&KDSWHU

(QJLQH7URXEOHVKRRWLQJDQG2YHUKDXO
7RSLFV
 +RUVHSRZHUDQG+RUVHSRZHU5DWLQJV
 *UDSKVDQG'LDJUDPV
 3RZHU/RVVHVDQG)DLOXUHV
 (QJLQH7URXEOHVKRRWLQJ
 *DXJH&DUHDQG0DLQWHQDQFH
 9DOYHV9DOYH0HFKDQLVPVDQG&\OLQGHU
+HDGV6HUYLFLQJ
 &UDQNVKDIW6HUYLFLQJ
 &\OLQGHU6HUYLFLQJ
 3LVWRQVDQG5LQJV6HUYLFLQJ
 2SHUDWLRQDO7HVWLQJ

To hear audio, click on the box.

2YHUYLHZ
7KLVFKDSWHUGLVFXVVHVWKHWURXEOHVKRRWLQJDQGRYHUKDXORIDQHQJLQH<RXZLOOILUVW
OHDUQDERXWKRUVHSRZHULQFOXGLQJDEULHIGLVFXVVLRQRQG\QDPRPHWHUVDQGWKHLUUROHLQ
HQJLQHRYHUKDXO
2WKHUWRSLFVZLOOLQFOXGHJUDSKVDQGGLDJUDPVHQJLQHWURXEOHVKRRWLQJYDOYH
PDLQWHQDQFHVHUYLFLQJRIF\OLQGHUKHDGVFUDQNVKDIWVF\OLQGHUVDQGSLVWRQVDQGULQJV
DQGWKHRSHUDWLRQDOWHVWLQJRIWKHHQJLQHDIWHUWKHRYHUKDXOKDVEHHQFRPSOHWHGZLWK
SUHVWDUWXSLQLWLDOVWDUWXSDQGUXQLQ
$VDVXSHUYLVRU\RXUH[SHUWLVHZLOOEHLQYDOXDEOHLQWKHPDLQWHQDQFHRIWKH1DYDO
&RQVWUXFWLRQ)RUFH¶VH[WHQVLYHDXWRPRWLYHDQGKHDY\FRQVWUXFWLRQHTXLSPHQWLQYHQWRU\

2EMHFWLYHV
:KHQ\RXKDYHFRPSOHWHGWKLVFKDSWHU\RXZLOOEHDEOHWRGRWKHIROORZLQJ
 8QGHUVWDQGKRUVHSRZHUDQGKRUVHSRZHUUDWLQJ
 8QGHUVWDQGWKHXVHRIJUDSKVDQGGLDJUDPVIRUUHFRUGLQJRSHUDWLRQDODQG
PDLQWHQDQFHGDWD
 8QGHUVWDQGHQJLQHSRZHUORVVHVDQGIDLOXUHV
 ,GHQWLI\W\SHVRIHQJLQHSUREOHPVE\WURXEOHVKRRWLQJ
 8QGHUVWDQGKRZWRFDUHDQGPDLQWDLQJDXJHV
1$9('75$$ 
  8QGHUVWDQGKRZWRVHUYLFHDQGWURXEOHVKRRWYDOYHVYDOYHPHFKDQLVPVDQG
F\OLQGHUKHDGV
 8QGHUVWDQGKRZWRVHUYLFHFUDQNVKDIWV
 8QGHUVWDQGKRZWRVHUYLFHF\OLQGHUV
 8QGHUVWDQGKRZWRVHUYLFHSLVWRQVDQGULQJV
8QGHUVWDQGKRZWRFRQGXFWRSHUDWLRQDOWHVWLQJ

3UHUHTXLVLWHV
1RQH
7KLVFRXUVHPDSVKRZVDOORIWKHFKDSWHUVLQ&RQVWUXFWLRQ0HFKDQLF$GYDQFHG7KH
VXJJHVWHGWUDLQLQJRUGHUEHJLQVDWWKHERWWRPDQGSURFHHGVXS6NLOOOHYHOVLQFUHDVHDV
\RXDGYDQFHRQWKHFRXUVHPDS

:KHHODQG7UDFN$OLJQPHQW  &
7URXEOHVKRRWLQJ7UDQVPLVVLRQV7UDQVIHU&DVHVDQG 0
'LIIHUHQWLDOV 
&OXWFKHVDQG$XWRPDWLF7UDQVPLVVLRQV $

7URXEOHVKRRWLQJ(OHFWULFDO6\VWHPV '
9
)XHO6\VWHP2YHUKDXO
$
(QJLQH7URXEOHVKRRWLQJDQG2YHUKDXO
1
7KH6KRS,QVSHFWRUV &
$OID&RPSDQ\6KRS6XSHUYLVRU (
3XEOLF:RUNV6KRS6XSHUYLVRU '

)HDWXUHVRIWKLV0DQXDO
7KLVPDQXDOKDVVHYHUDOIHDWXUHVZKLFKPDNHLWHDV\WRXVHRQOLQH
x )LJXUHDQGWDEOHQXPEHUVLQWKHWH[WDUHLWDOLFL]HG7KHILJXUHRUWDEOHLVHLWKHU
QH[WWRRUEHORZWKHWH[WWKDWUHIHUVWRLW
x 7KHILUVWWLPHDJORVVDU\WHUPDSSHDUVLQWKHWH[WLWLVEROGDQGLWDOLFL]HG:KHQ
\RXUFXUVRUFURVVHVRYHUWKDWZRUGRUSKUDVHDSRSXSER[GLVSOD\VZLWKWKH
DSSURSULDWHGHILQLWLRQ
x $XGLRDQGYLGHRFOLSVDUHLQFOXGHGLQWKHWH[WZLWKDQLWDOLFL]HGLQVWUXFWLRQWHOOLQJ
\RXZKHUHWRFOLFNWRDFWLYDWHLW
x 5HYLHZTXHVWLRQVWKDWDSSO\WRDVHFWLRQDUHOLVWHGXQGHUWKH7HVW<RXU
.QRZOHGJHEDQQHUDWWKHHQGRIWKHVHFWLRQ6HOHFWWKHDQVZHU\RXFKRRVH,IWKH
DQVZHULVFRUUHFW\RXZLOOEHWDNHQWRWKHQH[WVHFWLRQKHDGLQJ,IWKHDQVZHULV
LQFRUUHFW\RXZLOOEHWDNHQWRWKHDUHDLQWKHFKDSWHUZKHUHWKHLQIRUPDWLRQLVIRU
UHYLHZ:KHQ\RXKDYHFRPSOHWHG\RXUUHYLHZVHOHFWDQ\ZKHUHLQWKDWDUHDWR
UHWXUQWRWKHUHYLHZTXHVWLRQ7U\WRDQVZHUWKHTXHVWLRQDJDLQ
1$9('75$$ 
 x 5HYLHZTXHVWLRQVDUHLQFOXGHGDWWKHHQGRIWKLVFKDSWHU6HOHFWWKHDQVZHU\RX
FKRRVH,IWKHDQVZHULVFRUUHFW\RXZLOOEHWDNHQWRWKHQH[WTXHVWLRQ,IWKH
DQVZHULVLQFRUUHFW\RXZLOOEHWDNHQWRWKHDUHDLQWKHFKDSWHUZKHUHWKH
LQIRUPDWLRQLVIRUUHYLHZ:KHQ\RXKDYHFRPSOHWHG\RXUUHYLHZVHOHFW
DQ\ZKHUHLQWKDWDUHDWRUHWXUQWRWKHUHYLHZTXHVWLRQ7U\WRDQVZHUWKHTXHVWLRQ
DJDLQ

