQ
 +7KHIRUPRIWKHGLVWULEXWLRQLVQRW3RLVVRQ
 D 
 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+LI F ! F

R



 (VWLPDWHGPHDQ 
F 


 6LQFH!!!UHMHFW+:HFDQFRQFOXGHWKDWWKHGLVWULEXWLRQLVQRW3RLVVRQDWD 
E 3YDOXH  IRXQGXVLQJ0LQLWDE

6HFWLRQ

 7KHYDULDEOHRILQWHUHVWLVEUHDNGRZQVDPRQJVKLIW
+%UHDNGRZQVDUHLQGHSHQGHQWRIVKLIW
+%UHDNGRZQVDUHQRWLQGHSHQGHQWRIVKLIW
D 
7KHWHVWVWDWLVWLFLV

 U F RLM  (LM 
 F
L M  (LM

7KHFULWLFDOYDOXHLV F 

7KHFDOFXODWHGWHVWVWDWLVWLFLV F  


 F  ! F  GRQRWUHMHFW+ DQGFRQFOXGHWKDWWKHGDWDSURYLGHLQVXIILFLHQWHYLGHQFHWRFODLPWKDW


PDFKLQHEUHDNGRZQDQGVKLIWDUHGHSHQGHQWDWD 
3YDOXH  XVLQJ0LQLWDE

 7KHYDULDEOHRILQWHUHVWLVFDOOVE\VXUJLFDOPHGLFDOSDWLHQWV
+ &DOOVE\VXUJLFDOPHGLFDOSDWLHQWVDUHLQGHSHQGHQWRI0HGLFDUHVWDWXV


+ &DOOVE\VXUJLFDOPHGLFDOSDWLHQWVDUHQRWLQGHSHQGHQWRI0HGLFDUHVWDWXV


D 
7KHWHVWVWDWLVWLFLV
U F RLM  (LM 
 F


L M 
(LM

7KHFULWLFDOYDOXHLV F 


7KHFDOFXODWHGWHVWVWDWLVWLFLV F  

 F  ! F 

GRQRWUHMHFW+ DQGFRQFOXGHHYLGHQFHLVQRWVXIILFLHQWWRFODLPWKDWVXUJLFDOPHGLFDO


SDWLHQWVDQG0HGLFDUHVWDWXVDUHGHSHQGHQW
3YDOXH 


 7KHYDULDEOHRILQWHUHVWLVVWDWLVWLFVJUDGHVDQG25JUDGHV
+ 6WDWLVWLFVJUDGHVDUHLQGHSHQGHQWRI25JUDGHV


+ 6WDWLVWLFVDQG25JUDGHVDUHQRWLQGHSHQGHQW


D 
7KHWHVWVWDWLVWLFLV
U F RLM  (LM 
 F


L M 
(LM

7KHFULWLFDOYDOXHLV F 




7KHFDOFXODWHGFULWLFDOYDOXHLV F  

 F  ! F  7KHUHIRUHUHMHFW+ DQGFRQFOXGHWKDWWKHJUDGHVDUHQRWLQGHSHQGHQWDWD 


3YDOXH 

 7KHYDULDEOHRILQWHUHVWLVFKDUDFWHULVWLFDPRQJGHIOHFWLRQVDQGUDQJHV
+ 'HIOHFWLRQDQGUDQJHDUHLQGHSHQGHQW


+ 'HIOHFWLRQDQGUDQJHDUHQRWLQGHSHQGHQW


D 
7KHWHVWVWDWLVWLFLV
U F RLM  (LM 
 F


L M 
(LM

7KHFULWLFDOYDOXHLV F 

7KHFDOFXODWHGWHVWVWDWLVWLFLV F  

 F  ! F  GRQRWUHMHFW+ DQGFRQFOXGHHYLGHQFHLVQRWVXIILFLHQWWRFODLPWKDWWKHGDWDDUHQRW


LQGHSHQGHQWDWD 
3YDOXH 

 7KHYDULDEOHRILQWHUHVWLVIDLOXUHVRIDQHOHFWURQLFFRPSRQHQW
+ 7\SHRIIDLOXUHLVLQGHSHQGHQWRIPRXQWLQJSRVLWLRQ


+ 7\SHRIIDLOXUHLVQRWLQGHSHQGHQWRIPRXQWLQJSRVLWLRQ


D 
7KHWHVWVWDWLVWLFLV
U F RLM  (LM 
 F


L M 
(LM

7KHFULWLFDOYDOXHLV F 



7KHFDOFXODWHGWHVWVWDWLVWLFLV F 

 F  ! F  GRQRWUHMHFW+ DQGFRQFOXGHHYLGHQFHLVQRWVXIILFLHQWWRFODLPWKDWWKHW\SHRIIDLOXUHLV


QRWLQGHSHQGHQWRIWKHPRXQWLQJSRVLWLRQDWD 
3YDOXH 


 7KHYDULDEOHRILQWHUHVWLVRSLQLRQRQFRUHFXUULFXOXPFKDQJH
+ 2SLQLRQRIWKHFKDQJHLVLQGHSHQGHQWRIWKHFODVVVWDQGLQJ


+ 2SLQLRQRIWKHFKDQJHLVQRWLQGHSHQGHQWRIWKHFODVVVWDQGLQJ


D 
7KHWHVWVWDWLVWLFLV
U F RLM  (LM 
 F


L M 
(LM

7KHFULWLFDOYDOXHLV F  

7KHFDOFXODWHGWHVWVWDWLVWLFLV F   

 F  !!! F  UHMHFW+ DQGFRQFOXGHWKDWWKHRSLQLRQVRQWKHFKDQJHDUHQRWLQGHSHQGHQWRIFODVV


VWDQGLQJ
3YDOXH|

6XSSOHPHQWDO([HUFLVHV

V V
 6\PPHWULFFRQILGHQFHLQWHUYDO [   d P d [  
 VLQFH] 
 
Q Q
V V
7KHOHQJWKRIWKLVLQWHUYDOLV   
Q Q
V V
$V\PPHWULFFRQILGHQFHLQWHUYDO [   d P d [   VLQFH] 
 DQG] 
 
Q Q
V V
7KHOHQJWKRIWKLVLQWHUYDOLV   
 
Q Q
7KHV\PPHWULFFRQILGHQFHLQWHUYDOLVWKHVKRUWHURIWKHWZRWKHDGYDQWDJHWRDV\PPHWULFFRQILGHQFH
LQWHUYDOLVWKHIDFWWKDWLQJHQHUDOWKH\DUHVKRUWHUWKDQDQDV\PPHWULFFRQILGHQFHLQWHUYDO

 P VXQNQRZQ
D Q  [  V 
  
 W R 
  
7KH3YDOXHIRUW  GHJUHHVRIIUHHGRP LVEHWZHHQDQG7KXVZHZRXOGFRQFOXGHWKDWWKH


UHVXOWVDUHQRWYHU\XQXVXDO
 E Q 
  
 W R 
  
7KH3YDOXHIRUW  GHJUHHVRIIUHHGRP LVEHWZHHQDQG7KXVZHZRXOGFRQFOXGHWKDW


WKHUHVXOWVDUHVRPHZKDWXQXVXDO
F Q  ZLWKQ!WKHVWDQGDUGQRUPDOWDEOHFDQEHXVHGIRUWKLVSUREOHP
  
 ]R 
  
7KH3YDOXHIRU]  LV7KXVZHZRXOGFRQFOXGHWKDWWKHUHVXOWVDUHYHU\XQXVXDO


G )RUFRQVWDQWYDOXHVRI [ DQGVLQFUHDVLQJRQO\WKHVDPSOHVL]HZHVHHWKDWWKHVWDQGDUGHUURURI
 ; GHFUHDVHVDQGFRQVHTXHQWO\DVDPSOHPHDQYDOXHRIZKHQWKHWUXHPHDQLVLVPRUHXQXVXDOIRU
WKHODUJHUVDPSOHVL]HV


 P  V 
 )LQG 3 V t  DQG 3 V d 
D Q 
Q   V  
 3
V

t


3 F t  | 

Q   V  
 3
V

d


3 F d 
  3 F t  
  3 F d   

E Q 
Q   V  
 3
V

t




3 F   t 
 
  3 F   t 

 

Q   V  
 3
V

d




3 F   d 
  3 F   t     3 F   d   

F Q 
Q   V  
 3
V

t




3 F  t  
  3 F t  |

Q   V  
 3
V

d




3 F  d 
  3 F  t   3 F  d 
  

G $VWKHVDPSOHVL]HLQFUHDVHVZLWKDOORWKHUYDOXHVKHOGFRQVWDQWWKHSUREDELOLW\ 3 V t  GHFUHDVHV
EHFDXVHWKHULJKWWDLORIWKHF GLVWULEXWLRQEHFRPHVUHODWLYHO\VKRUWHU



H $VWKHVDPSOHVL]HLQFUHDVHVZLWKDOORWKHUYDOXHVKHOGFRQVWDQWWKHSUREDELOLW\ 3 V d  GHFUHDVHV
EHFDXVHWKHOHIWWDLORIWKHF GLVWULEXWLRQEHFRPHVUHODWLYHO\VKRUWHU


 D 7KHGDWDDSSHDUWRIROORZDQRUPDOGLVWULEXWLRQEDVHGRQWKHQRUPDOSUREDELOLW\SORWVLQFHWKHGDWDIDOO
DORQJDVWUDLJKWOLQH
E ,WLVLPSRUWDQWWRFKHFNIRUQRUPDOLW\RIWKHGLVWULEXWLRQXQGHUO\LQJWKHVDPSOHGDWDVLQFHWKHFRQILGHQFH
LQWHUYDOVWREHFRQVWUXFWHGVKRXOGKDYHWKHDVVXPSWLRQRIQRUPDOLW\IRUWKHUHVXOWVWREHUHOLDEOH 
HVSHFLDOO\VLQFHWKHVDPSOHVL]HLVOHVVWKDQDQGWKHFHQWUDOOLPLWWKHRUHPGRHVQRWDSSO\ 
F 1RZLWKFRQILGHQFHZHFDQQRWLQIHUWKDWWKHWUXHPHDQFRXOGEHVLQFHWKLVYDOXHLVQRW
FRQWDLQHGZLWKLQWKHJLYHQFRQILGHQFHLQWHUYDO
G $VZLWKSDUWEWRFRQVWUXFWDFRQILGHQFHLQWHUYDORQWKHYDULDQFHWKHQRUPDOLW\DVVXPSWLRQPXVWKROGIRU
WKHUHVXOWVWREHUHOLDEOH
 H <HVLWLVUHDVRQDEOHWRLQIHUWKDWWKHYDULDQFHFRXOGEHVLQFHWKHFRQILGHQFHLQWHUYDORQWKH
YDULDQFHFRQWDLQVWKLVYDOXH
I L  LL 1RGRFWRUVDQGFKLOGUHQZRXOGUHSUHVHQWWZRFRPSOHWHO\GLIIHUHQWSRSXODWLRQVQRWUHSUHVHQWHGE\
WKHSRSXODWLRQRI&DQDGLDQ2O\PSLFKRFNH\SOD\HUV6LQFHGRFWRUVQRUFKLOGUHQZHUHWKHWDUJHWRIWKLV 
VWXG\RUSDUWRIWKHVDPSOHWDNHQWKHUHVXOWVVKRXOGQRWEHH[WHQGHGWRWKHVHJURXSV

 D 7KHGDWDDSSHDUWRIROORZDQRUPDOGLVWULEXWLRQEDVHGRQWKHQRUPDOSUREDELOLW\SORWVLQFHWKHGDWDIDOO
DORQJDVWUDLJKWOLQH
E  [ V Q 8VHWKHWGLVWULEXWLRQWRFRQVWUXFWWKHFRQILGHQFHLQWHUYDOVD 
 W D  Q  W  
V
[  W D  Q  dP
Q

 
   dP

 d P
ZLWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVDWOHDVW0SD


F  W D    Q  W  

V V
[  W D  Q  d P d [  W D Q 
Q Q
 
 
   d P d 
  
 
 d P d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG0SD

7KHORZHUHQGSRLQWRIWKHRQHVLGHGFRQILGHQFHLQWHUYDOLVWKHVDPHDVWKDWRIWKHWZRVLGHGFRQILGHQFH
LQWHUYDOGXHWRWKHOHYHORIFRQILGHQFHXVHG,QERWKFDVHVWKHSUREDELOLW\LQWKHOHIWWDLOLV
G  F D  Q  F   
Q   V
V d
F  D Q 
  
 V  d

V  d 
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIFRPSUHVVLYHVWUHQJWKLVDWPRVW 0SD  

H  FD   

  F  D   

  ZLWKD 

Q   V Q   V
d V d
FD  

F D   
     
 d V d
 
 d V  d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG
 0SD 7KHXSSHUHQGSRLQWRIWKHRQHVLGHGFRQILGHQFHLQWHUYDOLVWKHVDPHDVWKDWRIWKHWZRVLGHG


FRQILGHQFHLQWHUYDOGXHWRWKHOHYHORIFRQILGHQFH,QERWKFDVHVWKHSUREDELOLW\LQWKHULJKWWDLOLV
I &KDQJHWR
 [  DQGV 
FRQILGHQFHRQP
 
   d P d   
  
 d P d 
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG0SD

FRQILGHQFHLQWHUYDORQV  

     
d V d
  

 d V  d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG
0SD 



&RPSDULVRQRILQWHUYDOV

&RQILGHQFHLQWHUYDORQP7KHFRQILGHQFHLQWHUYDOQRZFRYHUVDUHJLRQVOLJKWO\OHVVWKDQWKHRULJLQDO
LQWHUYDOWKDWLVWKHOHQJWKRIWKHVHFRQGLQWHUYDOLVVKRUWHUWKDQWKHRULJLQDO
&RQILGHQFHLQWHUYDORQV 7KHFRQILGHQFHLQWHUYDOFRYHUVDUHJLRQVOLJKWO\OHVVWKDQWKHRULJLQDOWKH


OHQJWKRIWKHVHFRQGLQWHUYDOLVVKRUWHUWKDQWKHRULJLQDO
(IIHFWV:HVHHE\FRUUHFWLQJWKHYDOXHWKHOHQJWKRIWKHLQWHUYDOVKDYHEHFRPHVKRUWHUDQGWKHPHDQ
DQGYDULDQFHKDYHGHFUHDVHG,QSDUWLFXODUWKHVDPSOHVWDQGDUGGHYLDWLRQDVGHFUHDVHGE\DERXW
FDXVLQJWKHFRQILGHQFHLQWHUYDOVWRGHFUHDVHVXEVWDQWLDOO\

J &KDQJHWR
 [  DQGV 
 FRQILGHQFHRQP
 
   d P d   
  
 d P d 


:LWKFRQILGHQFHZHEHOLHYHWKHWUXHPHDQFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG

FRQILGHQFHLQWHUYDORQV  

  
  

d V d
  
 d V  d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHYDULDQFHRIFRPSUHVVLYHVWUHQJWKLVEHWZHHQDQG
 0SD  

&RPSDULVRQRILQWHUYDOVSDUWVIDQGJ

&RQILGHQFHLQWHUYDORQP7KHUHLVYHU\OLWWOHGLIIHUHQFHZKHQWKHGDWDYDOXHLVFKDQJHGRQO\VOLJKWO\
 &RQILGHQFHLQWHUYDORQV 7KHFRQILGHQFHLQWHUYDOKDVFKDQJHGYHU\OLWWOHZLWKDVOLJKWFKDQJHLQRQH


GDWDYDOXH
(IIHFWV7KHVDPSOHPHDQVDPSOHYDULDQFHDQGFRQILGHQFHLQWHUYDOVKDYHFKDQJHGYHU\OLWWOH
K 7KHUHDUHWZRFDVHVWKDWWKHDERYHH[HUFLVHVLOOXVWUDWH ZKHQDYDOXHLVFKDQJHGDQGWKHQHZYDOXHOLHV
IDUIURPWKHVDPSOHPHDQDQG ZKHQDYDOXHLVFKDQJHGDQGWKHQHZYDOXHOLHVQHDUWKHVDPSOHPHDQ :KHQ
WKHVLWXDWLRQLVFDVHWKHYDULDQFHKDVFKDQJHGGUDPDWLFDOO\UHVXOWLQJLQDVPDOOHUFRQILGHQFH 
LQWHUYDO7KHPHDQLVOHVVVHQVLWLYHWRWKLVFKDQJH:KHQWKHVLWXDWLRQLVFDVHWKHPHDQDQGYDULDQFH 
KDYHFKDQJHGOHVVWKDQLQFDVH1RWLFHWKHZLGWKVRIWKHFRQILGHQFHLQWHUYDOVIRUWKHRULJLQDOGDWDFDVH DQG
FDVHLQWKHWDEOHEHORZ

 :LGWKRI&RQILGHQFH,QWHUYDO
3DUDPHWHURI,QWHUHVW 2ULJLQDO'DWD &DVH &DVH
0HDQP   
9DULDQFHV   

 :LWKV WKHFRQILGHQFHLQWHUYDORQWKHPHDQKDVOHQJWKRIDWPRVWWKHHUURULVWKHQ( 


 
]  

D Q     
 
 
]  

E Q     
 

$VWKHVWDQGDUGGHYLDWLRQGHFUHDVHVZLWKDOORWKHUYDOXHVKHOGFRQVWDQWWKHVDPSOHVL]HQHFHVVDU\WR
PDLQWDLQWKHDFFHSWDEOHOHYHORIVLJQLILFDQFHDQGWKHOHQJWKRIWKHLQWHUYDOGHFUHDVHV

F :HZRXOGZDQWWRKDYHDUHODWLYHO\ODUJHVDPSOHVL]HQt:LWKDVDPSOHVL]HRIDWOHDVWWKH
FHQWUDOOLPLWWKHRUHPFDQDSSO\


S   S
 6DPSOH0HDQ  S 6DPSOH9DULDQFH 
Q
6DPSOH6L]HQ 6DPSOLQJ'LVWULEXWLRQ 6DPSOH0HDQ 6DPSOH9DULDQFH
D  1RUPDO S S   S

E  1RUPDO S S   S

F  1RUPDO S S   S


G $VWKHVDPSOHVL]HLQFUHDVHVWKHYDULDQFHRIWKHVDPSOLQJGLVWULEXWLRQGHFUHDVHV

S   S
 ]D   ( ]D  
Q


D Q  S 


   
(  

E Q  S 
   
(  

F Q  S 
   
(  

G $VWKHVDPSOHVL]HLQFUHDVHVDQGDOORWKHUYDOXHVKHOGFRQVWDQWWKHHUURUGHFUHDVHV
S   S
H ]D   ( ]D  
Q


Q 
   
(  

Q 
   
(  

Q 
   
(  

$VWKHVDPSOHVL]HLQFUHDVHDQGDOORWKHUYDOXHVKHOGFRQVWDQWWKHHUURUGHFUHDVHV

I :KHQWKHFRQILGHQFHOHYHOLVLQFUHDVHGWKHHUURULQHVWLPDWLQJWKHWUXHYDOXHRISZLOODOVRLQFUHDVH
7KLVFDQEHVHHQE\FRPSDULQJYDOXHVEHWZHHQSDUWVGDQGH)RUQ ZHVHHWKDW( ZLWKD
OHYHORIFRQILGHQFHZKLOH( ZLWKDOHYHORIFRQILGHQFHIRUWKHVDPHVDPSOHVL]H

D
 V G    ]  



 
D Q  E ) 
  )  


 
E Q  E ) 
  )    )     



 
F Q  E ) 
  )    )     



G EZKLFKLVWKHSUREDELOLW\RID7\SH,,HUURUGHFUHDVHVDVWKHVDPSOHVL]HLQFUHDVHVEHFDXVHWKHYDULDQFH
RIWKHVDPSOHPHDQGHFUHDVHV&RQVHTXHQWO\WKHSUREDELOLW\RIREVHUYLQJDVDPSOHPHDQLQWKH
DFFHSWDQFHUHJLRQFHQWHUHGDERXWWKHLQFRUUHFWYDOXHRIPOKGHFUHDVHVZLWKODUJHUQ

D
 V G    ]  



 
D Q  E )   )  


 
E Q  E )   )    )     


 
F Q  E ) 
  )    )     

G 7KHSUREDELOLW\RID7\SH,,HUURULQFUHDVHVZLWKDQLQFUHDVHRIWKHVWDQGDUGGHYLDWLRQ

D
 V G    ]  



 
D Q  E )   )  )    

7KHUHIRUHSRZHU E 
 
E Q  E )   )  )    

7KHUHIRUHSRZHU E 
 
F Q  E ) 
  )  )    

7KHUHIRUHSRZHU E 
G $VVDPSOHVL]HLQFUHDVHVDQGDOORWKHUYDOXHVDUHKHOGFRQVWDQWWKHSRZHULQFUHDVHVEHFDXVHWKH 
YDULDQFHRIWKHVDPSOHPHDQGHFUHDVHV&RQVHTXHQWO\WKHSUREDELOLW\RID7\SH,,HUURUGHFUHDVHV  ZKLFK
LPSOLHVWKHSRZHULQFUHDVHV

 + P 



V  WKHWUXHPHDQLV
[P   
D E 3 [ d  ZKHQ P  3 d 3 ] d  Q
V  Q   Q
 Q  E 3 ] d   
Q  E 3 ] d   
Q  E 3 ] d   
Q  E 3 ] d   
[  P    
E 3YDOXH  3 [ t  3 t 3 ] t  Q
V  Q   Q
Q 3YDOXH  3 ] t   
Q 3YDOXH  3 ] t   
Q 3YDOXH  3 ] t   
Q 3YDOXH  3 ] t    RQO\VDPSOHWKDWLVVWDWLVWLFDOO\VLJQLILFDQW
DWD 
F $VWKHVDPSOHVL]HLQFUHDVHVWKHSUREDELOLW\RIFRPPLWWLQJDQHUURU7\SH,RU7\SH,,GHFUHDVHV


 D 5HMHFWLQJDQXOOK\SRWKHVLVSURYLGHVVWURQJHUHYLGHQFHWKDQQRWUHMHFWLQJDQXOOK\SRWKHVLV7KHUHIRUH
SODFHZKDWZHDUHWU\LQJWRSURYHLQWKHDOWHUQDWLYHK\SRWKHVLV

$VVXPHWKHGDWDIROORZDQRUPDOGLVWULEXWLRQ

E  WKHSDUDPHWHURILQWHUHVWLVWKHPHDQZHOGVWUHQJWKP
 + P 


 + P!


 1RWJLYHQ
 7KHWHVWVWDWLVWLFLV
[  P
W
V Q
 6LQFHQRFULWLFDOYDOXHLVJLYHQZHZLOOFDOFXODWHWKH3YDOXH
  [ 
  W  

3YDOXH  3 W t    S  YDOXH  

 7KHUHLVVRPHZKDWVLJQLILFDQWHYLGHQFHWRVXSSRUWWKHFODLPWKDWWKHZHOGVWUHQJWKH[FHHGVSVL
,IZHXVHGD RUZHZRXOGQRWUHMHFWWKHQXOOK\SRWKHVLVWKXVWKHFODLPZRXOGQRWEH
VXSSRUWHG,IZHXVHGD ZHZRXOGUHMHFWWKHQXOOLQIDYRURIWKHDOWHUQDWLYHDQGFRQFOXGHWKH
ZHOGVWUHQJWKH[FHHGVSVL

 + S YHUVXV+ Sz


 

D )LQGWKH3RZHU   E IRUFRQILGHQFH
S   S  S   S
S   S  ]D    S   S  ]D  
E ) Q  ) Q
S   S S   S

Q Q

       
         
) Q  ) Q
       

Q Q

 Q  E )   )     


   E    

Q  E )   )       


   E    

Q  E )   )       


   E    

3RZHULQFUHDVHVDVVDPSOHVL]HLQFUHDVHVZKHQDOORWKHUYDOXHVDUHKHOGFRQVWDQW

E )LQGWKH3RZHU   E IRUFRQILGHQFH

Q  E )   )     


   E    

Q  E )   ) 


    
   E    


Q  E )   ) 
      
   E    
7KHSRZHURIWKHWHVWLVJUHDWHUIRUWKHODUJHUYDOXHVRIDVLQFHWKHODUJHUDYDOXHUHVXOWVLQDVPDOOHU
DFFHSWDQFHUHJLRQ

F Q S D 

S   S  S   S
S   S  ]D    S   S  ]D  
E ) Q  ) Q
S   S S   S

Q Q
       
    
     
Q Q
 )  )
       

Q Q
)   )  

3RZHU  

$VWKHGLIIHUHQFHEHWZHHQWKHK\SRWKHVL]HGYDOXHRISDQGWKHWUXHYDOXHRISLQFUHDVHVWKHPRUH
SRZHUIXOWKHWHVW

G D E ]D  ]E 




S 

      
Q 

  
Q 

S 

      
 Q 

  
Q 

$VPDOOHUVDPSOHVL]HLVUHTXLUHGZKHQWKHWUXHSURSRUWLRQOLHVIXUWKHUIURPWKHK\SRWKHVL]HGYDOXH
VLQFHQRWDVODUJHRIDVDPSOHZLOOEHQHFHVVDU\WRGHWHFWWKLVGLIIHUHQFH

 D  WKHSDUDPHWHURILQWHUHVWLVWKHVWDQGDUGGHYLDWLRQV
 +V 
 +V
 1RWJLYHQ
Q   V 

 7KHWHVWVWDWLVWLFLV F 

V 

 6LQFHQRFULWLFDOYDOXHLVJLYHQZHZLOOFDOFXODWHWKHSYDOXH
 Q V 
  

 F 





3YDOXH  3 F  
 
   3  YDOXH  

 7KH3YDOXHLVJUHDWHUWKDQDQ\DFFHSWDEOHVLJQLILFDQFHOHYHODWKHUHIRUHZHGRQRWUHMHFWWKHQXOO
K\SRWKHVLV7KHUHLVLQVXIILFLHQWHYLGHQFHWRVXSSRUWWKHFODLPWKDWWKHVWDQGDUGGHYLDWLRQLVOHVVWKDQ
PLFURDPSV


E  Q V 
  

F 





3YDOXH  3 F   

  3  YDOXH  

 7KH3YDOXHLVOHVVWKDQWKHUHIRUHZHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHVWDQGDUG
GHYLDWLRQLVVLJQLILFDQWO\OHVVWKDQPLFURDPSV

F ,QFUHDVLQJWKHVDPSOHVL]HLQFUHDVHVWKHWHVWVWDWLVWLF F DQGWKHUHIRUHGHFUHDVHVWKH3YDOXHSURYLGLQJ



PRUHHYLGHQFHDJDLQVWWKHQXOOK\SRWKHVLV

 Q 
D  7KHSDUDPHWHURILQWHUHVWLVWKHVWDQGDUGGHYLDWLRQV
 +V 
 +Vz
 D 
Q   V 

 7KHWHVWVWDWLVWLFLV F 

V 

 5HMHFW+LI F  F  D



   Q  ZKHUH F 

RU F ! F D



 Q  ZKHUH F  


 Q V 


  

F 





 6LQFHDFFHSWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHYDULDQFHRIIDWW\DFLG
IRUGLHWPDUJDULQHLVQRWVLJQLILFDQWO\GLIIHUHQWIURPDWD 

E Q 
 +V 
 +Vz
 D 
Q   V 

 7KHWHVWVWDWLVWLFLV F 

V 

 5HMHFW+LI F  F  D



   Q  ZKHUH F 

RU F ! F D



 Q  ZKHUH F  


 Q V 


  

F 




 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWUXHYDULDQFHRIIDWW\DFLGIRUGLHW
PDUJDULQHLVVLJQLILFDQWO\GLIIHUHQWIURPDWD 

F 7KHLQFUHDVHGVDPSOHVL]HFKDQJHVWKHGHJUHHVRIIUHHGRPRIWKHWHVWVWDWLVWLFDQGWKHUHIRUHWKH 
DFFHSWDQFHUHJLRQWKHODUJHUVDPSOHVL]HDFWXDOO\GHFUHDVHVWKHDFFHSWDEOHGLIIHUHQFHEHWZHHQWKH
VDPSOHYDULDQFHDQGDFWXDO


 $VVXPHWKHGDWDIROORZDQRUPDOGLVWULEXWLRQ

D  7KHSDUDPHWHURILQWHUHVWLVWKHVWDQGDUGGHYLDWLRQV
 +V   
 +V  
 D 
Q   V 

 7KHWHVWVWDWLVWLFLV F 

V 

  F 
 

 UHMHFW+LI F   


 V DQGD 


  



F 

 

!GRQRWUHMHFWWKHQXOOK\SRWKHVLVWKDWLVWKHUHLVLQVXIILFLHQWHYLGHQFHWRFRQFOXGHWKH
VWDQGDUGGHYLDWLRQLVDWPRVWPP
E $OWKRXJKWKHVDPSOHVWDQGDUGGHYLDWLRQLVOHVVWKDQWKHK\SRWKHVL]HGYDOXHRILWLVQRW
VLJQLILFDQWO\OHVV ZKHQD  WKDQWRFRQFOXGHWKHVWDQGDUGGHYLDWLRQLVDWPRVW
PP7KHYDOXHRIFRXOGKDYHRFFXUUHGDVDUHVXOWRIVDPSOLQJYDULDWLRQ



1RUPDO 3UREDELOLW\ 3ORW




&XPXODWLYH SHUFHQW











      