1$9('75$$ 
+256(32:(5DQG+256(32:(55$7,1*
:KHQHYHUVRPHRQHPHQWLRQVKRUVHSRZHUWKHILUVWWKLQJWKDWFRPHVWRPLQGLVFDUV
IDVWFDUVZLWKH[WUHPHWRUTXHYHKLFOHVZLWKODUJHSRZHUDQGH[WUHPHVSHHG%XWZKDW
PDNHVKRUVHSRZHUPHDVXULQJVRPHDQLQJIXO"$QGZK\LVLWFDOOHGKRUVHSRZHU"
(QJLQHVDUHUDWHGDFFRUGLQJWRKRUVHSRZHUDQGWRUTXH7KHVSHHGDQGIXHOVHWWLQJRI
DQHQJLQHZLOOGHWHUPLQHLWVDFWXDOUDWHGKRUVHSRZHUVHWWLQJ+RUVHSRZHULVWKHDELOLW\WR
PDLQWDLQDORDGDWDGHVLUDEOHRUIL[HGVSHHG,WLVDPHDVXUHRIKRZIDVWZRUNFDQEH
GRQH+RUVHSRZHULVSURGXFHGDVDGLUHFWUHVXOWRIFRPEXVWLRQLQWKHF\OLQGHU
&RPEXVWLRQSUHVVXUHVIRUFHWKHSLVWRQ
GRZQWKHF\OLQGHUSURGXFLQJZRUN7KH
DPRXQWRIZRUNSURGXFHGRQWKHSRZHU
VWURNHFDQEHGHWHUPLQHGXVLQJWKH
IROORZLQJIRUPXOD
:RUN )RUFH['LVWDQFH
:KHUH
)RUFH 3UHVVXUHDFWLQJRQWKHSLVWRQLQ
SVL
'LVWDQFH /HQJWKRISLVWRQVWURNH
7KHPRUHIXHOUHOHDVHGLQWRWKHF\OLQGHU
GXULQJDJLYHQSHULRGWKHJUHDWHUWKH
DPRXQWRIKRUVHSRZHUSURGXFHG
-DPHV:DWW7KHZRUGKRUVHSRZHUZDV
FUHDWHGLQE\DQHQJLQHHUQDPHG )LJXUH²3RUWUDLWRI-DPHV:DWW
-DPHV:DWWZKLOHKHZDVGHYHORSLQJDZD\ E\&DUO)UHGHULNYRQ
WRLPSURYHWKHSRZHURIDVWHDPHQJLQH %UHGD
Figure 4-1:KLOHZDWFKLQJ
KRUVHVKDXOFRDORXWRIDFRDO
PLQHKHFDPHXSZLWKWKHLGHDRI
GHILQLQJWKHSRZHUH[HUWHGE\
WKHVHDQLPDOV+HIRXQGWKDWRQ
DYHUDJHDPLQHSRQ\FRXOGGR
IRRWSRXQGVRIZRUNLQD
PLQXWH+HWKHQLQFUHDVHGWKDW
QXPEHUE\SHUFHQWDQG
SHJJHGWKHPHDVXUHPHQWRI
KRUVHSRZHUDWIRRW
SRXQGVRIZRUNLQRQHPLQXWH
:KDWKRUVHSRZHUPHDQVLVWKLV
,Q:DWW
VMXGJPHQWRQHKRUVH
FDQGRIRRWSRXQGVRI
ZRUNHYHU\PLQXWHFigure 4-2
6RLPDJLQHDKRUVHUDLVLQJFRDO
RXWRIDFRDOPLQHDVVKRZQLQ
WKHLOOXVWUDWLRQ$KRUVHH[HUWLQJ
KRUVHSRZHUFDQUDLVH
SRXQGVRIFRDOIHHWLQD
PLQXWHRUSRXQGVRIFRDO )LJXUH²,OOXVWUDWLRQVKRZLQJKRZ
-DPHV:DWWGHWHUPLQHGKRUVHSRZHU
1$9('75$$ 
IHHWLQRQHPLQXWHRUSRXQGVIHHWLQRQHPLQXWH<RXFDQPDNHXS
ZKDWHYHUFRPELQDWLRQRIIHHWDQGSRXQGV\RXOLNH$VORQJDVWKHSURGXFWLV
IRRWSRXQGVLQRQHPLQXWH\RXKDYHDKRUVHSRZHU
:DWWXVHGKLVQHZIRXQGWHUPWRUDWHWKHSRZHURIWKHVWHDPHQJLQHFigure 4-36LQFH
PRVWSHRSOHZHUHXQIDPLOLDUZLWKWKHVWHDPHQJLQHKHKDGWRFRPHXSZLWKD
FRPSDULVRQPHDVXUHPHQWWKDWWKHQRUPDOIDUPHURIWKHGD\ZRXOGXQGHUVWDQG7KH
GUDIWKRUVHZDVZLGHO\XVHGHQRXJKWKDWPRVWSHRSOHRIWKHWLPHKDGDWOHDVWDQLGHDRI
WKHDQLPDO¶VFDSDELOLW\$VZLWKDQ\PHDVXUHPHQWWKHUHDUHGLIIHUHQWYDULDWLRQVDQG
GLIIHUHQWPHWKRGVRIPHDVXULQJKRUVHSRZHURUKS7KHQRUPDOPHDVXUHPHQWRI
KRUVHSRZHULVFDOOHGPHFKDQLFDOKRUVHSRZHU
IWOE
 +3 
0LQXWH
(QHUJ\
(QHUJ\LVEHVWGHILQHGDVWKHFDSDFLW\IRUSURGXFLQJZRUN(QHUJ\H[LVWVLQDQXPEHURI
IRUPVNLQHWLFSRWHQWLDOHOHFWULFDOWKHUPDO
FKHPLFDODQGQXFOHDUDUHLWVFRPPRQ
IRUPV
 .LQHWLFHQHUJ\LVWKHHQHUJ\RI
PRWLRQDQGDQ\ERG\LQDVWDWHRI
PRWLRQLVGHVFULEHGDVSRVVHVVLQJ
NLQHWLFHQHUJ\
 $LULQLWVFRPSUHVVHGVWDWHDQG
FRQWDLQHGLQDUHVHUYRLUKDVWKH
SRWHQWLDOIRUFUHDWLQJPRWLRQDQGLV
WKHUHIRUHGHVFULEHGDVSRWHQWLDO
HQHUJ\
7KHILUVWODZRIWKHUPRG\QDPLFVVWDWHVWKDW
HQHUJ\FDQQHLWKHUEHFUHDWHGQRU
GHVWUR\HGKRZHYHUWKHZD\LQZKLFK
HQHUJ\PDQLIHVWVLWVHOIFDQEHFKDQJHG,Q
DQLQWHUQDOFRPEXVWLRQHQJLQHWKHSRWHQWLDO )LJXUH²-DPHV:DWW
V
KHDWHQHUJ\RIDIXHOLVUHOHDVHGZKHQLWLV LPSURYHGVWHDPHQJLQHSRZHUHGWKH
FRPEXVWHGSURGXFLQJSUHVVXUHWKDWDFWVRQ LQGXVWULDOUHYROXWLRQ
DSLVWRQDQGGULYHVLWWKURXJKLWVSRZHU
VWURNHSURGXFLQJNLQHWLFHQHUJ\1RWDOORIWKHSRWHQWLDOKHDWHQHUJ\RIWKHIXHOFDQEH
VXFFHVVIXOO\FRQYHUWHGWRNLQHWLFHQHUJ\7KLVHQHUJ\LVGHVFULEHGDVUHMHFWHGKHDWDQG
PXVWEHGLVVLSDWHGWRWKHDWPRVSKHUH
(IIHFWVRI+HDW(QHUJ\
+HDWLVHDVLO\FRQYHUWHGLQWRPHFKDQLFDOHQHUJ\7KHVXQ¶VKHDWGDLO\UDLVHVWRQVRI
ZDWHUYDSRUKLJKLQWRWKHDWPRVSKHUHVRDOOWKHPHFKDQLFDOHQHUJ\RIIDOOLQJZDWHU
ZKHWKHUDVUDLQLQULYHUVRULQJODFLHUVVWHPVGLUHFWO\IURPWKHVXQ¶VKHDW,QWKHKHDWHG
HQJLQHWKHKHDWUHOHDVHGIURPWKHEXUQLQJRIIXHOLVFRQYHUWHGLQWRPHFKDQLFDORU
NLQHWLFHQHUJ\
)RUFH
)RUFHLVJHQHUDOO\GHILQHGLQWHUPVRIWKHHIIHFWVLWSURGXFHVDOWKRXJKLWVKRXOGDOZD\V
EHUHPHPEHUHGWKDWIRUFHVFDQEHH[HUWHGZLWKQRUHVXOW,IIRUFHLVDSSOLHGWRDERG\DW
UHVWLWPD\EHVXIILFLHQWWRFDXVHWKHERG\WRPRYHKRZHYHULWPLJKWQRW8VLQJWKH
1$9('75$$ 
VWDQGDUGV\VWHPIRUFHLVPHDVXUHGLQSRXQGV
,QDGLHVHOHQJLQHIRUFHLVUHSUHVHQWHGE\F\OLQGHUSUHVVXUH7KLVIRUFHDFWVRQWKH
VHFWLRQDODUHDRIWKHSLVWRQFURZQDQGLVWUDQVPLWWHGWRURWDU\PRWLRQE\DFWLQJRQWKH
FUDQNWKURZ7KHDPRXQWRIIRUFHLVFRQWUROOHGE\WKHDPRXQWRIIXHOGHOLYHUHGWRWKH
HQJLQHF\OLQGHUEHFDXVHRIWKHH[FHVVDLUIDFWRULQGLHVHO
:RUN
:RUNLVDFFRPSOLVKHGZKHQIRUFHSURGXFHVDUHVXOW:KHQWKHGHILQLWLRQLVDSSOLHGWRDQ
HQJLQHZRUNLVDFFRPSOLVKHGZKHQIRUFHDFWLQJRQWKHSLVWRQUHVXOWVLQSLVWRQWUDYHO,Q
WKHIROORZLQJIRUPXODVWDQGDUGYDOXHVDUHDOZD\VOLVWHGILUVW
:RUN )RUFH 'LVWDQFH
[
ZDWWVHFRQG SRXQGV IHHW
7RXVHDQRQHQJLQHDQDORJ\WRGHILQHZRUNLIWZRSHUVRQVRILGHQWLFDOZHLJKWUXQ
H[DFWO\\DUGVHDFKKDVDFFRPSOLVKHGWKHVDPHDPRXQWRIZRUN
7RUTXH
7RUTXHLVWXUQLQJHIIRUW,QDW\SLFDOHQJLQHWKHIRUFHDFWLQJRQWKHSLVWRQLVWUDQVPLWWHG
WRDFUDQNVKDIWWKURZ7KHWKURZLVDOHYHU7RUTXHLVWKHSURGXFWRIIRUFHRQWKHWRUTXH
DUPRUFUDQNWKURZDQGLWVSHUSHQGLFXODUGLVWDQFHIURPWKHVKDIWFHQWHU7KHJUHDWHUWKH
GLVWDQFHRIWKHWKURZFHQWHUOLQHIURPWKHFUDQNVKDIWPDLQFHQWHUOLQHWKHJUHDWHUWKH
OHYHUDJHDQGWKHPRUHSRWHQWLDOWRUTXH7KHDELOLW\WRSURGXFHWRUTXHLQDQHQJLQHLV
GLUHFWO\UHODWHGWRLWVF\OLQGHUSUHVVXUHV)RULQVWDQFHSHDNWRUTXHZLOODOZD\VRFFXU
ZKHQF\OLQGHUSUHVVXUHVSHDN
([DPSOH
$ELF\FOHKDVDFUDQNVKDIWGULYHQE\DSDLURIWKURZVFDOOHGSHGDOVRIIVHWGHJUHHV
3HDNWRUTXHLVDWDPD[LPXPZKHQHYHUPXVFOHIRUFHDFWLQJRQWKHSHGDOVLVDWD
PD[LPXP+LJKWRUTXHLVUHTXLUHGWRSURSHODELF\FOHDQGWKHZHLJKWRILWVULGHUXSD
VWHHSKLOOVRDJHDUVHOHFWLRQPXVWEHPDGHVRWKDWWKHUHTXLUHGWRUTXHLVZLWKLQWKH
FDSDELOLWLHVRILWVHQJLQHWKHF\FOLVW

,QGLFDWHG+RUVHSRZHULKS
,QGLFDWHGKRUVHSRZHULVWKHSRZHUWUDQVPLWWHGWRWKHSLVWRQVIURPWKHH[SDQGLQJ
FRPEXVWLRQJDVHV,QGLFDWHGKRUVHSRZHULVQRWPHDVXUHGZLWKDWHVWLQVWUXPHQWEXWLV
PDWKHPDWLFDOO\FDOFXODWHG,QGLFDWHGKRUVHSRZHUGRHVQRWWDNHLQWRDFFRXQWIULFWLRQDO
SRZHUORVVHVRIPRYLQJSDUWVRUWKHSRZHUORVVHVE\DFFHVVRU\LWHPVVXFKDVZDWHU
SXPSVEORZHUVRLOSXPSVIXHOLQMHFWLRQSXPSVDQGFRROLQJIDQV
7KHIRUPXODIRUFDOFXODWLQJHQJLQHLQGLFDWHGKRUVHSRZHULV
3[/[$ [1[&
,QGLFDWHG +RUVHSRZHU 

ZKHUH
3 PHDQLQGLFDWHG3UHVVXUHLQSVL
/ /HQJWKRIVWURNHRIWKHSLVWRQLQIHHW
$ 3LVWRQFURVVVHFWLRQDO$UHD
1 1XPEHURISRZHUVWURNHVSHUF\OLQGHUSHUPLQXWH
& 1XPEHURIHQJLQH&\OLQGHUV

1$9('75$$ 
([DPSOH
$IRXUVWURNHF\FOHVL[F\OLQGHUGLHVHOHQJLQHZLWKDERUHRI´DQGDVWURNHRI³LV
UXQDWDVSHHGRIUSP7KHPHDQHIIHFWLYHSUHVVXUHREWDLQHGIURPDQLQGLFDWRU
GLDJUDPLVVSHFLILHGDVSVL&DOFXODWHWKHLQGLFDWHGKRUVHSRZHURIWKHHQJLQH
)LUVWXVHWKHHQJLQHVSHFLILFDWLRQVWRFRQVWUXFWWKHGDWDUHTXLUHGIRUWKH3/$1&
IRUPXOD
3 0(3FDOFXODWHGE\GHWHUPLQLQJWKHDYHUDJHF\OLQGHUSUHVVXUHWKURXJKWKH
FRPSUHVVLRQVWURNHVXEWUDFWHGIURPWKHDYHUDJHF\OLQGHUSUHVVXUHWKURXJKWKH
SRZHUVWRNH7KLVGDWDLVSURYLGHGSVL
[/[$1[&
6R,QGLFDWHG+RUVHSRZHU   

/ 6WURNH /HQJWKLQIHHW  


 [  [ $ [ 1 [ &
6R,QGLFDWHG +RUVHSRZHU 

$ 3LVWRQVHFWLRQDODUHD%RUHGLDPHWHU ´VSUDGLXV ´7RFDOFXODWHWKH
DUHDRIDFLUFOHWKHVTXDUHRIWKHUDGLXVLVPXOWLSOLHGE\
[ 
 [  [  [ 1 [ &
6R ,QGLFDWHG +RUVHSRZHU 

1 QXPEHURISRZHUVWURNHVSHUPLQXWHLQRQHHQJLQHF\OLQGHU6RDSRZHUVWURNH
RFFXUVRQFHSHUWZRIXOOURWDWLRQV

 

 [  [  [  [ &
6R ,QGLFDWHG +RUVHSRZHU 

& 1XPEHURIHQJLQHF\OLQGHUV 
 [  [  [  [ 
6R ,QGLFDWHG +RUVHSRZHU 

1RZWKHHTXDWLRQLVFRPSOHWHDQGFDQEHVROYHG

,QGLFDWHG +RUVHSRZHU  

,QGLFDWHG+RUVHSRZHU +3

%UDNH+RUVHSRZHUEKS
7KLVLVWKHSRZHUPHDVXUHGDWWKHIO\ZKHHORIDQHQJLQHDQGLVWKHDFWXDODPRXQWRI
SRZHUWKDWFDQEHGHOLYHUHGDWDFHUWDLQVSHHGZLWKDZLGHRSHQWKURWWOH,WLVDOZD\V
ORZHUWKDQLQGLFDWHGKRUVHSRZHUFDOFXODWHGSRZHUEHFDXVHRIWKHDPRXQWRISRZHU
FRQVXPHGE\WKHHQJLQHLQRYHUFRPLQJLQWHUQDOIULFWLRQDQGSXPSLQJORVVHV²XVXDOO\
DERXWWROHVVWKDQLQGLFDWHGKRUVHSRZHUIRUWKHVDPHHQJLQH7KHWHUPLV
XVHGWRGHVFULEHDFWXDOHQJLQHSRZHURYHUFDOFXODWHGSRZHUDQGLVGHULYHGIURPWKH
1$9('75$$ 
EUDNLQJGHYLFHXVXDOO\DG\QDPRPHWHUWKDWLVDSSOLHGWRPHDVXUHWKHKRUVHSRZHUWKH
HQJLQHGHYHORSV

&DOFXODWLQJ%UDNH+RUVHSRZHU

)RUFH [ GLVWDQFH [ WLPH
 %UDNH +RUVHSRZHU
OE [ IW [ PLQ

'LVWDQFHPXVWWDNHLQWRDFFRXQWWKDWDQLQWHUQDOFRPEXVWLRQHQJLQHURWDWHVDQG
WKHUHIRUHWKHGLVWDQFHIDFWRULVQRWOLQHDUEXWFLUFXODUWRDFFRPPRGDWHWKLV S LVXVHG
WRFRQVWUXFWWKHHTXDWLRQZKLFKLVVLPSOLILHGDVIROORZV
 S  ; 
 y  
RUIRUFDOFXODWLRQSXUSRVHV
,QWKHILUVWEUDNHIRUPXODWKHYDOYHVWLPHDQGGLVWDQFHDUHPXOWLSOLHGE\HDFKRWKHUDQG
E\WKHIRUFHYDOXH,QDGLHVHOHQJLQHIRUFHLVH[SUHVVHGDVWRUTXH+RZHYHUWLPHDQG
GLVWDQFHDUHFRPPRQO\H[SUHVVHGDVRQHYDOXHUSP6RIRUSUDFWLFDOSXUSRVHVWKH
EUDNHSRZHUIRUPXODWKDWLVXVHGEHFRPHV
7RUTXH OE  IW [ 7LPH USP
%UDNH +RUVHSRZHU 3RZHU 

7RUTXH [ USP
%UDNH +RUVHSRZHU N:  

7KLVIRUPXODFDQEHXVHGWRFDOFXODWHEUDNHKRUVHSRZHUSURYLGLQJWKHWRUTXHYDOXHDQG
URWDWLRQDOVSHHGYDOXHVDUHNQRZQ)RUH[DPSOHD&XPPLQV(&(/(&7LV
VSHFLILHGWRSURGXFHDSHDNWRUTXHYDOXHRIOEIWDWUSPWRFDOFXODWHWKH
DPRXQWRISRZHUWKLVHQJLQHSURGXFHVDWWKLVVSHHGDQGWRUTXH
 OE  IW [  USP
%UDNH +RUVHSRZHU EKS   %UDNH +RUVHSRZHU 