; 
&RQFHQWUDWLRQ

$FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWZHFDQDVVXPHWKHXQGHUO\LQJGLVWULEXWLRQLVQRUPDO
7KLVLVHYLGHQWE\WKHIDFWWKDWWKHGDWDIDOODORQJDVWUDLJKWOLQH7KHDVVXPSWLRQRIQRUPDOLW\VKRXOGEH
VDWLVILHGLQRUGHUWRSHUIRUPDK\SRWKHVLVWHVWXVLQJDFWHVWVWDWLVWLF
 7KHSDUDPHWHURILQWHUHVWLVWKHVWDQGDUGGHYLDWLRQV
 +V 
 +V
 1RWJLYHQ
Q   V 

 7KHWHVWVWDWLVWLFLV F 

V 

 6LQFHQRFULWLFDOYDOXHLVJLYHQZHZLOOFDOFXODWHWKHSYDOXH
  Q 
V

  

 F 





3YDOXH  3 F d   
3YDOXH
 $3YDOXHRIOHVVWKDQLVKLJKO\VLJQLILFDQWHYLGHQFHWRFRQFOXGHWKHVWDQGDUGGHYLDWLRQLVOHVVWKDQ
JO


 D  7KHSDUDPHWHURILQWHUHVWLVWKHWUXHSURSRUWLRQS
 + S 


 + S


 D 


S  S
 7KHWHVWVWDWLVWLFLV ] 


S   S  

Q
 ]  UHMHFW+ LI] 
  


  S 

  
] 


   


 !GRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHUHLVLQVXIILFLHQWHYLGHQFHWR
VXSSRUWWKHFODLPWKDWWKHWUXHSURSRUWLRQLVOHVVWKDQ

3YDOXH  3 ] d 
    

E $OWKRXJKWKHVDPSOHSURSRUWLRQLVOHVVWKDQWKHK\SRWKHVL]HGYDOXHRILWLVQRWVLJQLILFDQWO\OHVV
WKDQWRFRQFOXGHWKDWWKHSURSRUWLRQLVDWOHVVWKDQ7KHYDOXHRIFRXOGKDYHRFFXUUHGDV
DUHVXOWRIVDPSOLQJYDULDWLRQ


 S 

D FRQILGHQFHLQWHUYDO ]D 

S   S S   S
S  ]D d S d S  ]D
 
Q

Q
 d S d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHSURSRUWLRQRIDLUFUDIWWKDWKDYHZLULQJHUURUVOLHVEHWZHHQ
DQG

]D  
 

E  Q S   S     




( 
Q 
F 8VH S 
]D 




Q S   S     




 ( 
Q 
G 3UHOLPLQDU\LQIRUPDWLRQFDQVLJQLILFDQWO\GHFUHDVHWKHFRPSXWHGQHHGHGVDPSOHVL]H:LWKRXWWKLV
LQIRUPDWLRQZHPXVWXVHS LQWKHFRPSXWDWLRQVUHVXOWLQJWKHZRUVWFDVHVL]H


 S 

D FRQILGHQFHLQWHUYDO ]D 


S   S S   S
S  ]D d S d S  ]D
 
Q Q


 d S d 
:LWKFRQILGHQFHZHEHOLHYHWKHWUXHSURSRUWLRQRIQHZHQJLQHHULQJJUDGXDWHVZKRZHUHSODQQLQJWR
FRQWLQXHVWXG\LQJIRUDQDGYDQFHGGHJUHHOLHVEHWZHHQDQG


E FRQILGHQFHLQWHUYDO ]D 

S   S S   S
S  ]D d S d S  ]D
 
Q

Q
 d S d 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHSURSRUWLRQRIQHZHQJLQHHULQJJUDGXDWHVZKRZHUHSODQQLQJWR
FRQWLQXHVWXG\LQJIRUDQDGYDQFHGGHJUHHOLHVEHWZHHQDQG

F &RPSDULVRQRISDUWVDDQGE

7KHFRQILGHQFHLQWHUYDOLVODUJHUWKDQWKHFRQILGHQFHLQWHUYDO+LJKHUFRQILGHQFHDOZD\V
\LHOGVODUJHULQWHUYDOVDOORWKHUYDOXHVKHOGFRQVWDQW

G <HVVLQFHERWKLQWHUYDOVFRQWDLQWKHYDOXHWKXVWKHWUXHSURSRUWLRQFDQQRWEHFRQVLGHUHG 
VLJQLILFDQWO\GLIIHUHQWIURP

 &UHDWHDWDEOHIRUWKHQXPEHURIQRQFRQIRUPLQJFRLOVSULQJV YDOXH DQGWKHREVHUYHGQXPEHURIWLPHVWKH


QXPEHUDSSHDUHG2QHSRVVLEOHWDEOHLV

9DOXH                    
2EV                    

7KHYDOXHRISPXVWEHHVWLPDWHG/HWWKHHVWLPDWHEHGHQRWHGE\ S VDPSOH

         
VDPSOHPHDQ 

VDPSOH PHDQ 
 S 
Q 
VDPSOH

9DOXH 2EVHUYHG ([SHFWHG


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  


6LQFHVHYHUDORIWKHH[SHFWHGYDOXHVDUHOHVVWKDQVRPHFHOOVPXVWEHFRPELQHGUHVXOWLQJLQWKH
IROORZLQJWDEOH

9DOXH 2EVHUYHG ([SHFWHG


  
  
  
  
  
  
  
  
t  

7KHGHJUHHVRIIUHHGRPDUHNS  

D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIQRQFRQIRUPLQJFRLOVSULQJV
 + 7KHIRUPRIWKHGLVWULEXWLRQLVELQRPLDO


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRWELQRPLDO


 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F









     

    

F 
   
 
 


 6LQFH!UHMHFW+ :HDUHDEOHWRFRQFOXGHWKHGLVWULEXWLRQRIQRQFRQIRUPLQJVSULQJVLV




QRWELQRPLDODWD 
E 3YDOXH  IRXQGXVLQJ0LQLWDE

 &UHDWHDWDEOHIRUWKHQXPEHURIHUURUVLQDVWULQJRIELWV YDOXH DQGWKHREVHUYHGQXPEHURIWLPHVWKH


QXPEHUDSSHDUHG2QHSRVVLEOHWDEOHLV

9DOXH      
2EV      

7KHYDOXHRISPXVWEHHVWLPDWHG/HWWKHHVWLPDWHEHGHQRWHGE\ S VDPSOH

                
VDPSOHPHDQ 


VDPSOH PHDQ 

 S 
Q 
VDPSOH

9DOXH      
2EVHUYHG      
([SHFWHG      

6LQFHVHYHUDORIWKHH[SHFWHGYDOXHVDUHOHVVWKDQVRPHFHOOVPXVWEHFRPELQHGUHVXOWLQJLQWKH
IROORZLQJWDEOH

9DOXH    t
2EVHUYHG    
([SHFWHG    
7KHGHJUHHVRIIUHHGRPDUHNS  


D  7KHYDULDEOHRILQWHUHVWLVWKHIRUPRIWKHGLVWULEXWLRQIRUWKHQXPEHURIHUURUVLQDVWULQJRIELWV
 + 7KHIRUPRIWKHGLVWULEXWLRQLVELQRPLDO


 + 7KHIRUPRIWKHGLVWULEXWLRQLVQRWELQRPLDO


 D 


 7KHWHVWVWDWLVWLFLV
N
2 (


F 
 L

(
L

L  L

 5HMHFW+ LI F ! F










F     


  



 


 6LQFHGRQRWUHMHFW+ :HDUHXQDEOHWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHGLVWULEXWLRQ




RIWKHQXPEHURIHUURUVLVELQRPLDODWD 
E 3YDOXH  IRXQGXVLQJ0LQLWDE

0LQG([SDQGLQJ([HUFLVHV

 D
7U ; 
;  ;   ; 

;  ;   ;  ;   ;  



;  ;   ;  ;   ;   ; U  ; U  

Q  U ;  ;   ;  ;   ;   ; U  ; U 


%HFDXVH;LVWKHPLQLPXPOLIHWLPHRIQLWHPV ( ; 
QO
7KHQ;;LVWKHPLQLPXPOLIHWLPHRI Q LWHPVIURPWKHPHPRU\OHVVSURSHUW\RIWKHH[SRQHQWLDODQG

( ;   ; 
Q   O

6LPLODUO\ ( ; N  ; N  7KHQ
Q  N   O
Q Q QU  U 7 
( 7U   DQG ( U P
QO Q   O Q  U   O O U O


E  3 F   O7U  F   D
 D U D U
 
F F
D U D U

3  O 
7U 7U




 7U 7U
7KHQDFRQILGHQFHLQWHUYDOIRU P LV 
O F F
D U  D U
 

F Q U DQGWKHREVHUYHGYDOXHRI7ULV   


    
$FRQILGHQFHLQWHUYDOIRU LV  

O  

 ]D 
f  [   [
 D H  G[  H  G[
]D S f S

7KHUHIRUH   D  ) ] D 

7RPLQLPL]H/ZHQHHGWRPLQLPL]H )    D   )   D  VXEMHFWWR D   D  D 7KHUHIRUHZHQHHG

WRPLQLPL]H )    D   )   D  D 
 ]
D
w
)    D   S H 
wD 
 ]
D  D
w
)    D  D  S H 
wD 
]
 ]
D  D D
8SRQVHWWLQJWKHVXPRIWKHWZRGHULYDWLYHVHTXDOWR]HURZHREWDLQ H  H  7KLVLVVROYHGE\
] D ] D  D &RQVHTXHQWO\ D  D  D  D D DQG D  D  D 



 ( ;Q   ;  ( ;Q   ; ( ;Q   ( ; ;; 
;L
9 ;Q   ; 9 ;Q   9 ; 9 ;Q   9
Q

V  9 ;  ;   ;Q
Q

V  > 9 ;  9 ;
 
 9 ;Q @
Q

Q

V 
 
Q
>V  V V @
  

V 

Q
>QV @ 

V
V 
Q
 
V  
Q

;Q   ;
7KHGLVWULEXWLRQRI LVDWGLVWULEXWLRQZLWKQGHJUHHVRIIUHHGRP

6 
Q
$ D SHUFHQWSUHGLFWLRQLQWHUYDORQ;QFDQEHGHYHORSHGDV
; ;
 WD  Q  d Q  d WD  Q 

6 
Q
 
 WD  Q 6   d ;Q   ; d WD  Q 6  
Q Q
 
;  WD  Q 6   d ;Q  d ;  WD  Q 6  
Q Q

SUHGLFWLRQLQWHUYDORQ;LV
 
;  WD  Q 6   d ;Q  d ;  WD  Q 6  
Q Q
 
      d ; d      
 
 d ; d 

7KHSUHGLFWLRQLQWHUYDOLVZLGHUEHFDXVHLWGHSHQGVRQERWKWKHHUURUIURPWKHILWWHGPRGHO HUURUIURPXVLQJ
; DVWKHHVWLPDWH DQGHUURUDVVRFLDWHGZLWKIXWXUHREVHUYDWLRQV


&+$37(5

6HFWLRQ

D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQILOOYROXPH P  P  

 +  P  P
  
 RU P 
P 

 +  P  P z  RU P z P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V
V 

 

Q
Q 

 5HMHFW+ LI] ]D  RU] !]D  


    

 [  [

G 

 V

 V  

Q  Q  


 

    
]
 

   


 
 VLQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVQRHYLGHQFHWKDWWKH
WZRPDFKLQHILOOYROXPHVGLIIHUDWD 
E 3YDOXH    )      
F 3RZHU    E ZKHUH


'' ''
 E ) ]D 
  )  ]D


 

V V


V V  

 

  

Q Q
 
Q Q  



 
 )    
 ) 
 


 
 

 
   
 )     ) 
   )   ) 
 
 
3RZHU  
V V
 
V
V 

G  [  [  ]D   
d P  P d [  [  ]D 
 

Q Q Q Q
       
   

   
 
 

       d P  P d     


 
   
 

  d P  P d 


 

:LWKFRQILGHQFHZHEHOLHYHWKHWUXHGLIIHUHQFHLQWKHPHDQILOOYROXPHVLVEHWZHHQDQG
6LQFHLVFRQWDLQHGLQWKLVLQWHUYDOZHFDQFRQFOXGHWKHUHLVQRVLJQLILFDQWGLIIHUHQFHEHWZHHQ
WKHPHDQV
H $VVXPHWKHVDPSOHVL]HVDUHWREHHTXDOXVHD E DQG' 

]D V   
 

 ]E V  
    
  
 Q #  Q XVHQ  Q  
 

G 
 


  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQEUHDNLQJVWUHQJWKV P  P DQG'     

 +  P  P
  
 RU P 
P 

 +  P  P !  RU P ! P
    

 D 
 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V
V 

 

Q
Q 

 5HMHFW+ LI] !]D 


 

 [  [

G 


 V

 V 


Q  Q  


 

    
] 



   


 
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWRVXSSRUW
WKHXVHRISODVWLFDWD 




 E  ) 
   3RZHU  
 

 

 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQEXUQLQJUDWH P  P  

 +  P  P
  
 RU P 
P 

 +  P  P z  RU P z P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V
V 

 

Q
Q 

 5HMHFW+ LI] ]D  RU] !]D  


    

 [  [

G 


 V

 V 


Q  Q  


 

    
]


   


 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPHDQEXUQLQJUDWHVGRQRWGLIIHU
VLJQLILFDQWO\DWD 

E 3YDOXH    )      




' '  ''
F  E ) ]D 
  )  ]D 
 

V V
 
V
V 


  
 

Q Q
 
Q
Q 



 
 )    )  
 


 
 

 
   
 )     )    )   ) 
 
 

V V  
V V
 

G  [  [  ]D   
d P  P d [  [  ]D   

Q Q Q Q
       
   

  
    

       d P  P d      


   
 

  d P  P d   

:HDUHFRQILGHQWWKDWWKHPHDQEXUQLQJUDWHIRUVROLGIXHOSURSHOODQWH[FHHGVWKDWRISURSHOODQWE\
EHWZHHQDQGFPV

 [ 
 [ 

V 
 V  

Q  Q  
 

D WZRVLGHGFRQILGHQFHLQWHUYDO
V V
 
V
V 

 [  [  ]D   
d P  P d [  [  ]D 
 

Q Q Q Q
       
   

   
 
 

       d P  P d      


   
 

  d P  P d   

:HDUHFRQILGHQWWKDWWKHPHDQILOOYROXPHIRUPDFKLQHH[FHHGVWKDWRIPDFKLQHE\EHWZHHQ
DQGIOR]

E WZRVLGHGFRQILGHQFHLQWHUYDO
V V
 
V
V 

 [  [  ]D   
d P  P d [  [  ]D 
 

Q Q Q Q
       
   

   



 

       d P  P d      


   
 

  d P  P d 


 

:HDUHFRQILGHQWWKDWWKHPHDQILOOYROXPHIRUPDFKLQHH[FHHGVWKDWRIPDFKLQHE\EHWZHHQ
DQGIOR]

&RPSDULVRQRISDUWVDDQGE
$VWKHOHYHORIFRQILGHQFHLQFUHDVHVWKHLQWHUYDOZLGWKDOVRLQFUHDVHV ZLWKDOORWKHUYDOXHVKHOGFRQVWDQW 


F XSSHUVLGHGFRQILGHQFHLQWHUYDO
V V
 

 P  P d [  [  ]D   

Q Q
   
 

 
 

 P  P d     


 
 
 

 P  P d 
 

:LWKFRQILGHQFHZHEHOLHYHWKHILOOYROXPHIRUPDFKLQHH[FHHGVWKHILOOYROXPHRIPDFKLQHE\
QRPRUHWKDQIOR]

 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQILOOYROXPH P  P  

 +  P  P
  
 RU P 
P 

 +  P  P z  RU P z P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V V
 

  

Q Q
 

 5HMHFW+ LI] ]D  RU] !]D  


    

 [  [

'    

 V 
 V  

Q  Q  


 

    
] 

 
  


 
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPHDQILOOYROXPHVRIPDFKLQHDQG
PDFKLQHGLIIHUVLJQLILFDQWO\DWD 

E 3YDOXH    )      

F $VVXPHWKHVDPSOHVL]HVDUHWREHHTXDOXVHD E DQG' 

]D V   
 

 ]E V  
    
  
 Q #  Q XVHQ  Q  
'  '
 



 

 [ 
 [ 

V 

 V  


Q  Q  
 

D FRQILGHQFHLQWHUYDO
V
V 
V V  

 [  [  ]D 
 
d P  P d [  [  ]D 
 

Q Q Q Q
       
   


   
 
       d P  P d      
   
 

  d P  P d 


 

:LWKFRQILGHQFHZHEHOLHYHWKHPHDQURDGRFWDQHQXPEHUIRUIRUPXODWLRQH[FHHGVWKDWRI
IRUPXODWLRQE\EHWZHHQDQG


E  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQURDGRFWDQHQXPEHU P  P DQG'     

 +  P  P
  
 RU P 
P 

 +  P  P   RU P  P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V
V 

 

Q
Q 

 5HMHFW+ LI] ]D 


 

  [  [

 

 V 

 V  


Q  Q  


 

    
 ] 


   


 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPHDQURDGRFWDQHQXPEHUIRUIRUPXODWLRQ
H[FHHGVWKDWRIIRUPXODWLRQXVLQJD 
F 3YDOXH  3 ] d    3 ] d     

 OHYHORIFRQILGHQFH( DQG] 


 
]

 

Q# V V
  
    Q XVHQ  Q  
( 
   

 OHYHORIFRQILGHQFH( DQG] 


 
]

 

Q# V V
  

  
  Q XVHQ  Q  
( 
   

 &DVH%HIRUH3URFHVV&KDQJH &DVH$IWHU3URFHVV&KDQJH


P  PHDQEDWFKYLVFRVLW\EHIRUHFKDQJH

P  PHDQEDWFKYLVFRVLW\DIWHUFKDQJH


[  
[ 


V 
 V 

Q
 Q 


FRQILGHQFHRQ P  P  WKHGLIIHUHQFHLQPHDQEDWFKYLVFRVLW\EHIRUHDQGDIWHUSURFHVVFKDQJH
 

V V
 
V
V 

[ 
[   ]D 
Q
 

Q

d P  P d [  [
     ]D 
Q


Q


   

 
 
 
 

       d P  P d       


 
   
 

  d P  P d   

:HDUHFRQILGHQWWKDWWKHGLIIHUHQFHLQPHDQEDWFKYLVFRVLW\EHIRUHDQGDIWHUWKHSURFHVVFKDQJHOLHV
ZLWKLQDQG6LQFHLVFRQWDLQHGLQWKLVLQWHUYDOZHFDQFRQFOXGHZLWKFRQILGHQFHWKDWWKH
PHDQEDWFKYLVFRVLW\ZDVXQDIIHFWHGE\WKHSURFHVVFKDQJH


 &DWDO\VW &DWDO\VW
[ 

[ 

V 
 V 

Q 
 Q 


D FRQILGHQFHLQWHUYDORQ P  P  WKHGLIIHUHQFHLQPHDQDFWLYHFRQFHQWUDWLRQ
 

V V
 
V
V 

 [  [  ]D   
d P  P d [  [  ]D 
 

Q Q Q Q
       
   

   
   

       d P  P d      


   
 

  d P  P d 


 

:HDUHFRQILGHQWWKDWWKHPHDQDFWLYHFRQFHQWUDWLRQRIFDWDO\VWH[FHHGVWKDWRIFDWDO\VWE\
EHWZHHQDQGJO

E <HVVLQFHWKHFRQILGHQFHLQWHUYDOGLGQRWFRQWDLQWKHYDOXHZHZRXOGFRQFOXGHWKHPHDQDFWLYH
FRQFHQWUDWLRQGHSHQGVRQWKHFKRLFHRIFDWDO\VW

 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQEDWFKYLVFRVLW\EHIRUHDQGDIWHUWKHSURFHVVFKDQJH
 P  P
 

 +  P  P
  

 +  P  P  
  

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V V
 

  

Q Q
 

 5HMHFW+ LI] ]DZKHUH]  


  

 [ 

[  '  
 

 V 
 V 

 Q 
 Q 

    
] 


   


 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHSURFHVVFKDQJHKDVLQFUHDVHGWKHPHDQ
E\OHVVWKDQ

E 3YDOXH  3 ] d    3 ] d     

F 3DUWVDDQGEDERYHJLYHHYLGHQFHWKDWWKHPHDQEDWFKYLVFRVLW\FKDQJHLVOHVVWKDQ7KLVFRQFOXVLRQLV
DOVRVHHQE\WKHFRQILGHQFHLQWHUYDOJLYHQLQDSUHYLRXVSUREOHPVLQFHWKHLQWHUYDOGLGQRWFRQWDLQWKH
YDOXH6LQFHWKHXSSHUHQGSRLQWLVWKHQWKLVDOVRJLYHVHYLGHQFHWKDWWKHGLIIHUHQFHLVOHVVWKDQ


  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQDFWLYHFRQFHQWUDWLRQ P  P  

 +  P  P
  
 RU P 
P 

 +  P  P z  RU P z P
    

 D 
 7KHWHVWVWDWLVWLFLV
[  [  '
] 
  

V
V 

 

Q
Q 

 5HMHFW+ LI] ]D  RU] !]D  


    

 [  [

G 

 V  V

 

Q  Q  
 

    
] 

 
 


 

 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPHDQDFWLYHFRQFHQWUDWLRQVGRGLIIHU
VLJQLILFDQWO\DWD 

3YDOXH    )      

7KHFRQFOXVLRQVUHDFKHGE\WKHFRQILGHQFHLQWHUYDORIWKHSUHYLRXVSUREOHPDQGWKHWHVWRIK\SRWKHVLV
FRQGXFWHGKHUHDUHWKHVDPH$WZRVLGHGFRQILGHQFHLQWHUYDOFDQEHWKRXJKWRIDVUHSUHVHQWLQJWKH
DFFHSWDQFHUHJLRQRIDK\SRWKHVLVWHVWJLYHQWKDWWKHOHYHORIVLJQLILFDQFHLVWKHVDPHIRUERWK 
SURFHGXUHV7KXVLIWKHYDOXHGIDOOVRXWVLGHWKHFRQILGHQFHLQWHUYDOLWLVWKHVDPHUHVXOWDVUHMHFWLQJWKH 
QXOOK\SRWKHVLV




 
E ) 
   ) 
 
  
   

 
   
 )   )    

3RZHU E  LWZRXOGDSSHDUWKDWWKHVDPSOHVL]HVZLOOKDYHWREHLQFUHDVHGWR
GHWHFWWKHGLIIHUHQFHRI&DOFXODWHWKHYDOXHRIQXVLQJDDQGE

6HFWLRQ

 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQURGGLDPHWHU P  P  

 +  P  P


  
 RU P 
P 

 +  P  P z  RU P z P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

 
V 
Q Q
S
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW   W D   Q


  Q 
ZKHUH W  RUW ! W D   Q  Q    ZKHUH


 W 
 


Q   V  Q   V
 

  [  [ '   V    

Q Q 
   S
 

    
 V

 V 
  

 

Q  Q  


 

    
W 

 
 
 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWZRPDFKLQHVGRQRW
SURGXFHURGVZLWKVLJQLILFDQWO\GLIIHUHQWPHDQGLDPHWHUVDWD 

E 3YDOXH 3 W !  !   3YDOXH!

F FRQILGHQFHLQWHUYDOW 
 
   
 [  [  WD  Q    VS  d P  P d [  [  WD  Q    VS 
Q Q Q Q
     Q        Q
   

   
        d P  P d       
   
 

  d P  P d   

6LQFH]HURLVFRQWDLQHGLQWKLVLQWHUYDOZHDUHFRQILGHQWWKDWPDFKLQHDQGPDFKLQHGRQRW
SURGXFHURGVZKRVHGLDPHWHUVDUHVLJQLILFDQWO\GLIIHUHQW

 $VVXPHWKHSRSXODWLRQVIROORZQRUPDOGLVWULEXWLRQVDQG V V 7KHDVVXPSWLRQRIHTXDOYDULDQFHVPD\ EH







SHUPLWWHGLQWKLVFDVHVLQFHLWLVNQRZQWKDWWKHWWHVWDQGFRQILGHQFHLQWHUYDOVLQYROYLQJWKHWGLVWULEXWLRQ DUHUREXVWWR
WKLVDVVXPSWLRQRIHTXDOYDULDQFHVZKHQVDPSOHVL]HVDUHHTXDO

&DVH$)&& &DVH$7&
P  PHDQIRDPH[SDQVLRQIRU$)&&

P  PHDQIRDPH[SDQVLRQIRU$7&


 [ 

 [ 


 V

  V 

Q  

Q  


    
FRQILGHQFHLQWHUYDOW   V 

 S

   
 [  [  WD  Q    VS  d P  P d [  [  WD  Q    VS 
Q Q Q Q
     Q        Q
   

   
       d P  P d      
   
 

  d P  P d 


 

<HVZLWKFRQILGHQFHZHEHOLHYHWKHPHDQIRDPH[SDQVLRQIRU$7&H[FHHGVWKDWRI$)&&E\EHWZHHQ
DQG


 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQFDWDO\VW\LHOG P  P  

 +  P  P
  
 RU P 
P 

 +  P  P   RU P  P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

 
V 
Q Q
S
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW   W D  Q


  Q 
ZKHUH W 


Q   V  Q   V 

 [  [ '   V    

Q Q 
   S
 

      

 V  V   


 

Q  Q  
 

    
 W 
 
 
 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHPHDQ\LHOGRIFDWDO\VW
VLJQLILFDQWO\H[FHHGVWKDWRIFDWDO\VWDWD 

E FRQILGHQFHLQWHUYDOW 
 
   
 [  [  WD  Q    VS  d P  P d [  [  WD  Q    VS 
Q Q Q Q
     Q        Q
   

   
        d P  P d       
   
 

  d P  P d 


 

:HDUHFRQILGHQWWKDWWKHPHDQ\LHOGRIFDWDO\VWH[FHHGVWKDWRIFDWDO\VWE\EHWZHHQDQG


 D $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWVWKHDVVXPSWLRQRIQRUPDOLW\DSSHDUVWREHPHWVLQFHWKHGDWD
IDOODSSUR[LPDWHO\DORQJDVWUDLJKWOLQH7KHHTXDOLW\RIYDULDQFHVGRHVQRWDSSHDUWREHVHYHUHO\YLRODWHG
HLWKHUVLQFHWKHVORSHVDUHDSSUR[LPDWHO\WKHVDPHIRUERWKVDPSOHV
1RUPDO 3UREDELOLW\ 3ORW
1RUPDO 3UREDELOLW\ 3ORW






3UREDELOLW\


3UREDELOLW\

















   


   

W\SH W\SH
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 
1  39DOXH  1  39DOXH 


       
W\SH W\SH

E  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQGHIOHFWLRQWHPSHUDWXUHXQGHUORDG P  P  

 + P  P  
 RU P 
P 

 + P  P   RU P  P


   

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

 
V 
Q Q
S
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW  W D Q
  Q 
ZKHUH W 

 7\SH 7\SH

Q   V  Q   V
 

 [  [ '  V    

Q Q 
  S
 

    
 

 V  V   


 

Q Q  
    
W 


 
 
 

 6LQFH!GRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHPHDQGHIOHFWLRQWHPSHUDWXUH
XQGHUORDGIRUW\SHGRHVQRWVLJQLILFDQWO\H[FHHGWKHPHDQGHIOHFWLRQWHPSHUDWXUHXQGHUORDGIRUW\SH
DWWKHOHYHORIVLJQLILFDQFH
F 3YDOXH 3 W !  SYDOXH
G  '  8VHV DVDQHVWLPDWHRIV
S

P P 
G  

V S
 
8VLQJ&KDUW9J ZLWKE G ZHJHWQ#6R Q 
Q 
 7KHUHIRUHWKHVDPSOHVL]HV
RIDUHLQDGHTXDWH


 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQHWFKUDWH P  P  

 +  P  P


  
 RU P 
P 

 +  P  P z  RU P z P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

 
V 
Q Q
S
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW   W D   Q


  Q 
ZKHUH W 
RUW ! W D   Q
  Q 
ZKHUH
 W 
 

Q   V  Q   V
 

 [  [ '   V    

Q Q 
   S
 

      

 V  V   


 

Q  Q  
 

    
 W 
 
 
 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWZRPDFKLQHVPHDQHWFKUDWHVGR
VLJQLILFDQWO\GLIIHUDWD 

E 3YDOXH 3 W     3YDOXH   3YDOXH

F FRQILGHQFHLQWHUYDOW 
 
   
 [  [  WD   
V  d P  P d [  [  WD  Q    VS 
Q Q Q Q
   Q Q  S        Q
   

   
       d P  P d      
   
 

  d P  P d   

:HDUHFRQILGHQWWKDWWKHPHDQHWFKUDWHIRUVROXWLRQH[FHHGVWKDWIRUVROXWLRQE\EHWZHHQ
DQG

G $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWVWKHDVVXPSWLRQRIQRUPDOLW\DSSHDUVWREHPHWVLQFHWKHGDWD
IDOODSSUR[LPDWHO\DORQJDVWUDLJKWOLQH7KHHTXDOLW\RIYDULDQFHVGRHVQRWDSSHDUWREHVHYHUHO\YLRODWHG
HLWKHUVLQFHWKHVORSHVDUHDSSUR[LPDWHO\WKHVDPHIRUERWKVDPSOHV

1RUPDO 3UREDELOLW\ 3ORW 1RUPDO 3UREDELOLW\ 3ORW









3UREDELOLW\
3UREDELOLW\







 

 

 

 

          

VROXWLRQ VROXWLRQ

$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW

6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 


1  39DOXH  1  39DOXH 


 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQLPSDFWVWUHQJWK P  P  

 +  P  P
  
 RU P 
P 

 +  P  P   RU P  P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

V V
 

  

Q Q
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW  W D Q ZKHUH W  


VLQFH

V V  

  

Q Q  
Q 
    
V 
V 




Q
Q
 

Q  Q 
 

Q # 
WUXQFDWHG
 [

 [ 

 V

 V 

Q  Q  
 

    
W 

   


 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWVXSSOLHUSURYLGHVJHDUVZLWKKLJKHU
PHDQLPSDFWVWUHQJWKDWWKHOHYHORIVLJQLILFDQFH
E 3YDOXH 3 W 3YDOXH
F  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQLPSDFWVWUHQJWK P  P  

 +  P  P
  

 +  P  P ! 
  