'\QDPRPHWHUV
$G\QDPRPHWHULVDQLQVWUXPHQWGHVLJQHGSULPDULO\WRPHDVXUHSRZHU(VVHQWLDOO\LW
DSSOLHVWXUQLQJUHVLVWDQFHWRWKHWRUTXHRXWSXWWZLVWLQJHIIRUWWRDQRWKHUPDFKLQHDQG
DFFXUDWHO\PHDVXUHVWKHDSSOLHGUHVLVWDQFH3RZHULVWKHUDWHRIDFFRPSOLVKLQJZRUN
:KHQSRZHULVWHVWHGRQDG\QDPRPHWHULWVIDFWRUVDUHWRUTXHDQGWLPH7KHWRUTXH
RXWSXWRIDQHQJLQHLVDFFXUDWHO\PHDVXUHGE\WKHG\QDPRPHWHUDQGIDFWRUHGZLWKWLPH
USPWRFDOFXODWHLWVSRZHU0RVWG\QDPRPHWHUVDUHHOHFWURQLFDQGZLOOWDNHFDUHRIWKH
PDWKDQGGLVSOD\WKHSRZHULQXQLWVRIEUDNHKRUVHSRZHUEKSRUNLORZDWWVN:
7KHUHDUHWZRJHQHUDOFDWHJRULHVRIG\QDPRPHWHUVDQGWKH\DUHGHILQHGE\WKHPHWKRG
XVHGWRDSSO\DUHVLVWDQFHWRWKHWXUQLQJHIIRUWRIWKHHQJLQHRUFKDVVLVEHLQJWHVWHG$Q
HOHFWURPRWLYHG\QDPRPHWHULVEDVLFDOO\DQHOHFWULFPRWRUWXUQHGLQUHYHUVH7KHHQJLQH
LVFRXSOHGWRWKHG\QDPRPHWHUDUPDWXUHDQGURWDWHVLW$VFXUUHQWLVVZLWFKHGWRIORZ
WKURXJKWKHLQGXFWLRQFRLOVRIWKHHOHFWURPRWLYHG\QDPRPHWHUUHVLVWDQFHWRWKHWXUQLQJ
HIIRUWRIWKHHQJLQHLQFUHDVHV7KHPRUHFXUUHQWIORZHGWKURXJKWKHG\QDPRPHWHUFRLOV
WKHVWURQJHUWKHHOHFWURPDJQHWLFILHOGSURGXFHGDQGWKHJUHDWHUWKHDPRXQWRIWRUTXH
UHTXLUHGE\WKHHQJLQH7KHVHFRQGFDWHJRU\RIG\QDPRPHWHULVK\GUDXOLF7KH
K\GUDXOLFPHGLXPXVHGLVXVXDOO\ZDWHUEXWRWKHUW\SHVRIK\GUDXOLFPHGLDDUHDOVR
1$9('75$$ 
XVHG7KHFULWLFDOFRPSRQHQWLQWKHK\GUDXOLFG\QDPRPHWHULVDORDGFHOORUPXOWLSOH
ORDGFHOOV7KHVHXVHDSULQFLSOHVLPLODUWRWKDWXVHGE\DK\GUDXOLFGULYHOLQHUHWDUGHU
VXFKDVWKH&DWHUSLOODUEUDNHVDYHUZKHUHZDWHULVIORZHGWKURXJKWKHFHOODQGDFWVRQ
DQLPSHOOHU,QOHWDQGRXWOHWYDOYHVDUHXVHGWRFRQWUROWKHIORZRIWKHK\GUDXOLFPHGLXP
LQWRDQGRXWRIWKHORDGFHOODQGGHILQHWKHWRUTXHUHTXLUHGWRURWDWHWKHLPSHOOHU$OO
G\QDPRPHWHUVPHDVXUHWRUTXH0RVWDOVRPHDVXUHURWDWLRQDOVSHHG:KHQERWKWRUTXH
DQGUSPDUHNQRZQEUDNHKRUVHSRZHUFDQEHFDOFXODWHGXVLQJWKHHTXDWLRQVGLVFXVVHG
SUHYLRXVO\
:KHQSHUIRUPLQJFKDVVLVG\QDPRPHWHUWHVWLQJRIGLHVHOHQJLQHVZKHWKHUIRUSXUSRVHV
RIGLDJQRVLVRUIRUSHUIRUPLQJDQHQJLQHUXQLQURXWLQHDOORIWKHJDXJHVDQG
LQVWUXPHQWDWLRQVKRXOGEHFRQQHFWHGWRWKHHQJLQHEHLQJWHVWHG/RDGLQJDQHQJLQH
GRZQRQDG\QDPRPHWHULVWKHXOWLPDWHSHUIRUPDQFHWHVWIRUDQHQJLQHDQGLWVKRXOGEH
DVWKRURXJKO\PRQLWRUHGDVSRVVLEOH,WWDNHVDOLWWOHH[WUDWLPHWRFRQQHFWDOOWKH
UHTXLUHGJDXJHVDQGLQVWUXPHQWVEXWWKH\ZLOOKHOSHQVXUHDFFXUDWHGLDJQRVHVDQG
FRPSOHWHUHSRUWV(OHFWURQLFSULQWRXWVGRQRWORRNSURIHVVLRQDOZKHQKDOIWKHGDWD
FDWHJRULHVDUHOHIWEODQN

(QJLQH'\QDPRPHWHU
$QHQJLQHG\QDPRPHWHULVDSLHFHRIWHVW
HTXLSPHQWWKDWHQDEOHVWKHPHFKDQLFWRIXOO\
ORDGWHVWWKHRYHUKDXOHGHQJLQHEHIRUHLWLV
UHLQVWDOOHGLQWKHYHKLFOHHTXLSPHQWFigure
4-4
:LWKDQHQJLQHG\QDPRPHWHUWKHHQJLQH
FDQEHIXOO\FKHFNHGDQGILQHWXQHGEHIRUHLW
LVSODFHGLQWRVHUYLFH7KHHQJLQHLV
PRXQWHGLQWKHVWDQGDQGIXHOOLQHVFRROLQJ
V\VWHPKRVHVH[KDXVWV\VWHPRLOOLQHVDQG
DOODYDLODEOHLQVWUXPHQWDWLRQFRQQHFWHG$
W\SLFDOG\QDPRPHWHUZLOOLQFOXGHWKH
IROORZLQJJDXJHVDQGPHWHUVIRUPRQLWRULQJ
UXQLQFRQGLWLRQV
 )XHODQGRLOSUHVVXUHJDXJHV )LJXUH²:DWHUEUDNHHQJLQH
 &RRODQWWHPSHUDWXUHJDXJHV G\QDPRPHWHU
 7DFKRPHWHUIRUHQJLQHUSP
 3\URPHWHUIRUPHDVXULQJH[KDXVWJDVWHPSHUDWXUH
 %DURPHWHUIRUPHDVXULQJDLULQWDNHSUHVVXUH
0RVWG\QDPRPHWHUVZLOOKDYHRQHJDXJHXSVWUHDPDQGRQHGRZQVWUHDPRIWKHDLU
FRROHUWRLQGLFDWHKRZZHOOLWLVGRLQJWKHMRE
%HSDUWLFXODUO\REVHUYDQWGXULQJDQ\UXQLQSURFHGXUHWRGHWHFWSRVVLEOHSUREOHPVWKDW
PD\GHYHORS0RQLWRUDOOJDXJHVDQGUHDGLQJVRQWKHG\QDPRPHWHUYHKLFOHGDVK
GLVSOD\RUHQJLQHFRQWUROSDQHO/RRNIRUWKHIROORZLQJSUREOHPV
 $Q\XQXVXDOQRLVHVVXFKDVNQRFNLQJVFUDSLQJHWF
 $Q\VLJQLILFDQWGURSLQHQJLQHRLOSUHVVXUH
 $Q\VLJQLILFDQWULVHLQFRRODQWWHPSHUDWXUHDERYHƒ)
 $Q\VLJQLILFDQWULVHLQRLOWHPSHUDWXUHWKDWH[FHHGVƒ
1$9('75$$ 
  $Q\H[KDXVWWHPSHUDWXUHWKDWH[FHHGVWKHPD[LPXPDFFHSWDEOHOLPLWIRUWKH
VSHFLILFHQJLQHLQYROYHG
 $Q\RLOFRRODQWIXHORUDLULQOHWV\VWHPOHDNV
,IWKHHQJLQHGHYHORSVDQ\RIWKHVHSUREOHPVLWPXVWEHLPPHGLDWHO\VKXWGRZQ
,QYHVWLJDWHDQGFRUUHFWDQ\SUREOHPEHIRUHFRQWLQXLQJWKHWHVW

&KDVVLV'\QDPRPHWHU
$FKDVVLVG\QDPRPHWHUDOORZVIRUWKHFRQWUROOHGYHKLFOHUXQLQZLWKRXWWKHQHHGRID
URDGWHVWFigure 4-57KHYHKLFOH¶VGULYHD[OHVDUHSODFHGRQDVHWRILQJURXQGUROOHUV
DQGRSHUDWHGWKURXJKDVSHFLILFUDQJHRIVSHHGVDQGORDGVWRPRQLWRUSHUIRUPDQFH
(QVXUHWKHGULYHD[OHVDUHSURSHUO\DOLJQHGDQGLQFRQWDFWZLWKWKHUROOHUVDQGWKHQ
FKDLQWKHPLQWRSRVLWLRQ
$FKDVVLVG\QDPRPHWHUPXVWEH
SURSHUO\FDOLEUDWHG2QYHKLFOHV
ZLWKERJLHD[OHVWKH
G\QDPRPHWHUPXVWEHDGMXVWHG
VRWKHUHLVQRPRUHWKDQDPSK
GLIIHUHQFHEHWZHHQD[OHVSHHGV
GXULQJWHVWLQJ2QYHKLFOHV
HTXLSSHGZLWKDSRZHUGLYLGHU
ORFNRXWFRQWUROWKHORFNRXW
VKRXOGEHHQJDJHGGXULQJ
WHVWLQJ9HKLFOHVZLWKRXWORFNRXW
FRQWUROPD\UHTXLUHDVSHFLDOO\
IDEULFDWHGORFNRXWGHYLFH)LQDOO\
LWPD\EHQHFHVVDU\WR
GLVFRQQHFWWKHIURQWSURSHOOHU
VKDIWIURPWKHWUDQVIHUFDVH
&KHFNWKHHQJLQHPDQXDOIRU
WKHVHDQGRWKHUSUHFDXWLRQVSULRU
WRWHVWLQJ