RU P ! P  
 

 D 


 7KHWHVWVWDWLVWLFLV
[  [  G
W 
 

V 
V 

 

Q 
Q 

 5HMHFWWKHQXOOK\SRWKHVLVLIW ! W D Q ZKHUH


 


V V  

  

Q Q  
Q 
    
V V  

 

Q Q  

Q  Q   

Q # 
 [

 [ 
 ' 
 V 
 V 
Q  Q  
 

    
W 

   


 
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHPHDQLPSDFWVWUHQJWKIURP
VXSSOLHULVQRWDWOHDVWIWOEKLJKHUWKDWVXSSOLHUXVLQJD 


 8VLQJWKHLQIRUPDWLRQSURYLGHGLQ([HUFLVHDQGW 
 ZHILQGDFRQILGHQFHLQWHUYDORQ
WKHGLIIHUHQFH P  P   

V V V V


[  [  W  d P   P d [  [  W 
Q Q Q Q
     d P   P d    
 d P   P d 

6LQFHWKHFRQILGHQFHLQWHUYDOUHSUHVHQWVWKHGLIIHUHQFHVWKDW P  P FRXOGWDNHRQZLWK  

FRQILGHQFHZHFDQFRQFOXGHWKDW6XSSOLHUGRHVSURYLGHJHDUVZLWKDKLJKHUPHDQLPSDFWVWUHQJWKWKDQ
6XSSOLHU7KLVLVYLVLEOHIURPWKHLQWHUYDO  VLQFH]HURLVQRWFRQWDLQHGLQWKHLQWHUYDODQG
WKHGLIIHUHQFHVDUHDOOSRVLWLYHPHDQLQJWKDW P  P !  

 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQVSHHG P  P  

 +  P  P


  
 RU P 
P 

 +  P  P !  RU P ! P


    

 D 


 7KHWHVWVWDWLVWLFLV
[  [  '
W 
  

 
V 
Q Q
S
 

 5HMHFWWKHQXOOK\SRWKHVLVLIW ! W D  Q


  Q 
ZKHUH W 

 &DVHPLO &DVHPLO
Q   V  Q   V
 

 [  [  V    

Q Q 
  S
 

    
 

 V  V   


 

Q  

 Q  


    
W 

 
 
 

 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHUHGXFLQJWKHILOPWKLFNQHVVIURPPLOVWR
PLOVVLJQLILFDQWO\LQFUHDVHVWKHPHDQVSHHGRIWKHILOPDWWKHOHYHORIVLJQLILFDQFH 1RWHVLQFH
LQFUHDVHLQILOPVSHHGZLOOUHVXOWLQORZHUYDOXHVRIREVHUYDWLRQV 

E 3YDOXH 3 W !  3YDOXH

F FRQILGHQFHLQWHUYDOW 
   
 [  [  W D    Q  Q    VS  d P  P  d [  [  W D   Q  Q    VS 
Q Q  Q Q

   
 
    
  d P  P  d 
     
   
  d P  P  d 


:HDUHFRQILGHQWWKHPHDQVSHHGRIWKHILOPDWPLOH[FHHGVWKHPHDQVSHHGIRUWKHILOPDWPLO
E\EHWZHHQDQGP-LQ


  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQPHOWLQJSRLQW P  P 
 + P  P   RU P P
 + P  P  z  RU P z P 
 D 
 7KHWHVWVWDWLVWLFLV
[  [  ' 
W
 
VS 
Q Q 
 5HMHFWWKHQXOOK\SRWKHVLVLIW  W D   Q  Q    ZKHUH W  RUW! W D   Q  Q    ZKHUH
 W  

Q   V  Q    V
 [  [  '  VS
Q  Q   

      
 V  V   

Q Q  
    
W 
 
 
 
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHGDWDGRQRWVXSSRUWWKHFODLPWKDW
ERWKDOOR\VKDYHWKHVDPHPHOWLQJSRLQWDWD 
3YDOXH 3 W   3YDOXH

_ P  P  _ 
 G  
V  
 8VLQJWKHDSSURSULDWHFKDUWLQWKH$SSHQGL[ZLWKE DQGD ZHKDYHQ  VR
Q  
Q  Q Q 


 D  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQZHDUDPRXQW P  P  
 + P  P   RU P P
 + P  P  z  RU P z P 
 D 
 7KHWHVWVWDWLVWLFLV
[  [  ' 
W
V V

Q Q 
 5HMHFWWKHQXOOK\SRWKHVLVLIW W  ZKHUH W  RUW! W  ZKHUH W  
VLQFH

V V

Q Q 
Q 
    
V V

Q Q

Q   Q   
Q # 
WUXQFDWHG


 [  [  ' 
 V  V 
Q Q  
    
W 
   

 

 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHGDWDVXSSRUWWKHFODLPWKDWWKHWZR
FRPSDQLHVSURGXFHPDWHULDOZLWKVLJQLILFDQWO\GLIIHUHQWZHDUDWWKHOHYHORIVLJQLILFDQFH

E 3YDOXH 3 W!   3YDOXH 

3YDOXH

F  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQZHDUDPRXQW P  P 
 + P  P  
 + P  P  ! 
 D 
 7KHWHVWVWDWLVWLFLV
[  [  ' 
W
V V

Q Q 
 5HMHFWWKHQXOOK\SRWKHVLVLIW! W  ZKHUH W  VLQFH

V V

Q Q 
Q 
    
V V

Q Q

Q   Q   
Q # 
 [  [ 
 V  V  ' 
Q Q  
    
W 
   

 

 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWWKHGDWDVXSSRUWWKHFODLPWKDWWKH
PDWHULDOIURPFRPSDQ\KDVDKLJKHUPHDQZHDUWKDQWKHPDWHULDOIURPFRPSDQ\XVLQJDOHYHO
RIVLJQLILFDQFH


  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQFRDWLQJWKLFNQHVV P  P  
 + P  P  
 + P  P  ! 
 D 
 7KHWHVWVWDWLVWLFLV
[  [  G
W
V V

Q Q
 5HMHFWWKHQXOOK\SRWKHVLVLIW! W  ZKHUH W   VLQFH

V V

Q Q 
Q  
 
  
V V

Q Q

Q   Q  
Q # 
WUXQFDWHG
 [  [ 
 V  V 
Q Q  
    
W 
   

 
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDWLQFUHDVLQJWKHWHPSHUDWXUHGRHV
QRWVLJQLILFDQWO\UHGXFHWKHPHDQFRDWLQJWKLFNQHVVDWD 
3YDOXH 3 W! 3YDOXH

 ,ID FRQVWUXFWDORZHURQHVLGHGFRQILGHQFHLQWHUYDORQWKHGLIIHUHQFHWRDQVZHUWKLVTXHVWLRQ


W 
V V 
[  [   W D Q 
Q Q 
d P  P 

   

      d P  P 
 
 d P   P  

6LQFHWKHLQWHUYDOFRQWDLQVZHDUHFRQILGHQWWKHUHLVQRGLIIHUHQFHLQWKHPHDQFRDWLQJWKLFNQHVV
EHWZHHQWKHWZRWHPSHUDWXUHVWKDWLVUDLVLQJWKHSURFHVVWHPSHUDWXUHGRHVQRWVLJQLILFDQWO\UHGXFHWKH
PHDQFRDWLQJWKLFNQHVV

 FRQILGHQFHLQWHUYDO
W 
V V V V
[  [  W D Q 
Q Q 
d P  P  d [  [  W D  Q   
Q Q 

       
      d P  P  d      
   
 d P  P  d 
ORZHURQHVLGHGFRQILGHQFHLQWHUYDO
W  



V V 
[  [   W D Q 
Q Q 
d P  P 

   
    




d P  P 

 d P   P 
)RUSDUWD 
:HDUHFRQILGHQWWKHPHDQDEUDVLYHZHDUIURPFRPSDQ\H[FHHGVWKHPHDQDEUDVLYHZHDUIURP
FRPSDQ\E\EHWZHHQDQGPJ
)RUSDUWF 
:HDUHFRQILGHQWWKHPHDQDEUDVLYHZHDUIURPFRPSDQ\H[FHHGVWKHPHDQDEUDVLYHZHDUIURP
FRPSDQ\E\DWOHDVWPJ

6HFWLRQ

 G VG Q 


FRQILGHQFHLQWHUYDO
V V
G  WD 
 Q d P d G  WD

G
 G

Q
G  Q
Q
 
   d P d   

G

dPGd

:LWKFRQILGHQFHZHEHOLHYHWKHPHDQVKHDUVWUHQJWKRI.DUOVUXKHPHWKRGH[FHHGVWKHPHDQVKHDU
VWUHQJWKRIWKH/HKLJKPHWKRGE\EHWZHHQDQG6LQFHLVQRWLQFOXGHGLQWKLVLQWHUYDOWKH
LQWHUYDOLVFRQVLVWHQWZLWKUHMHFWLQJWKHQXOOK\SRWKHVLVWKDWWKHPHDQVDUHWKHVDPH

7KHFRQILGHQFHLQWHUYDOLVGLUHFWO\UHODWHGWRDWHVWRIK\SRWKHVLVZLWKOHYHORIVLJQLILFDQFHDQGWKH
FRQFOXVLRQVUHDFKHGDUHLGHQWLFDO

 ,WLVRQO\QHFHVVDU\IRUWKHGLIIHUHQFHVWREHQRUPDOO\GLVWULEXWHGIRUWKHSDLUHGWWHVWWREHDSSURSULDWHDQG
UHOLDEOH
1RUPDO3UREDELOLW\3ORW






3UREDELOLW\













    

GLII
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG 
1  39DOXH 


  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHEHWZHHQWKHPHDQSDUNLQJWLPHVPG 

 +  P
 G

 +  P z 
 G

 D 
 7KHWHVWVWDWLVWLFLV
G
W 
V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW  W  


ZKHUH W 
RUW ! W
 
ZKHUH W 

  G 
 V
G

 Q 


W 

  
 6LQFHGRQRWUHMHFWWKHQXOODQGFRQFOXGHWKHGDWDGRQRWVXSSRUWWKHFODLPWKDWWKH
WZRFDUVKDYHGLIIHUHQWPHDQSDUNLQJWLPHVDWWKHOHYHORIVLJQLILFDQFH7KHUHVXOWLVFRQVLVWHQWZLWK WKH
FRQILGHQFHLQWHUYDOFRQVWUXFWHGVLQFHLVLQFOXGHGLQWKHFRQILGHQFHLQWHUYDO

 $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWVWKHDVVXPSWLRQRIQRUPDOLW\GRHVQRWDSSHDUWREHYLRODWHGVLQFH
WKHGDWDIDOODSSUR[LPDWHO\DORQJDVWUDLJKWOLQH

1RUPDO3UREDELOLW\3ORW






3UREDELOLW\













  

GLII
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG 
1  39DOXH 

 G VG Q  ZKHUHGL EUDQGEUDQG


FRQILGHQFHLQWHUYDO
V V
G  WD 
 Q d P d G  WD

G
 G

Q
G  Q
Q
 
    d P d   

G

dPGd

6LQFH]HURLVFRQWDLQHGZLWKLQWKLVLQWHUYDOZHDUHFRQILGHQWWKHUHLVQRVLJQLILFDQWGLIIHUHQFHEHWZHHQ
WKHWZREUDQGVRIWLUH


 D G VG Q 
FRQILGHQFHLQWHUYDO
V V
 G  W D 
 Q  d P d G  WD
G

G

Q
G  Q
Q
 
    d P d   

G

dPGd

6LQFH]HURLVFRQWDLQHGZLWKLQWKLVLQWHUYDOZHDUHFRQILGHQWWKHUHLVQRVLJQLILFDQWLQGLFDWLRQWKDW
RQHGHVLJQODQJXDJHLVSUHIHUDEOH

E $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWVWKHDVVXPSWLRQRIQRUPDOLW\GRHVQRWDSSHDUWREHYLRODWHG
VLQFHWKHGDWDIDOODSSUR[LPDWHO\DORQJDVWUDLJKWOLQH

1RUPDO3UREDELOLW\3ORW






3UREDELOLW\













  

GLII
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG 
1  39DOXH 

  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQEORRGFKROHVWHUROOHYHOPG
ZKHUHGL %HIRUH$IWHU
 + PG

 + P ! 
G

 D 
 7KHWHVWVWDWLVWLFLV
G
W 
V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW! W 
ZKHUH W 

  G 
 V
G

 Q 

W 

  
 6LQFH!UHMHFWWKHQXOODQGFRQFOXGHWKHGDWDVXSSRUWWKHFODLPWKDWWKHPHDQGLIIHUHQFH
LQFKROHVWHUROOHYHOVLVVLJQLILFDQWO\OHVVDIWHUIDWGLHWDQGDHURELFH[HUFLVHSURJUDPDWWKHOHYHORI
VLJQLILFDQFH


 D  7KHSDUDPHWHURILQWHUHVWLVWKHPHDQGLIIHUHQFHLQQDWXUDOYLEUDWLRQIUHTXHQFLHVPG
ZKHUHGL ILQLWHHOHPHQW(TXLYDOHQW3ODWH
 + P  G

 + P z  G

 D 


 7KHWHVWVWDWLVWLFLV
G
W 
V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW W 


ZKHUH W 
RUW! W 
ZKHUH W 


  G 
 V
G

 Q 

W 

  
 6LQFHGRQRWUHMHFWWKHQXOODQGFRQFOXGHWKHGDWDVXJJHVWWKDWWKHWZRPHWKRGV
GRQRWSURGXFHVLJQLILFDQWO\GLIIHUHQWPHDQYDOXHVIRUQDWXUDOYLEUDWLRQIUHTXHQF\DWWKHOHYHORI 
VLJQLILFDQFH

E FRQILGHQFHLQWHUYDO
V V
 G  W D 
 Q d P d G  WD

G
 G

Q
G  Q
Q
 
   d P d   

G

dPGd

:LWKFRQILGHQFHZHEHOLHYHWKDWWKHPHDQGLIIHUHQFHEHWZHHQWKHQDWXUDOYLEUDWLRQIUHTXHQF\IURP
WKHHTXLYDOHQWSODWHPHWKRGDQGWKHQDWXUDOYLEUDWLRQIUHTXHQF\IURPWKHILQLWHHOHPHQWPHWKRGLVEHWZHHQ
DQGF\FOHV

  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQZHLJKWPG
ZKHUHG  :HLJKW%HIRUH:HLJKW$IWHU
L

 +  P
 G

 +  P ! 
 G

 D 
 7KHWHVWVWDWLVWLFLV
G
W 
V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW ! W  


ZKHUH W 

  G 
 V
G

 Q 

W 

  
 6LQFH!UHMHFWWKHQXOODQGFRQFOXGHWKHUHLVHYLGHQFHWRFRQFOXGHWKDWWKHPHDQZHLJKWORVV
LVVLJQLILFDQWO\JUHDWHUWKDQWKDWLVWKHGDWDVXSSRUWWKHFODLPWKDWWKLVSDUWLFXODUGLHWPRGLILFDWLRQ 
SURJUDPLVVLJQLILFDQWO\HIIHFWLYHLQUHGXFLQJZHLJKWDWWKHOHYHORIVLJQLILFDQFH


  7KHSDUDPHWHURILQWHUHVWLVWKHPHDQGLIIHUHQFHLQLPSXULW\OHYHOP G

ZKHUHG  7HVW7HVW
L

 +  P
  G

 +  P z 
 G

 D 
 7KHWHVWVWDWLVWLFLV
G
W 
V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW  W  


ZKHUH W 
RUW ! W
 
ZKHUH W 

  G 
 V G

 Q 

W 


  
 6LQFHUHMHFWWKHQXOODQGFRQFOXGHWKHWHVWVJLYHVLJQLILFDQWO\GLIIHUHQWLPSXULW\OHYHOVDW
D 

  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQZHLJKWORVVP G

ZKHUHG  %HIRUH$IWHU
L

 +  P
  G

 +  P ! 
 G

 D 
 7KHWHVWVWDWLVWLFLV
G'
W 


V  Q
G

 5HMHFWWKHQXOOK\SRWKHVLVLIW ! W  


ZKHUH W 

  G 
 V G

 Q 
  
W 

  
 6LQFH!UHMHFWWKHQXOODQGFRQFOXGHWKHUHLVHYLGHQFHWRVXSSRUWWKHFODLPWKDWWKLVSDUWLFXODU
GLHWPRGLILFDWLRQSURJUDPLVHIIHFWLYHLQSURGXFLQJDPHDQZHLJKWORVVRIDWOHDVWOEVDWWKHOHYHORI
VLJQLILFDQFH

 8VHV DVDQHVWLPDWHIRUV


G



]D  ]E V

   


Q G

 Q 
 

<HVWKHVDPSOHVL]HRILVDGHTXDWHIRUWKLVWHVW

6HFWLRQ

 
 D I   G I   
I 

 



 
E I   H I  
I 
 

 

 
F I   I I  
I 
 




 
 D I   G I  
I 
 



 
E I   H I  
I 
 

 

 
F I   I I  
I 
 

 

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHYDULDQFHVRIFRQFHQWUDWLRQ V  V 
 


 +  V



V 


 +  V z V






 D 
 7KHWHVWVWDWLVWLFLV
V


I 


V



 5HMHFWWKHQXOOK\SRWKHVLVLII  I   


ZKHUH I  
RUI ! I
  
ZKHUH I  

  Q 
 Q 

 V 
 V


 

I

 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVLQVXIILFLHQWHYLGHQFHWR
LQGLFDWHWKHWZRSRSXODWLRQYDULDQFHVGLIIHUVLJQLILFDQWO\DWWKHOHYHORIVLJQLILFDQFH

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHHWFKUDWHYDULDQFHV V  V  
 


 +  V



V 


 +  V z V






 D 
 7KHWHVWVWDWLVWLFLV
V


I 


V



 5HMHFWWKHQXOOK\SRWKHVLVLII  I   
RUI ! I   

  Q 
 Q 

 V 
 V


 

I 


 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHHWFKUDWHYDULDQFHVGRQRW
GLIIHUDWWKHOHYHORIVLJQLILFDQFH

 :LWK O     E  DQG D  ZHILQGIURP&KDUW9,RWKDWQ  Q  7KHUHIRUHWKH  

VDPSOHVRIVL]HZRXOGQRWEHDGHTXDWH


 D FRQILGHQFHLQWHUYDOIRUWKHUDWLRRIYDULDQFHV
V

V V  

 I  D     d


d ID    
  Q  Q 
 
  Q  Q 
V V V
  
  

 
V   

  d d 

 V 
  


V 

  d d  

V 


6LQFHWKHLQWHUYDOFRQWDLQVZHDUHFRQILGHQWWKHYDULDQFHVIRUWKHURGGLDPHWHUVDUHQRWVLJQLILFDQWO\
GLIIHUHQW
E FRQILGHQFHLQWHUYDO
V

V V  

 I  D     d


d ID    
  Q  Q 
 
  Q  Q 
V V V
  
  

 
V   

  d d 

 V 
  


V 

  d d  

V 


:HDUHFRQILGHQWWKHYDULDQFHVIRUWKHURGGLDPHWHUVDUHQRWVLJQLILFDQWO\GLIIHUHQW7KH
FRQILGHQFHLQWHUYDOLVZLGHUWKDQWKHFRQILGHQFHLQWHUYDO
F ORZHUVLGHGFRQILGHQFHLQWHUYDO
V

V 

 I  D     d

 Q  Q 


V



V 


 
V 

  d 

 V
 


V 

  d 

V 


:LWKFRQILGHQFHZHEHOLHYHWKHYDULDQFHVIRUWKHURGGLDPHWHUVDUHQRWVLJQLILFDQWO\GLIIHUHQWIURP
HDFKRWKHU

 D FRQILGHQFHLQWHUYDOIRUWKHUDWLRRIYDULDQFHV
V 
V V  

I  D

d d ID      



   Q  Q    Q  Q 
V V V
  
  

 
V   


 d d 

 V 
  


V 

 d d  

V 


6LQFHWKHLQWHUYDOFRQWDLQVZHDUHFRQILGHQWWKHFDWDO\VWYDULDQFHVDUHQRWVLJQLILFDQWO\GLIIHUHQW
E FRQILGHQFHLQWHUYDO
V

V V  

 I  D     d


d ID    
  Q  Q 
 
  Q  Q 
V V V
  
  

 
V   

  d d 

 V 
  


V 

  d d  

V 


:HDUHFRQILGHQWWKHFDWDO\VWYDULDQFHVDUHQRWVLJQLILFDQWO\GLIIHUHQW7KHFRQILGHQFHLQWHUYDO
LVZLGHUWKDQWKHFRQILGHQFHLQWHUYDO


F ORZHUVLGHGFRQILGHQFHLQWHUYDO
V 
V 

 I  D     d

 Q  Q 


V V
 
 

 
V 

  d 

 V
 


V 

  d 

V 


:LWKFRQILGHQFHZHEHOLHYHWKHFDWDO\VWYDULDQFHVDUHQRWVLJQLILFDQWO\GLIIHUHQWIURPHDFKRWKHU

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHWKLFNQHVVYDULDQFHV V  V 




 +  V



V 


 +  V z V






 D 
 7KHWHVWVWDWLVWLFLV
V


I 


V



 5HMHFWWKHQXOOK\SRWKHVLVLII  I    
ZKHUH I   
RUI ! I
  
ZKHUH I  

  Q 
 Q 

 V

 V 

 


 I 
 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWKLFNQHVVYDULDQFHVGRQRW
VLJQLILFDQWO\GLIIHUDWWKHOHYHORIVLJQLILFDQFH

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHVWUHQJWKYDULDQFHV V  V 




 +  V



V 


 +  V z V






 D 
 7KHWHVWVWDWLVWLFLV
V


I 


V



 5HMHFWWKHQXOOK\SRWKHVLVLII  I   


ZKHUH I  
RUI ! I
  
ZKHUH I  

  Q 
 Q 

 V

 V 

 

 I 
 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHSRSXODWLRQYDULDQFHVGRQRW
VLJQLILFDQWO\GLIIHUDWWKHOHYHORIVLJQLILFDQFH


  7KHSDUDPHWHUVRILQWHUHVWDUHWKHPHOWLQJYDULDQFHV V  V 




 +  V
 

V 


 +  V z V
 
 


 D 
 7KHWHVWVWDWLVWLFLV
V

I 


V


 5HMHFWWKHQXOOK\SRWKHVLVLII  I  
ZKHUH I 
RUI ! I  
ZKHUH  
 I 

  Q 
 Q 

 V 
 V


 


 I 
 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHSRSXODWLRQYDULDQFHVGRQRW
VLJQLILFDQWO\GLIIHUDWWKHOHYHORIVLJQLILFDQFH

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHWKLFNQHVVYDULDQFHV V  V 




 +  V
 

V 


 +  V z V
 
 


 D 
 7KHWHVWVWDWLVWLFLV
V

I 


V


 5HMHFWWKHQXOOK\SRWKHVLVLII  I   


ZKHUH I  
RUI ! I   
ZKHUH
 I  

  Q 
 Q 

 V 
 V


 

I
 
 

 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHWKLFNQHVVYDULDQFHVDUHQRWHTXDODWWKH
OHYHORIVLJQLILFDQFH

  7KHSDUDPHWHUVRILQWHUHVWDUHWKHWLPHWRDVVHPEOHVWDQGDUGGHYLDWLRQV V  V  

 +  V
 

V 


 +  V z V
 
 


 D 
 7KHWHVWVWDWLVWLFLV
V

I 


V


 5HMHFWWKHQXOOK\SRWKHVLVLII  I  D     Q
  Q  
RUI ! ID   Q
  Q  

  Q 

Q  V  V  


 

I
 
 

 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHUHLVQRHYLGHQFHWRVXSSRUW
WKHFODLPWKDWPHQDQGZRPHQGLIIHUVLJQLILFDQWO\LQUHSHDWDELOLW\IRUWKLVDVVHPEO\WDVNDWWKHOHYHORI
VLJQLILFDQFH


 FRQILGHQFHLQWHUYDO
V 
V V  

 I  D     d


d
  Q  Q 
 
ID   Q
  Q  
V V V
  
  

V 

  d 
d  
V 


V 

 d d  

V 


6LQFHWKHYDOXHLVFRQWDLQHGZLWKLQWKLVLQWHUYDOZHDUHFRQILGHQWWKHUHLVQRVLJQLILFDQWGLIIHUHQFH
EHWZHHQWKHUHSHDWDELOLW\RIPHDQDQGZRPHQIRUWKHDVVHPEO\WDVN

 )RURQHSRSXODWLRQVWDQGDUGGHYLDWLRQEHLQJODUJHUWKDQWKHRWKHUWKHQO 8VLQJQ D DQG


&KDUW9,SZHILQGWKDWE#7KHUHIRUHZHZRXOGVD\WKDWQ Q  Q  LVDGHTXDWHWRGHWHFWWKLV  

GLIIHUHQFHZLWKKLJKSUREDELOLW\

6HFWLRQ

  WKHSDUDPHWHUVRILQWHUHVWDUHWKHSURSRUWLRQRIGHIHFWLYHSDUWVS DQGS  

 +  S  S  

 +  S z S
  

 D 
 7HVWVWDWLVWLFLV
S  S
] 
 
ZKHUH
 
S   S 
Q Q  

[ [
S  

Q Q 

 5HMHFWWKHQXOOK\SRWKHVLVLI] ] 
ZKHUH ] 
RU]! ] 
ZKHUH ] 

  Q 
 Q 

 [
 [ 

  
 S  S  S 
  
 

  
] 


 
    
 
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDW\HVWKHHYLGHQFHLQGLFDWHV
WKDWWKHUHLVQRWDVLJQLILFDQWGLIIHUHQFHLQWKHIUDFWLRQRIGHIHFWLYHSDUWVSURGXFHGE\WKHWZRPDFKLQHVDW
WKHOHYHORIVLJQLILFDQFH

3YDOXH  3 ]  


 D 3RZHU E
   
] ST   S  S ] ST   S  S
D Q

Q
 
D 
Q Q
 

E  )  )
   

V      S S V   
S S


    
 S  T 
  
       
 V       
 
S S

   

        
       
   
E  )  )
 


  )   )     
3RZHU  

S S T T ]
]
E ST S T
   

D 

   


E Q
S 
S 



     

  
     


 
   

Q 

   
] ST   S  S ]   S  S
D  D   ST
D E  ) Q Q Q Q
  )
V S   S  V S   S 


    
 S  T 
  
       
 V S   S   
 
   
               
E     
)  )





  )   )     
3RZHU  



]D S S T T ]
E ST  ST 
   



E  Q 

S 
S  

             

 


   

Q 


  WKHSDUDPHWHUVRILQWHUHVWDUHWKHSURSRUWLRQRIUHVLGHQWVLQIDYRURIDQLQFUHDVHSDQGS
 + S S
 + S z S
 D 
 7HVWVWDWLVWLFLV
S   S 
] ZKHUH
 
S   S 
Q Q
[ [
S  

Q Q 

 5HMHFWWKHQXOOK\SRWKHVLVLI] ] 
ZKHUH ] 
RU]! ] 
ZKHUH ] 

  Q 
 Q 

 [ 
 [ 

  
 S  S  S 
  
 

  
] 

 
    
 
 6LQFH!UHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKDW\HVWKHGDWDGRLQGLFDWHDVLJQLILFDQW
GLIIHUHQFHLQWKHSURSRUWLRQVRIVXSSRUWIRULQFUHDVLQJWKHVSHHGOLPLWEHWZHHQUHVLGHQWVRIWKHWZR
FRXQWLHVDWWKHOHYHORIVLJQLILFDQFH

3YDOXH  3 ]  

 FRQILGHQFHLQWHUYDORQWKHGLIIHUHQFH
S   S S   S S   S S   S
S  S  ]D  
d S  S d S  S  ]D
   
   

Q Q Q Q
       
   

               


    
  d S  S d     
 
   
 

 d S  S d 
 

6LQFHWKLVLQWHUYDOFRQWDLQVWKHYDOXH]HURZHDUHFRQILGHQWWKHUHLVQRVLJQLILFDQWGLIIHUHQFHLQWKH
IUDFWLRQRIGHIHFWLYHSDUWVSURGXFHGE\WKHWZRPDFKLQHVDQGWKDWWKHGLIIHUHQFHLQSURSRUWLRQVLVEHWZHHQ
DQG