)ULFWLRQ+RUVHSRZHU )LJXUH²$FKDVVLVG\QDPRPHWHU
)ULFWLRQKRUVHSRZHULVWKH
GLIIHUHQFHEHWZHHQLQGLFDWHGKRUVHSRZHUDQGEUDNHKRUVHSRZHU$FWXDOO\LWLVWKH
SRZHUUHTXLUHGWRRYHUFRPHIULFWLRQZLWKLQWKHHQJLQHVXFKDVIULFWLRQEHWZHHQHQJLQH
SDUWVUHVLVWDQFHLQGULYLQJDFFHVVRULHVDQGORVVGXHWRSXPSLQJDFWLRQRIWKHSLVWRQV
7KHODWWHUPD\EHFRPSDUHGWRWKHHIIRUWUHTXLUHGWRUDLVHWKHKDQGOHRIDKDQGRSHUDWHG
WLUHSXPS,WPD\EHGLIILFXOWWRGHILQHIULFWLRQKRUVHSRZHUSURSHUO\EXWZLWKSURSHU
PDLQWHQDQFHLWFDQEHUHGXFHGWRLPSURYHWKHPHFKDQLFDOHIILFLHQF\RIWKHHQJLQH

)O\ZKHHO+RUVHSRZHU
:KHQVSHDNLQJRIKRUVHSRZHUJHQHUDOO\LWLVUHIHUUHGWRDVKRUVHSRZHUDWWKHZKHHOV
7KHUHDUHSRZHUORVVHVWKURXJKWKHGULYHWUDLQHWFVRZKHHOKRUVHSRZHULVDOZD\V
ORZHUWKDQIO\ZKHHOKRUVHSRZHU$G\QDPRPHWHUZLOODWWHPSWWRFDOFXODWHWKHORVVHVRI
WKHYHKLFOHHTXLSPHQWFDXVHGE\IULFWLRQRIWKHJHDUVEHDULQJVGULYHWUDLQHWFWRREWDLQ
SRZHUDWWKHIO\ZKHHO7KHIO\ZKHHOKRUVHSRZHUHQJLQHKRUVHSRZHULVQRW
DFFXUDWHDVWKHRQO\ZD\WRJHWWKHH[DFWIO\ZKHHOKRUVHSRZHULVWRUHPRYHWKHHQJLQH
IURPWKHYHKLFOHHTXLSPHQWDQGEROWLWWRDQHQJLQHG\QDPRPHWHULQDWHVWFHOO%UDNH
1$9('75$$ 
KRUVHSRZHUPHDVXUHVWKHSRZHUEHLQJSXWWRWKHJURXQGZKLOHIO\ZKHHOKRUVHSRZHU
PHDVXUHVWKHSRZHUWKHHQJLQHSURGXFHV

+RUVHSRZHU&RQVLGHUDWLRQV
7KHHQJLQHRIDQ\SLHFHRIHTXLSPHQWLVWDNHQIRUJUDQWHGDVORQJDVLWUXQVVPRRWKO\
DQGHIILFLHQWO\(YHQWXDOO\KRZHYHULQWKHFRXUVHRIQRUPDORSHUDWLRQHQJLQHVVWRS
RSHUDWLQJHIILFLHQWO\RUHQWLUHO\:KHQWKLVKDSSHQVWKHPHFKDQLFPXVWEHDEOHWR
GHWHUPLQHWKHFDXVHDQGNQRZZKDWLVQHHGHGWRFRUUHFWWKHSUREOHP
*HQHUDOO\WKHVXSHUYLVRUGRHVQRWSHUIRUPHQJLQHUHSDLUVEXWGXHWR\RXUH[WHQVLYH
H[SHULHQFHLQWURXEOHVKRRWLQJDQGRYHUKDXOLQJDVVXSHUYLVRU\RXDUHUHVSRQVLEOHIRU
VHHLQJWKDWWKHVHUHSDLUVDUHSHUIRUPHGFRUUHFWO\DQGHIILFLHQWO\E\DVVLVWLQJDQG
LQVWUXFWLQJWKRVHSHUIRUPLQJWKHZRUN
6LQFHWKH1DYDO&RQVWUXFWLRQ)RUFHSRVVHVVHVVHYHUDOGLIIHUHQWPRGHOVRILQWHUQDO
FRPEXVWLRQHQJLQHVERWKJDVROLQHDQGGLHVHOIRUDXWRPRWLYHDQGKHDY\FRQVWUXFWLRQ
HTXLSPHQWLWLVLPSUDFWLFDOWRVSHFLI\DQ\GHWDLOHGWURXEOHVKRRWLQJRURYHUKDXO
SURFHGXUHVIRUDOOWKHHQJLQHVZLWKLQWKHLQYHQWRU\+RZHYHUKHUHDUHVRPHHOHPHQWDU\
SULQFLSOHVWKDWDSSO\WRDOOHQJLQHWURXEOHVKRRWLQJDQGRYHUKDXOV
 &RQVXOWWKHGHWDLOHGUHSDLUSURFHGXUHVJLYHQLQWKHPDQXIDFWXUHUV¶LQVWUXFWLRQ
DQGPDLQWHQDQFHPDQXDOV6WXG\WKHDSSURSULDWHPDQXDOVDQGSDPSKOHWVEHIRUH
DWWHPSWLQJDQ\UHSDLUZRUN3D\SDUWLFXODUDWWHQWLRQWRWROHUDQFHVOLPLWVDQG
DGMXVWPHQWV
 2EVHUYHWKHKLJKHVWGHJUHHRIFOHDQOLQHVVLQKDQGOLQJHQJLQHSDUWVGXULQJ
RYHUKDXO
 %HIRUHVWDUWLQJUHSDLUZRUNEHVXUHDOOUHTXLUHGWRROVDQGUHSODFHPHQWVIRU
NQRZQGHIHFWLYHSDUWVDUHDYDLODEOH
 .HHSGHWDLOHGUHFRUGVRIUHSDLUVVXFKDVWKHPHDVXUHPHQWVRISDUWVKRXUVRI
XVHDQGQHZSDUWVLQVWDOOHG$QDQDO\VLVRIWKHVHUHFRUGVZLOOLQGLFDWHWKHKRXUV
RIRSHUDWLRQWKDWPD\EHH[SHFWHGIURPWKHYDULRXVHQJLQHSDUWVDQGZLOOKHOSLQ
GHWHUPLQLQJZKHQDSDUWVKRXOGEHUHQHZHGWRDYRLGDIDLOXUH
6LQFHPDLQWHQDQFHFDUGVPDQXIDFWXUHUV¶WHFKQLFDOPDQXDOVDQGYDULRXVLQVWUXFWLRQV
FRQWDLQUHSDLUSURFHGXUHVLQGHWDLOWKLVFKDSWHUZLOOEHOLPLWHGWRJHQHUDOLQIRUPDWLRQRQ
VRPHRIWKHWURXEOHVHQFRXQWHUHGGXULQJRYHUKDXOWKHLUFDXVHVDQGPHWKRGVRIUHSDLU

*5$3+6DQG',$*5$06
*UDSKVDQGGLDJUDPVDUHDEEUHYLDWHGPHWKRGVRIUHFRUGLQJRSHUDWLRQDODQG
PDLQWHQDQFHGDWD
0DQXIDFWXUHUV¶RSHUDWLRQDODQGPDLQWHQDQFHPDQXDOVRIWHQFRQWDLQJUDSKVDQG
GLDJUDPV7KHWHFKQLFDOEXOOHWLQVSUHSDUHGFKLHIO\IRUWXQHXSPHFKDQLFVPD\XVHD
SDUWLFXODUJUDSKRUGLDJUDPWRHOLPLQDWHSDJHVRIZULWWHQGHVFULSWLRQWKDWRWKHUZLVH
ZRXOGEHQHFHVVDU\

3HUIRUPDQFH&XUYHV
Figures 4-6 DQG 4-7DUHH[DPSOHVRIJUDSKVWKDWGHVFULEHHQJLQHSHUIRUPDQFHLQWHUPV
RIEUDNHKRUVHSRZHUDQGIXHOFRQVXPSWLRQ'\QDPRPHWHUWHVWVSURYLGHWKHGDWDXVHG
LQSORWWLQJWKHSHUIRUPDQFHFXUYHVIRUHDFKHQJLQHFigure 4-8LVDQRWKHUH[DPSOHRID
JUDSK,WVKRZVWKDWWKHDPRXQWRIWRUTXHDQHQJLQHSURGXFHVYDULHVZLWKLWVVSHHG7KH
UHODWLRQVKLSEHWZHHQWRUTXHDQGKRUVHSRZHULVVKRZQLQFigure 4-9
1$9('75$$ 
 )LJXUH²3HUIRUPDQFHFXUYHVRIDW\SLFDOVL[F\OLQGHUJDVROLQHHQJLQH