 FRQILGHQFHLQWHUYDORQWKHGLIIHUHQFH
S   S
    S
S   
S  S  
S  S
 S  ]     
d S  S d S  S  ]D  
  
S D        
Q Q Q Q

               


      d S  S d      
   

 d S  S d 
6LQFHWKLVLQWHUYDOGRHVQRWFRQWDLQWKHYDOXH]HURZHDUHFRQILGHQWWKHUHLVDVLJQLILFDQWGLIIHUHQFHLQ
WKHSURSRUWLRQVRIVXSSRUWIRULQFUHDVLQJWKHVSHHGOLPLWEHWZHHQUHVLGHQWVRIWKHWZRFRXQWLHVDQGWKDWWKH
GLIIHUHQFHLQSURSRUWLRQVLVEHWZHHQDQG


6XSSOHPHQWDO([HUFLVHV

 D 7KHDVVXPSWLRQRIQRUPDOLW\LVQHFHVVDU\WRWHVWWKHFODLP$FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWVWKH 
DVVXPSWLRQRIQRUPDOLW\GRHVQRWDSSHDUWREHYLRODWHG7KLVLVHYLGHQWIURPWKHIDFWWKDWWKHGDWDDSSHDU WRIDOO
DORQJDVWUDLJKWOLQH

1RUPDO 3UREDELOLW\ 3ORW 1RUPDO 3UREDELOLW\ 3ORW









3UREDELOLW\
3UREDELOLW\
















 

         

YHQGRU YHQGRU
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 
1  39DOXH  1  39DOXH 

E  WKHSDUDPHWHUVRILQWHUHVWDUHWKHYDULDQFHVRIUHVLVWDQFHRISURGXFWV V  V 




 + V 

V 


 + V z V

 


 D 


 7KHWHVWVWDWLVWLFLV
V 

I 


V 


 
 5HMHFW+LII I ZKHUH I 
I 
   
 

RUI! I  


ZKHUH I  

 V  V 
Q  Q 

 

I 

 

 6LQFHUHMHFW+DQGFRQFOXGHWKHYDULDQFHVDUHVLJQLILFDQWO\GLIIHUHQWDWD 

 D 1RUPDOLW\DQGHTXDOLW\RIYDULDQFHVDSSHDUVWREHUHDVRQDEOHVHHQRUPDOSUREDELOLW\SORW7KHGDWDDSSHDU
WRIDOODORQJDVWUDLJKWOLQHDQGWKHVORSHVDSSHDUWREHWKHVDPH

1RUPDO 3UREDELOLW\ 3ORW 1RUPDO 3UREDELOLW\ 3ORW

 

 

 
3UREDELOLW\

3UREDELOLW\

 

 

 

 

 

 

              

KRXU KRXU
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 
1  39DOXH  1  39DOXH 


E  [ 
 [ 

 V

 V


 Q 
 Q 

FRQILGHQFHLQWHUYDO WD  Q
  Q 
W 
ZKHUH W 


      

V 

S

   
 [  [    WD    Q  Q    VS Q

Q
d P  P d [  [

     WD    Q
 Q    VS
Q

Q

   
        d P  P d       
   
 

  d P  P d   

F <HVZHDUHFRQILGHQWWKHUHVXOWVIURPWKHILUVWWHVWFRQGLWLRQH[FHHGWKHUHVXOWVRIWKHVHFRQGWHVW
FRQGLWLRQE\EHWZHHQDQG u 3$  

 D FRQILGHQFHLQWHUYDOIRU V  V 




V 

FRQILGHQFHLQWHUYDORQ 

V 


 
 I   I 
I 
 


V 
V 
V


I  
d 
d 
I 
V 

V 

V



 V 


  d d 




 V  


V 

 d d 
 

V 


E 6LQFHWKHYDOXHLVFRQWDLQHGZLWKLQWKLVLQWHUYDOZLWKFRQILGHQFHWKHSRSXODWLRQYDULDQFHVGRQRW
GLIIHUVLJQLILFDQWO\DQGFDQEHDVVXPHGWREHHTXDO

 D  7KHSDUDPHWHURILQWHUHVWLVWKHPHDQZHLJKWORVVP G

ZKHUHG  ,QLWLDO:HLJKW)LQDO:HLJKW
L

 +  P  G

 +  P !  G

 D 


 7KHWHVWVWDWLVWLFLV
G'
W 


V  Q
G

 5HMHFW+ LIW !WD   Q


ZKHUHW 
 
 G 
V 
 G

Q 
  
 W 
  
 6LQFHUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHDYHUDJHZHLJKWORVVLVVLJQLILFDQWO\
JUHDWHUWKDQDWD 
E  +  P   G

 +  P !  G

 D 


 7KHWHVWVWDWLVWLFLV
G'
W 


V  Q
G

 5HMHFW+ LIW !WD


  Q
ZKHUHW 
 
 G 
V 
 G

Q 
  
W
 
  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHDYHUDJHZHLJKWORVVLVQRW
VLJQLILFDQWO\JUHDWHUWKDQDWD 
F  +  P G

 +  P ! 
 G

 D 


 7KHWHVWVWDWLVWLFLV
G'
W 


V  Q
G

 5HMHFW+ LIW !WD


  Q
ZKHUHW 
 
 G 
V 
 G

Q 
  
W

 
  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHDYHUDJHZHLJKWORVVLVQRW
VLJQLILFDQWO\JUHDWHUWKDQDWD 
8VLQJD 
 +  P
 G

 +  P ! 
 G

 D 


 7KHWHVWVWDWLVWLFLV
G'
W 


V  Q
G

 5HMHFW+ LIW !WD


  Q
ZKHUHW 
 
 G 
V 
 G

Q 
  
W

 
  
 6LQFHGRQRWUHMHFWWKHQXOOK\SRWKHVLVDQGFRQFOXGHWKHDYHUDJHZHLJKWORVVLVQRW
VLJQLILFDQWO\JUHDWHUWKDQDWD 

V V
 
V
V 

 [ 
[   ]D 
Q
 

Q

d P  P d [  [
     ]D 
Q


Q


   

D FRQILGHQFHLQWHUYDO ]D 


   
   

     
  d P  P d      
   
 

  d P  P d 


 

<HVZLWKFRQILGHQFHWKHGDWDLQGLFDWHWKDWWKHPHDQEUHDNLQJVWUHQJWKRIWKH\DUQRIPDQXIDFWXUHU
H[FHHGVWKDWRIPDQXIDFWXUHUE\EHWZHHQDQG


E FRQILGHQFHLQWHUYDO ]D 


   
   

       d P  P d      


   
 

  d P  P d  

<HVZHDUHFRQILGHQWPDQXIDFWXUHUSURGXFHV\DUQZLWKKLJKHUEUHDNLQJVWUHQJWKE\EHWZHHQ 
DQGSVL
F 7KHUHVXOWVRISDUWVD DQGE DUHGLIIHUHQWEHFDXVHWKHFRQILGHQFHOHYHORU]YDOXHXVHGLVGLIIHUHQW
:KLFKRQHLVXVHGGHSHQGVXSRQWKHOHYHORIFRQILGHQFHFRQVLGHUHGDFFHSWDEOH

 D D  ]D 




 Q #
]D 


V 

V 
 #     

 Q 


( 

 

E D  ]D 


 Q #
]D 


V 

V 
 #    
 Q 


( 

 

F $VWKHFRQILGHQFHOHYHOLQFUHDVHVVDPSOHVL]HZLOODOVRLQFUHDVH
G D  ]D  

 Q #
]D 


V 

V 
 #     

 Q 


( 
 

H D  ]D 


 Q #
]D 


V 

V 
 #    
 Q 


( 
 

I $VWKHHUURUGHFUHDVHVWKHUHTXLUHGVDPSOHVL]HLQFUHDVHV

 D  7KHSDUDPHWHUVRILQWHUHVWDUHWKHSURSRUWLRQVRIFKLOGUHQZKRFRQWUDFWSROLRS S  

 + S  S
  

 + S zS


  

 D 


 7KHWHVWVWDWLVWLFLV
S  S
] 
 

 
S   S 
Q Q  

 5HMHFW+ LI]  ]D


  
RU] ! ]D ZKHUH ]D
  

[  [ [
  S 
 3ODFHER S  

Q  Q Q

  

[ 
 S 
 9DFFLQH
Q 



  
] 

 
    
 
 6LQFH!UHMHFW+ DQGFRQFOXGHWKHSURSRUWLRQRIFKLOGUHQZKRFRQWUDFWHGSROLRLV 


VLJQLILFDQWO\GLIIHUHQWDWD 
E D 
5HMHFW+ LI]  ]D RU] ! ]D ZKHUH ]D
  
   

]  


6LQFH!UHMHFW+ DQGFRQFOXGHWKHSURSRUWLRQRIFKLOGUHQZKRFRQWUDFWHGSROLRLVGLIIHUHQWDW


D 
F 7KHFRQFOXVLRQVDUHWKHVDPHVLQFH] LVVRODUJHLWH[FHHGV]D LQERWKFDVHV  


[  [ 
 S 
 S 

Q  Q 
 
 

S   S S   S
S 
 S  r ]D 


Q



Q
 

 

D  ]D 
] 

   
    r  
 
  d S  S d   

6LQFH]HURLVFRQWDLQHGLQWKLVLQWHUYDOZHDUHFRQILGHQWWKHUHLVQRVLJQLILFDQWGLIIHUHQFHEHWZHHQWKH
SURSRUWLRQRIXQOLVWHGQXPEHUVLQWKHWZRFLWLHV
E  ]D ]
 

   


    r  
 

  d S  S d   

$JDLQWKHSURSRUWLRQRIXQOLVWHGQXPEHUVLQWKHWZRFLWLHVGRQRWGLIIHU
[ 
F  S 


Q 



[ 
 S 


Q 



FRQILGHQFHLQWHUYDO
   
    r  
 
  d S  S d   

FRQILGHQFHLQWHUYDO
   
    r  
 
  d S  S d   

,QFUHDVLQJWKHVDPSOHVL]HGHFUHDVHGWKHHUURUDQGZLGWKRIWKHFRQILGHQFHLQWHUYDOVEXWGRHVQRWFKDQJH
WKHFRQFOXVLRQVGUDZQ7KHFRQFOXVLRQUHPDLQVWKDWWKHUHLVQRVLJQLILFDQWGLIIHUHQFH

 D  7KHSDUDPHWHUVRILQWHUHVWDUHWKHSURSRUWLRQVRIWKRVHUHVLGHQWVZKRZHDUDVHDWEHOWUHJXODUO\SS
 +S S
 +SzS
 D 
 7KHWHVWVWDWLVWLFLV
S  S
] 
 

 
S   S 
Q Q  

 5HMHFW+LI] ]D 


RU]! ]D ZKHUH ]
 

[  [ [
  S 
 S  

Q  Q Q

  

[ 
 S 

Q 



  
] 

 
    
 
 6LQFHGRQRWUHMHFW+DQGFRQFOXGHWKDWHYLGHQFHLVLQVXIILFLHQWWRFODLPWKDW
WKHUHLVDGLIIHUHQFHLQVHDWEHOWXVDJHD 


E D 
5HMHFW+LI] ]D RU]! ]D ZKHUH ]


 

] 
6LQFHGRQRWUHMHFW+DQGFRQFOXGHWKDWHYLGHQFHLVLQVXIILFLHQWWRFODLPWKDWWKHUH
LVDGLIIHUHQFHLQVHDWEHOWXVDJHD 
F 7KHFRQFOXVLRQVDUHWKHVDPHEXWZLWKGLIIHUHQWOHYHOVRIFRQILGHQFH
G Q Q 
D 
5HMHFW+LI] ]D RU]! ]D ZKHUH ]


 

  
 ] 

 
    
 
6LQFHGRQRWUHMHFW+DQGFRQFOXGHWKDWHYLGHQFHLVLQVXIILFLHQWWRFODLPWKDWWKHUHLV
DGLIIHUHQFHLQVHDWEHOWXVDJHD 
D 
5HMHFW+LI] ]D RU]! ]D ZKHUH ]
 
 

] 
6LQFHGRQRWUHMHFW+DQGFRQFOXGHWKDWHYLGHQFHLVLQVXIILFLHQWWRFODLPWKDWWKHUH
LVDGLIIHUHQFHLQVHDWEHOWXVDJHD 
$VWKHVDPSOHVL]HLQFUHDVHGWKHWHVWVWDWLVWLFKDVDOVRLQFUHDVHGVLQFHWKHGHQRPLQDWRURI]GHFUHDVHG
+RZHYHUWKHGHFUHDVH RUVDPSOHVL]HLQFUHDVH ZDVQRWHQRXJKWRFKDQJHRXUFRQFOXVLRQ

 D <HVWKHUHFRXOGEHVRPHELDVLQWKHUHVXOWVGXHWRWKHWHOHSKRQHVXUYH\
E ,ILWFRXOGEHVKRZQWKDWWKHVHSRSXODWLRQVDUHVLPLODUWRWKHUHVSRQGHQWVWKHUHVXOWVPD\EHH[WHQGHG

 D  7KHSDUDPHWHUVRILQWHUHVWDUHWKHSURSRUWLRQRIOHQVHVWKDWDUHXQVDWLVIDFWRU\DIWHUWXPEOHSROLVKLQJS 


S

 + S  S
  

 + S zS


  

 D 


 7KHWHVWVWDWLVWLFLV
S   S 
]
 
S   S 
Q Q 
 5HMHFW+ LI]  ]D   RU] ! ]D   ZKHUH ]D   
  

 [  QXPEHURIGHIHFWLYHOHQVHV


[  [  [ 
 S   S 
Q  Q  Q 
[ 
 S  
Q 
  
] 
 
    
 
 6LQFHUHMHFW+ DQGFRQFOXGHWKHUHLVVWURQJHYLGHQFHWRVXSSRUWWKHFODLPWKDWWKHWZR


SROLVKLQJIOXLGVDUHGLIIHUHQW
E 7KHFRQFOXVLRQVDUHWKHVDPHZKHWKHUZHDQDO\]HWKHGDWDXVLQJWKHSURSRUWLRQXQVDWLVIDFWRU\RU 
SURSRUWLRQVDWLVIDFWRU\7KHSURSRUWLRQRIGHIHFWLYHVDUHGLIIHUHQWIRUWKHWZRIOXLGV




     
  
     


Q
   

 

Q 

 7KHSDUDPHWHURILQWHUHVWLV P  P 
+   P  P  +   P   P  
o
+ P ! P  + P  P  ! 
/HWQ  VL]HRIVDPSOH

; HVWLPDWHIRUP 

/HWQ  VL]HRIVDPSOH

; HVWLPDWHIRUP 

;   ; LVDQHVWLPDWHIRU P  P 
V V 
7KHYDULDQFHLV9 ;   ;  9 ; 9  ;   
Q Q
7KHWHVWVWDWLVWLFIRUWKLVK\SRWKHVLVZRXOGWKHQEH
;   ;  
=
V V

Q Q
:HZRXOGUHMHFWWKHQXOOK\SRWKHVLVLI] !]D IRUDJLYHQOHYHORIVLJQLILFDQFH
 

7KH3YDOXHZRXOGEH3 =t]   