1$9('75$$ 
+RUVHSRZHULVUHODWHGWRERWKWRUTXHDQGVSHHG:KHQERWKDUHLQFUHDVLQJDVWKH\GR
EHWZHHQDQGUSPWKHQKRUVHSRZHUJRHVXSVKDUSO\$VWRUTXHUHDFKHV
PD[LPXPDQGEHJLQVWRWDSHURIIKRUVHSRZHUFRQWLQXHVWRULVHWRPD[LPXP7KH
KRUVHSRZHUVWDUWVWRGHFOLQHEH\RQGUDWHGVSHHGZKHUHWRUTXHIDOOVRIIVKDUSO\

)LJXUH²3HUIRUPDQFHFXUYHVRIDW\SLFDOVL[F\OLQGHUGLHVHOHQJLQH

)LJXUH²*UDSKVKRZLQJ )LJXUH²*UDSKLQGLFDWLQJWKH
UHODWLRQVKLSEHWZHHQWRUTXHDQG UHODWLRQVKLSEHWZHHQWRUTXHDQG
1$9('75$$ VSHHG KRUVHSRZHU 
7LPLQJ'LDJUDPV
(QJLQHWLPLQJLVODUJHO\DPDWWHURIRSHQLQJDQGFORVLQJYDOYHVRUSRUWVDQGRIDGMXVWLQJ
LJQLWLRQRUIXHOLQMHFWLRQVRWKDWWKHVHHYHQWVRFFXUDWWKHSURSHUWLPHLQWKHF\FOHRI
HQJLQHRSHUDWLRQ7LPLQJGLDJUDPVGHSLFWWKHVHHYHQWVLQUHODWLRQWRHDFKRWKHUDQGLQ
UHODWLRQWRWRSGHDGFHQWHU7'&DQGERWWRPGHDGFHQWHU%'&7KH\DUHXVHIXOWRWKH
PHFKDQLFIRUTXLFNDQGHDV\UHIHUHQFH+RZHYHUEHIRUHWLPLQJGLDJUDPVFDQEHXVHIXO
\RXPXVWUHFDOODIHZIDFWVDERXWHQJLQHF\FOHV
7KHIRXUVWURNHF\FOHHQJLQHPDNHVWZRFRPSOHWHFUDQNVKDIWUHYROXWLRQVLQRQHF\FOH
LQWDNHFRPSUHVVLRQSRZHUDQGH[KDXVW7KHWZRVWURNHF\FOHHQJLQHFRPSOHWHVD
F\FOHZLWKMXVWRQHFUDQNVKDIWUHYROXWLRQ:LWKGLHVHOHQJLQHF\FOHVWZRDQGIRXU
VWURNHWKHHYHQWRIIXHOLQMHFWLRQZLOOEHVKRZQRQWKHWLPLQJGLDJUDPLQVWHDGRIVSDUN
LJQLWLRQZKLFKLVFRPPRQWRJDVROLQHHQJLQHRSHUDWLQJF\FOHV

)RXU6WURNH&\FOH(QJLQH7LPLQJ
Figure 4-10VKRZVDW\SLFDOWLPLQJGLDJUDPIRUDIRXUVWURNHF\FOHGLHVHOHQJLQH7KH
DFWXDOOHQJWKRIWKHVWURNHVVKRZQDQGWKHEHJLQQLQJRIIXHOLQMHFWLRQZLOOYDU\DIHZ
GHJUHHVLQHLWKHUGLUHFWLRQGHSHQGLQJRQWKHVSHFLILFPDQXIDFWXUHU¶VUHFRPPHQGDWLRQV
)ROORZWKHHYHQWVLQWKLVF\FOHE\WUDFLQJWKHFLUFXODUSDWWHUQDURXQGWZRFRPSOHWH
UHYROXWLRQVLQDFORFNZLVHGLUHFWLRQ6WDUW7'&ZLWKWKHEHJLQQLQJRIWKH
32:(56752.(&RPSUHVVLRQLVDWLWVSHDNZKHQIXHOLQMHFWLRQKDVEHHQFRPSOHWHG
DQGFRPEXVWLRQLVWDNLQJSODFH3RZHULVGHOLYHUHGWRWKHFUDQNVKDIWDVWKHSLVWRQLV
GULYHQGRZQZDUGE\WKHH[SDQGLQJJDVHVLQWKHF\OLQGHU3RZHUGHOLYHU\HQGVZKHQWKH
H[KDXVWYDOYHRSHQV
$IWHUWKHH[KDXVWYDOYHRSHQVWKHSLVWRQFRQWLQXHVGRZQZDUGWR%'&DQGWKHQXSZDUG
LQWKH(;+$8676752.(7KHH[KDXVWJDVHVDUHSXVKHGRXWRIWKHF\OLQGHUDVWKH
SLVWRQULVHVWR7'&DQGWKHH[KDXVWYDOYHFORVHVDIHZGHJUHHVDIWHU7'&WRHQVXUH
SURSHUVFDYHQJLQJ7KHFUDQNVKDIWKDVPDGHDFRPSOHWHUHYROXWLRQGXULQJWKHSRZHU
DQGH[KDXVWVWURNHV
7KHLQWDNHYDOYHRSHQVDIHZGHJUHHVEHIRUH7'&QHDUWKHHQGRIWKHXSZDUGH[KDXVW
VWURNHWRDLGLQVFDYHQJLQJWKHF\OLQGHU$VWKHFUDQNVKDIWFRQWLQXHVWRURWDWHSDVW7'&
WKH,17$.(6752.(EHJLQV7KHLQWDNHVWURNHFRQWLQXHVIRUWKHZKROHGRZQZDUG
VWURNHDQGSDUWRIWKHQH[WXSZDUGVWURNHWRWDNHDGYDQWDJHRIWKHLQHUWLDRIWKH
LQFRPLQJFKDUJHRIIUHVKDLU
7KHUHVWRIWKHXSZDUGVWURNHLVWKH&2035(66,216752.(ZKLFKEHJLQVDWWKH
LQVWDQWRILQWDNHYDOYHFORVLQJDQGHQGVDW7'&)8(/,1-(&7,21PD\EHJLQDVPXFK
DVƒEHIRUH7'&DQGFRQWLQXHWR7'&WKXVFRPSOHWLQJWKHSRZHUF\FOHDQGWKH
VHFRQGFRPSOHWHUHYROXWLRQRIWKHHQJLQH
%\VKRZLQJDQDSSUR[LPDWHLJQLWLRQSRLQWLQSODFHRIIXHOLQMHFWLRQFigure 4-10FRXOG
HDVLO\UHSUHVHQWDWLPLQJGLDJUDPIRUDW\SLFDOJDVROLQHHQJLQH
)RUDGGLWLRQDOLQIRUPDWLRQRQGLHVHOIXHOLQMHFWLRQV\VWHPWHVWVWKDWFDQEHPDGHERWKLQ
WKHVKRSDQGLQWKHILHOGUHIHUWRWKHPDQXIDFWXUHU¶VVHUYLFHPDQXDO

1$9('75$$ 
 )LJXUH²7\SLFDOWLPLQJGLDJUDPRIDIRXUVWURNHF\FOHGLHVHOHQJLQH

7ZR6WURNH&\FOH(QJLQHV
Figure 4-11VKRZVDWLPLQJGLDJUDPRIDWZRVWURNHF\FOHGLHVHOHQJLQH7KLVHQJLQHLV
W\SLFDORIWKH*HQHUDO0RWRUVVHULHVZKLFKXVHVDEORZHUWRVHQGIUHVKDLULQWRWKH
F\OLQGHUDQGWRFOHDURXWWKHH[KDXVWJDVHV7KHPRYHPHQWRIWKHSLVWRQLWVHOIGRHV
SUDFWLFDOO\QRQHRIWKHZRUNRILQWDNHDQGH[KDXVWDVLWGRHVLQDIRXUVWURNHF\FOH
HQJLQH7KLVIDFWLVLPSRUWDQWWRWKHPHFKDQLFLQGHWHFWLQJWZRVWURNHF\FOHGLHVHO
HQJLQHSRZHUORVVHV
%HJLQQLQJDW7'&LQFigure 4-11WKHIXHOKDVEHHQLQMHFWHGDQGFRPEXVWLRQLVWDNLQJ
SODFH7KHSLVWRQLVGULYHQGRZQDQGWKHSRZHULVGHOLYHUHGWRWKHFUDQNVKDIWXQWLOWKH
SLVWRQLVMXVWDOLWWOHPRUHWKDQKDOIZD\GRZQ7KHH[KDXVWYDOYHVWZRLQHDFKF\OLQGHU
RSHQƒDIWHU7'&7KHH[KDXVWJDVHVEORZRXWWKURXJKWKHPDQLIROGDQGWKH
F\OLQGHUSUHVVXUHGURSVRIIUDSLGO\
$WƒDIWHU7'&ƒEHIRUH%'&WKHLQWDNHSRUWVDUHXQFRYHUHGE\WKHGRZQZDUG
PRYHPHQWRIWKHSLVWRQ6FDYHQJLQJDLUXQGHUEORZHUSUHVVXUHVZLUOVXSZDUGWKURXJK
WKHF\OLQGHUDQGFOHDUVWKHF\OLQGHURIH[KDXVWJDVHV7KLVIORZRIFRRODLUDOVRKHOSVWR
FRROWKHF\OLQGHUDQGWKHH[KDXVWYDOYHV6FDYHQJLQJFRQWLQXHVXQWLOWKHSLVWRQUHDFKHV
ƒDIWHU%'&$WWKLVSRLQWWKHH[KDXVWYDOYHVDUHFORVHG7KHEORZHUFRQWLQXHVWR
VHQGIUHVKDLULQWRWKHF\OLQGHUIRUMXVWDVKRUWWLPHRQO\ƒRIURWDWLRQEXWLWLV
VXIILFLHQWWRJLYHDVOLJKWVXSHUFKDUJLQJHIIHFW
7KHLQWDNHSRUWVDUHFORVHGDWƒDIWHU%'&DQGFRPSUHVVLRQWDNHVSODFHGXULQJWKH
1$9('75$$ 
UHPDLQGHURIWKHXSZDUGVWURNHRIWKHSLVWRQ,QMHFWLRQEHJLQVDWDERXWƒEHIRUH
7'&DQGHQGVDERXWƒEHIRUH7'&GHSHQGLQJRQWKHHQJLQHVSHHGDQGORDG
7KHZKROHF\FOHLVFRPSOHWHGLQRQHUHYROXWLRQRIWKHFUDQNVKDIWDQGWKHSLVWRQLVUHDG\
WRGHOLYHUWKHQH[WSRZHUVWURNH

)LJXUH²7LPLQJGLDJUDPRIDWZRVWURNHF\FOHGLHVHOHQJLQH

1$9('75$$ 
0XOWLSOH&\OLQGHU(QJLQHV
7KHRUHWLFDOO\WKHSRZHUVWURNHRIDSLVWRQFRQWLQXHVIRUƒRIFUDQNVKDIWURWDWLRQRQD
IRXUVWURNHF\FOHHQJLQH%HVWUHVXOWVFDQEHREWDLQHGKRZHYHULIWKHH[KDXVWYDOYHV
DUHRSHQHGZKHQWKHSRZHUVWURNHKDVFRPSOHWHGDERXWIRXUILIWKVRILWVWUDYHO
7KHUHIRUHWKHSHULRGWKDWSRZHULVGHOLYHUHGGXULQJƒRIFUDQNVKDIWURWDWLRQRURQH
IRXUVWURNHF\FOHZLOOEHƒPXOWLSOLHGE\WKHQXPEHURIF\OLQGHUVLQWKHHQJLQH7KLV
PD\YDU\VOLJKWO\DFFRUGLQJWRWKHPDQXIDFWXUHUV¶VSHFLILFDWLRQV,IDQHQJLQHKDVWZR
F\OLQGHUVSRZHUZLOOEHWUDQVPLWWHGIRUƒRIWKHƒQHFHVVDU\WRFRPSOHWHWKHIRXU
HYHQWVRIWKHF\FOH7KHPRPHQWXPRIWKHIO\ZKHHOURWDWHVWKHFUDQNVKDIWIRUWKH
UHPDLQLQJƒRIWUDYHO
$VF\OLQGHUVDUHDGGHGWRDQHQJLQHHDFKRQHPXVWFRPSOHWHWKHIRXUVWHSVRIWKH
F\FOHGXULQJWZRUHYROXWLRQVRIWKHFUDQNVKDIW7KHQXPEHURISRZHULPSXOVHVIRUHDFK
UHYROXWLRQDOVRLQFUHDVHVSURGXFLQJVPRRWKHURSHUDWLRQ,IWKHUHDUHPRUHWKDQIRXU
F\OLQGHUVWKHSRZHUVWURNHVRYHUODSDVVKRZQLQFigure 4-127KHOHQJWKRIRYHUODS
LQFUHDVHVZLWKWKHQXPEHURIF\OLQGHUV7KHGLDJUDPIRUWKHVL[F\OLQGHUHQJLQHVKRZVD
QHZSRZHUVWURNHVWDUWLQJHDFKƒRIFUDQNVKDIWURWDWLRQDQGODVWLQJƒ7KLV
SURYLGHVDQRYHUODSRIƒ,QWKHHLJKWF\OLQGHUHQJLQHDSRZHUVWURNHVWDUWVHYHU\ƒ
DQGFRQWLQXHVIRUƒUHVXOWLQJLQDƒRYHUODSRISRZHU%HFDXVHWKHF\OLQGHUVILUHDW
UHJXODULQWHUYDOVRIILULQJRUGHUWKLVSURFHVVZLOODSSO\WRHLWKHULQOLQHRU9W\SHHQJLQHV