 +  P
 P
+  P z P 


Q  Q  Q
 

E 
D 
$VVXPHQRUPDOGLVWULEXWLRQDQG V V  V
P P  V
_ P  P  _ V 
G
V V 
)URP&KDUW9H Q  
Q     
Q 
 
Q  Q  
 


 D 1R
1RUPDO 3UREDELOLW\ 3ORW 1RUPDO 3UREDELOLW\ 3ORW







 

3UREDELOLW\
3UREDELOLW\

 

 

 

 

 

 

     

PHUFHGHV YRONVZDJ
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW

6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 


1  39DOXH  1  39DOXH 

E 7KHQRUPDOSUREDELOLW\SORWVLQGLFDWHWKDWWKHGDWDIROORZQRUPDOGLVWULEXWLRQVVLQFHWKHGDWDDSSHDUWRIDOO
DORQJDVWUDLJKWOLQH7KHSORWVDOVRLQGLFDWHWKDWWKHYDULDQFHVFRXOGEHHTXDOVLQFHWKHVORSHVDSSHDUWREH WKHVDPH
1RUPDO 3UREDELOLW\ 3ORW
1RUPDO 3UREDELOLW\ 3ORW





 
3UREDELOLW\




3UREDELOLW\













    


   

PHUFHGHV YRONVZDJ
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 
1  39DOXH  1  39DOXH 

F %\FRUUHFWLQJWKHGDWDSRLQWVLWLVPRUHDSSDUHQWWKHGDWDIROORZQRUPDOGLVWULEXWLRQV$SSDUHQWO\RQH
REVHUYDWLRQFDQFDXVHDQDQDO\VWWRUHMHFWWKHQRUPDOLW\DVVXPSWLRQ
G FRQILGHQFHLQWHUYDORQWKHUDWLRRIWKHYDULDQFHV V  V 
9

0

V 
9
 I   

  
V 
 I 
I 
0   
  

V 
V 
V 

9
I   
 9
 9
I   
V V V
  
0 0 0

 V 


  
9
 
 V 
0

V 

 
  9

V 
0

6LQFHWKHLQWHUYDOFRYHUVDUDQJHODUJHUWKDQDQGQRWLQFOXGLQJZHDUHFRQILGHQWWKDWWKHUHLV
HYLGHQFHWRVXSSRUWWKHFODLPWKDWWKHYDULDELOLW\LQPLOHDJHSHUIRUPDQFHLVJUHDWHUIRUD9RONVZDJHQWKDQ
IRUD0HUFHGHV


  WKHSDUDPHWHUVRILQWHUHVWDUHWKHYDULDQFHVLQPLOHDJHSHUIRUPDQFH V  V 




 + V 

V 

:KHUH9RONVZDJHQLVUHSUHVHQWHGE\YDULDQFH0HUFHGHVE\YDULDQFH
 + V z V

 


 D 


 7KHWHVWVWDWLVWLFLV
V


I 


V



 
 5HMHFW+LII I ZKHUH I 
I 
   
 

RUI! I  
ZKHUH I  

 V  V 
Q  Q 
 

I 
 
 6LQFH!UHMHFW+DQGFRQFOXGHWKDWWKHUHLVDVLJQLILFDQWGLIIHUHQFHEHWZHHQ9RONVZDJHQ
DQG0HUFHGHVLQWHUPVRIPLOHDJHYDULDELOLW\6DPHFRQFOXVLRQVUHDFKHGLQG

 D D ]D  ( 





]D    
Q V  V
(  



Q   
 


 
1HHGQ WRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHWZRDJHQWVGLIIHUE\ZLWKSUREDELOLW\RIDWOHDVW
E 7KHRULJLQDOVL]HRIQ LQ([HUFLVHZDVQRWDSSURSULDWHWRGHWHFWWKHGLIIHUHQFHVLQFHLWLVQHFHVVDU\
IRUDVDPSOHVL]HRIWRUHMHFWWKHQXOOK\SRWKHVLVWKDWWKHWZRDJHQWVGLIIHUE\ZLWKSUREDELOLW\RIDW OHDVW


 D 8QGHUO\LQJGLVWULEXWLRQVDSSHDUWREHQRUPDOVLQFHWKHGDWDIDOODORQJDVWUDLJKWOLQHRQWKHQRUPDO
SUREDELOLW\SORWV
1RUPDO 3UREDELOLW\ 3ORW 1RUPDO 3UREDELOLW\ 3ORW

 

 

 
3UREDELOLW\

3UREDELOLW\

 

 

 

 

 

 

        

ULGJHFUH YDOOH\YL
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW $YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG  6W'HY  $6TXDUHG 
1  39DOXH  1  39DOXH 

$WHVWRIK\SRWKHVLVFDQEHFRQGXFWHGWRWHVWIRUHTXDOLW\RIYDULDQFHV
 WKHSDUDPHWHUVRILQWHUHVWDUHWKHYDULDQFHVRIWKHILOOYROXPHV V  V 




 + V 

V 


 + V z V

 


 D 


 7KHWHVWVWDWLVWLFLV
V


I 


V




 
 5HMHFW+LII I ZKHUH I 
I 
   
 

RUI! I  
ZKHUH I  

 V  V 
Q  Q 

 

I
 
 

 6LQFHGRQRWUHMHFW+DQGFRQFOXGHWKHYDULDQFHVDUHQRWVLJQLILFDQWO\GLIIHUHQWDW
D 
E  7KHSDUDPHWHURILQWHUHVWLVWKHGLIIHUHQFHLQPHDQYROXPHV P  P  

 + P  P 
 RU P 
P 

 + P  P z  RU P z P


   

 D 


 7KHWHVWVWDWLVWLFLV
[  [  G
W 
 

 
V 
Q Q
S
 

 5HMHFW+LIW W D   Q RU]! W D   Q ZKHUH W D   Q W 




    
 

 [  [  V 




  S

 V 
 V

 Q
 Q 

    
W 

 
 
 
 6LQFHUHMHFW+DQGFRQFOXGHWKHUHLVDVLJQLILFDQWGLIIHUHQFHEHWZHHQPHDQILOO
YROXPHV

 D ]D  ( 





]
Q D   V  V
(



Q   
 


 
8VHQ 
6LQFHLWLVQHFHVVDU\WKDWWKHVDPSOHVL]HEHDWOHDVWWRGHWHFWWKDWWKHWUXHGLIIHUHQFHLVDVPXFKDVIOXLG
RXQFHVWKHVDPSOHVL]HVRIIURPHDFKYLQH\DUGGRSURYLGHJRRGGHWHFWLRQFDSDELOLW\ZKHQD 


 D 7KHDVVXPSWLRQRIQRUPDOLW\DSSHDUVWREHYDOLG7KLVLVHYLGHQWE\WKHIDFWWKDWWKHGDWDOLHDORQJD
VWUDLJKWOLQHLQWKHQRUPDOSUREDELOLW\SORW
1RUPDO 3UREDELOLW\ 3ORW







3UREDELOLW\












    

GLII
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG 
1  39DOXH 

E  7KHSDUDPHWHURILQWHUHVWLVWKHPHDQGLIIHUHQFHLQWLSKDUGQHVVPG
 + P G 
 + P G z 
 1RVLJQLILFDQFHOHYHOFDOFXODWH3YDOXH
 7KHWHVWVWDWLVWLFLV
G
W
VG  Q
 5HMHFW+LIWKH3YDOXHLVVLJQLILFDQWO\VPDOO
 G 
V 
 G
Q 

W 
  
 3YDOXH 3 7  3 7!    3YDOXH 
3YDOXH
6LQFHWKH3YDOXHLVODUJHUWKDQDQ\DFFHSWDEOHOHYHORIVLJQLILFDQFHGRQRWUHMHFW+DQGFRQFOXGHWKHUH
LVQRGLIIHUHQFHLQPHDQWLSKDUGQHVV
F E 
PG 
  
G 
V G 
)URP&KDUW9,ZLWKD Q FRXSRQV


 D $FFRUGLQJWRWKHQRUPDOSUREDELOLW\SORWWKHGDWDDSSHDUWRIROORZDQRUPDOGLVWULEXWLRQ7KLVLVHYLGHQW
E\WKHIDFWWKDWWKHGDWDIDOODORQJDVWUDLJKWOLQH
1RUPDO 3UREDELOLW\ 3ORW







3UREDELOLW\












      

GLII
$YHUDJH  $QGHUVRQ'DUOLQJ 1RUPDOLW\ 7HVW
6W'HY  $6TXDUHG 
1  39DOXH 

E  7KHSDUDPHWHURILQWHUHVWLVWKHPHDQGLIIHUHQFHLQGHSWKXVLQJWKHWZRJDXJHVPG
 + P G 
 + P G z 
 1RVLJQLILFDQFHOHYHOFDOFXODWHSYDOXH
 7KHWHVWVWDWLVWLFLV
G
W
VG  Q
 5HMHFW+LIWKH3YDOXHLVVLJQLILFDQWO\VPDOO
 G 
V 
 G
Q 

W 
  
 3YDOXH 3 7!    3YDOXH
3YDOXH
6LQFHWKH3YDOXHLVODUJHUWKDQDQ\DFFHSWDEOHOHYHORIVLJQLILFDQFHGRQRWUHMHFW+DQGFRQFOXGHWKHUH
LVQRGLIIHUHQFHLQPHDQGHSWKPHDVXUHPHQWVIRUWKHWZRJDXJHV
F E 
P G  
 
 

G 
V G  
)URP&KDUW9,ZLWKD DQGE ZHILQGQ 

0LQG([SDQGLQJ([HUFLVHV

 7KHHVWLPDWHRIPLVJLYHQE\ ; 7KHUHIRUH ;





;  ;   ;  7KHYDULDQFHRI ; FDQEHVKRZQWR

 V V  V 
  

EH 9 ;   8VLQJVVDQGVDVHVWLPDWHVIRUVVDQGVUHVSHFWLYHO\
 Q Q Q
D $ D FRQILGHQFHLQWHUYDORQPLVWKHQ

 V V  V   V V V 
     

 ;  = D     d P d ;  =D    
 Q Q Q  Q Q Q


E $FRQILGHQFHLQWHUYDOIRUPLV
         
        d P d        
 
   
       
 
 
   d P d 
  


 d P d 


6LQFH]HURLVQRWFRQWDLQHGLQWKLVLQWHUYDODQGEHFDXVHWKHSRVVLEOHGLIIHUHQFHV  DUH


QHJDWLYHZHFDQFRQFOXGHWKDWWKHUHLVVXIILFLHQWHYLGHQFHWRLQGLFDWHWKDWSHVWLFLGHWKUHHLVPRUHHIIHFWLYH

V V 
 7KH 9 ;   ;   DQGVXSSRVHWKLVLVWRHTXDODFRQVWDQWN7KHQZHDUHWRPLQLPL]H
Q Q

V V
&Q  &  Q  VXEMHFWWR    N 8VLQJD/DJUDQJHPXOWLSOLHUZHPLQLPL]HE\VHWWLQJWKHSDUWLDO
Q Q 
V V
GHULYDWLYHVRI I Q Q   O &Q  & Q   O     N ZLWKUHVSHFWWRQQDQGOHTXDOWR]HUR
Q Q 

7KHVHHTXDWLRQVDUH
w OV
I Q Q   O &   
wQ Q

w OV 
I Q Q   O &    
wQ  Q 

w V V 
I Q Q   O  N 
wO Q Q 
V V
8SRQDGGLQJHTXDWLRQV  DQG  ZHREWDLQ &  &   O    
Q Q

&  & 
6XEVWLWXWLQJIURPHTXDWLRQ  HQDEOHVXVWRVROYHIRUOWRREWDLQ O
N
7KHQHTXDWLRQV  DQG  DUHVROYHGIRUQDQGQWRREWDLQ
V &  & V  &  & 
Q Q
N& N&
,WFDQEHYHULILHGWKDWWKLVLVDPLQLPXPDQGWKDWZLWKWKHVHFKRLFHVIRUQDQGQ
V V 
9 ;   ;   
Q Q 

 0D[LPL]LQJWKHSUREDELOLW\RIUHMHFWLQJ +  LVHTXLYDOHQWWRPLQLPL]LQJ





[  [  G G
3  ]D     ]D  _ P  P  G 3  ] D     =  ]D   

V V V  V V  
      V

Q Q  Q Q Q Q
G
ZKHUH]LVDVWDQGDUGQRUPDOUDQGRPYDULDEOH7KLVSUREDELOLW\LVPLQLPL]HGE\PD[LPL]LQJ 
V V
 
Q Q

V V
7KHUHIRUHZHDUHWRPLQLPL]H    VXEMHFWWRQ Q  1
 
Q Q


V V 
)URPWKHFRQVWUDLQWQ 1QDQGZHDUHWRPLQLPL]H I Q  7DNLQJWKHGHULYDWLYHRI
Q 1  Q
 V V 
I Q ZLWKUHVSHFWWRQDQGVHWWLQJLWHTXDOWR]HURUHVXOWVLQWKHHTXDWLRQ  
Q 1  Q 
V 1 V 1
8SRQVROYLQJIRUQZHREWDLQ Q DQG Q 
V  V  V  V 
$OVRLWFDQEHYHULILHGWKDWWKHVROXWLRQPLQLPL]HVI Q 

 D  D 3 = ! ] H RU =   ] D  H ZKHUH=KDVDVWDQGDUGQRUPDOGLVWULEXWLRQ
7KHQ D 3 = ! ] H  3 =   ]D  H H  D  H D
E  E 3  ] D  H  =   ] H _ P  P   G
[P
E 3  ] D  H   ] H _ P P   G
V Q
3  ] D  H G  =  ]H  G

V Q V  Q
) ] H  G  )  ] G
DH 

V Q V Q

 7KHUHTXHVWHGUHVXOWFDQEHREWDLQHGIURPGDWDLQZKLFKWKHSDLUVDUHYHU\GLIIHUHQW([DPSOH
SDLU     
VDPSOH     
VDPSOH     
[  [ 
V  V  V SRROHG 
7ZRVDPSOHWWHVW W   3YDOXH 
[G  VG 
3DLUHGWWHVW W  
 3YDOXH|

 + V  V 

+V  z V 


3 F D  Q     F V z V 
Q  6 
E D  Q  _ V 

V

V  V

3  F D  Q     F V
Q  6 

V D  Q  _ V
 V V 

 
Q   6 
ZKHUH KDVDFKLVTXDUHGLVWULEXWLRQZLWKQGHJUHHVRIIUHHGRP
V



 + V V 

+V z V 

6 V

E 3 I     I _  G z 
 D  Q  Q    6 D  Q  Q    
V
 
V  V
6  V  V
3  I     I _  G
V    D  Q  Q    
6 V   D  Q  Q    
   V V

6  V 
ZKHUH   KDVDQ)GLVWULEXWLRQZLWKQDQGQGHJUHHVRIIUHHGRP
6  V 
 



You might also like