)LJXUH²3RZHUVWURNHVLQRQHIRXUVL[DQGHLJKWF\OLQGHUHQJLQHV

1$9('75$$ 
32:(5/266(6DQG)$,/85(6
3RZHUIDLOXUHVFDQUHVXOWIURPPLQRUWURXEOHVVXFKDVORRVHRUEDUHZLUHVDQG
GLVFRQQHFWHGRUGDPDJHGIXHOOLQHV:KHQUHSRUWHGE\WKHRSHUDWRUWKHVHWURXEOHVDUH
HDV\WRGHWHFWZLWKRXWWRRPXFKFKHFNLQJDQGWHVWLQJ7KHVXSHUYLVRUPXVWKRZHYHU
PDNHWKHPHFKDQLFVDZDUHWKDWWKHUHSUREDEO\ZDVLQDGGLWLRQDQDFWXDORU
FRQWULEXWLQJFDXVHWRWKHSRZHUIDLOXUH7KHVXSHUYLVRUPXVWWUDLQWKHPHFKDQLFVWRORRN
IRUWKLVFDXVHZKLOHPDNLQJUHSDLUV8QOHVVHOLPLQDWHGWKLVPD\EHWKHFDXVHRIPDMRU
WURXEOHODWHURQ
7RRRIWHQSUREOHPVDVVRFLDWHGZLWKSRZHUORVVRFFXUZLWKLQWKHHQJLQHDQGDUHQRW
HDVLO\LGHQWLILHG,WLVWKHVHKDUGWRILQGSUREOHPVZLWKOLWWOHRUQRYLVXDOLQGLFDWLRQWKDW
NHHSWKHVKRSPHFKDQLFVEXV\$QRSHUDWRUPD\QRWLFHDQDSSDUHQWSRZHUORVVLQWKH
HTXLSPHQWDQGEHFDXVHWKHUHLVH[FHVVLYHVPRNHFRPLQJIURPWKHH[KDXVWUHSRUWWKH
WURXEOHDVLPSURSHUFDUEXUHWLRQRULQWKHFDVHRIDGLHVHOHQJLQHDVLQMHFWRUWURXEOH$
OHVVH[SHULHQFHGPHFKDQLFPD\QRWLFHDQLQFUHDVHGHQJLQHWHPSHUDWXUHLQDGGLWLRQWR
WKHH[KDXVWVPRNHDQGGLDJQRVHWKHORVVRISRZHUDVLPSURSHUYDOYHDFWLRQRUDV
WURXEOHLQWKHFRROLQJV\VWHP7KHGLDJQRVHVDUHFRPSDUDWLYHO\VLPSOHWKURXJKYLVXDO
LQGLFDWLRQV%XWDVDVHQLRUPHFKDQLF\RXNQRZWKDWWKHUHDUHPDQ\FDXVHVRISRZHU
ORVVWKDWKDYHOLWWOHRUQRYLVXDOLQGLFDWLRQV([DPSOHVDUHLQFRUUHFWLJQLWLRQWLPLQJIDXOW\
FRLORUFRQGHQVHUGHIHFWLYHPHFKDQLFDOYDFXXPRUHOHFWURQLFVSDUNDGYDQFHZRUQ
GLVWULEXWRUFDPRUVOLSSLQJFOXWFK$Q\RIWKHPFDQFDXVHDSRZHUORVV
$IWHUDGHILFLHQF\KDVEHHQORFDWHGLQDQHQJLQHLWLVXVXDOO\HDV\WRPDNHWKH
QHFHVVDU\FRUUHFWLRQVWRHOLPLQDWHWKHFRQGLWLRQVFDXVLQJWKHGHILFLHQF\&DUHIXO
DQDO\VLVDQGVWUDLJKWWKLQNLQJKRZHYHUDUHRIWHQQHHGHGWRILQGWKHFDXVHRIHQJLQH
GHILFLHQFLHV,IDVXSHUYLVRUKDVDWKRURXJKNQRZOHGJHRIWKHEDVLFHQJLQHHULQJDQG
RSHUDWLQJSULQFLSOHVRIDQHQJLQHKLVRUKHUMRERIWUDLQLQJWKHPHFKDQLFVZLOOEHHDVLHU
DQGPRUHLQWHUHVWLQJ,QGLDJQRVLQJHQJLQHGHILFLHQFLHVWKHVXSHUYLVRUPXVWQHYHUMXPS
WRFRQFOXVLRQVDQGPDNHDGHFLVLRQRQWKHQDWXUHRIUHSDLUVWREHPDGHEHIRUHEHLQJ
VXUHWKDWZKDWZLOOEHGRQHZLOOHOLPLQDWHWKHWURXEOH7KHPHFKDQLFVPXVWEHDEOHWR
LQWHUSUHWWKHHQJLQHLQVWUXPHQWLQGLFDWLRQVDVZHOODVXVHWKHSURSHUWHVWLQJGHYLFHV
)XUWKHUPRUHWKH\PXVWEHDEOHWRURDGWHVWWKHHTXLSPHQWWRGHWHUPLQHZKHWKHUUHSDLUV
KDYHEHHQPDGHVDWLVIDFWRULO\DQGZKHWKHUDSDUWRUVHYHUDOSDUWVVKRXOGEHDGMXVWHGRU
UHSODFHG%HVLGHVWKHPHFKDQLFPXVWNQRZZKHQDQGKRZWRPDNHHPHUJHQF\
DGMXVWPHQWVIRUHYHU\XQLWRQWKHHQJLQH
,WPD\VHHPWKDWVRPHRIWKHTXDOLILFDWLRQVUHTXLUHGRIDJRRGPHFKDQLFSRLQWWRWKH
NQRZKRZRIDQDXWRPRWLYHHQJLQHHU+RZHYHUQRRQHSHUVRQFDQNQRZDOODERXW
HQJLQHVDQGDOVREHDQH[SHUWLQUHSDLULQJDOOW\SHVRISRZHUHGHTXLSPHQWXVHGLQWKH
1DYDO&RQVWUXFWLRQ)RUFH)RULQVWDQFHLIWKHFKHFNVRULQVWUXPHQWWHVWVLQGLFDWHVRPH
LQWHUQDOWURXEOHLQDPDJQHWRFDUEXUHWRURUIXHOLQMHFWLRQXQLWWKHUHSDLUVVKRXOGEH
PDGHE\PHFKDQLFVZKRKDYHH[SHULHQFHRUKDYHEHHQVSHFLDOO\WUDLQHGWRXVHWKH
HTXLSPHQWWRGRWKHSDUWLFXODUMREDWKDQG,WLVWKHVXSHUYLVRUZKRZLOOEHH[SHFWHGWR
KDYHWKHDQVZHUVWRDOOWKHTXHVWLRQVDVNHGE\OHVVH[SHULHQFHGPHFKDQLFV
7KHWKUHHEDVLFIDFWRUVWKDWDIIHFWDQLQWHUQDOFRPEXVWLRQHQJLQH¶VSRZHUDUHDVIROORZV
 &RPSUHVVLRQ
 ,JQLWLRQ
 )XHOGHOLYHU\
,QWKHGLHVHOHQJLQHIXHOLVLQMHFWHGLQWRHDFKF\OLQGHUDQGLJQLWLRQGHSHQGVRQWKHKHDW
RIFRPSUHVVLRQLQWKHJDVROLQHHQJLQHLJQLWLRQDQGFDUEXUHWLRQDUHLQGHSHQGHQW,Q
1$9('75$$ 
ERWKHQJLQHVRIFRXUVHSURSHUDFWLRQDQGWLPLQJRIDOOWKUHHIDFWRUVDUHQHFHVVDU\IRU
WKHHQJLQHWRSURGXFHLWVUDWHGSRZHU
$QHQJLQHZLOOUXQDQGGHYHORSLWVUDWHGSRZHURQO\LIDOORILWVSDUWVIXQFWLRQRURSHUDWH
DVWKH\VKRXOG,IDQ\RIWKHVHSDUWVZHDURUEUHDNUHTXLULQJUHSODFHPHQWRU
DGMXVWPHQWWKHSHUIRUPDQFHFKDUWVDQGHQJLQHVSHFLILFDWLRQVDUH³WRROV´WKDWZLOOKHOS
WKHPHFKDQLFEULQJWKRVHSDUWVEDFNWRWKHLURULJLQDOUHODWLRQVKLSWRHDFKRWKHU
7KHUHDUHPRUHIDFWRUV127GLUHFWO\DVVRFLDWHGZLWKHQJLQHZRUNLQJSDUWVWKDWPXVWEH
FRQVLGHUHGLQFRUUHFWLQJHQJLQHSRZHUORVVHV
x 2SHUDWLQJFRQGLWLRQVFDQDIIHFWHQJLQHSRZHU)RUH[DPSOHWKHXVDEOH
KRUVHSRZHURIDQHQJLQHLVUHGXFHGE\WKHQXPEHURIDFFHVVRULHVLWPXVW
RSHUDWH,IWKHHQJLQHLVUHTXLUHGWRSURYLGHSRZHUIRUOLIWLQJRSHUDWLRQVDWWKH
VDPHWLPHLWLVGHOLYHULQJSRZHUWRZKHHOVRUWUDFNVWKHHQJLQHPD\EH
RYHUORDGHGDQGPD\QRWEHDEOHWRGHYHORSLWVUDWHGUSPFRQVHTXHQWO\WKH
UDWHGKRUVHSRZHUZRXOGQRWEHUHDFKHG
x $OWLWXGHFDQKDYHDQHIIHFWRQHQJLQHSRZHUDQGPXVWDOVREHFRQVLGHUHG$VD
UXOHSHUFHQWRIWKHRXWSXWRIDQHQJLQHLVORVWIRUHYHU\IRRWLQFUHDVH
LQHOHYDWLRQDERYHVHDOHYHO2YHUKHDWHGDLUHQWHULQJWKHF\OLQGHUVKDVWKHVDPH
HIIHFWRQHQJLQHSRZHUDVDQLQFUHDVHLQDOWLWXGH,QFRPSXWLQJKRUVHSRZHU
RXWSXWHQJLQHHUVZLOOGHGXFWDVPXFKDVSHUFHQWIRUHDFKƒ)ULVHLQWKH
LQWDNHDLUWHPSHUDWXUHDERYHD³QRUPDO´WHPSHUDWXUHRIƒ)

(1*,1(7528%/(6+227,1*
$VDJHQHUDOUXOHZKHQWURXEOHVKRRWLQJDV\VWHPFRPSODLQWLQYHVWLJDWHWKHSRVVLEOH
FDXVHVWKDWFDQEHHOLPLQDWHGHDVLO\DQGLQH[SHQVLYHO\EHIRUHSURFHHGLQJWRWKRVHWKDW
UHTXLUHPRUHWLPH$YRLGFRPSRQHQWGLVDVVHPEO\XQWLO\RXKDYHH[KDXVWHGDOORWKHU
LQYHVWLJDWLYHRSWLRQV7KLVSUDFWLFHZLOOKHOSDYRLGSUHVHQWLQJDQLQIODWHGUHSDLUIRUD
VLPSOHSUREOHP,WPDNHVVHQVHWRGHYHORSVRPHSURFHGXUHVIRUWURXEOHVKRRWLQJHQJLQH
SUREOHPVLQWKHPHFKDQLFVKRSV$VHWRISURFHGXUHVZLOOKHOSWKHPHFKDQLFVPDQDJH
WKHLUWURXEOHVKRRWLQJSURFHGXUHV(QJLQH2(0VSURGXFHVRPHH[FHOOHQW
WURXEOHVKRRWLQJFKDUWVIRUWKHLURZQSURGXFWV
7KHWURXEOHVKRRWLQJDSSURDFKXVHGE\WKHPHFKDQLFVZLOOGHSHQGRQZKHWKHUWKH
HQJLQHLVK\GURPHFKDQLFDOO\RUHOHFWURQLFDOO\PDQDJHGDQGRQWKHHQJLQH2(0.HHS
LQPLQGWKDWWKHWURXEOHVKRRWLQJSURFHGXUHUHTXLUHGRIPRVWHOHFWURQLFDOO\PDQDJHG
HQJLQHVLVVWUXFWXUHGDQGVHTXHQWLDODQGPXVWEHDGKHUHGWR7KHIROORZLQJVHFWLRQV
GLVFXVVVRPHW\SLFDOHQJLQHSUREOHPVDORQJZLWKWKHLUSRVVLEOHFDXVHVDQGVROXWLRQV
ZLWKWKHIRFXVRQK\GURPHFKDQLFDOSUREOHPV

([FHVVLYH2LO&RQVXPSWLRQ
([FHVVLYHRLOFRQVXPSWLRQZRXOGSUREDEO\ILUVWEHQRWHGE\WKHRSHUDWRUZKRKDVWRDGG
RLOWRPDLQWDLQWKHSURSHURLOOHYHO7ZRPDLQFDXVHVRIH[FHVVLYHRLOFRQVXPSWLRQDUH
H[WHUQDOOHDNDJHDQGEXUQLQJLQWKHFRPEXVWLRQFKDPEHU9HULI\WKHFRQGLWLRQE\
PRQLWRULQJRLOFRQVXPSWLRQDQGDQDO\]LQJH[KDXVWVPRNH
x ([FHVVF\OLQGHUZDOOOXEULFDWLRQ
o +LJKRLOVXPSOHYHO
o ([FHVVLYHFRQQHFWLQJURGDQGELJHQGEHDULQJRLOWKURZRII
o 3OXJJHGRLOFRQWUROZLSHUULQJV

1$9('75$$ 
 o 2LOSUHVVXUHWRRKLJK
o 2LOGLOXWHGZLWKIXHO
6ROXWLRQ7KLVW\SHRISUREOHPXVXDOO\UHTXLUHVDQHQJLQHGLVDVVHPEO\WR
GLDJQRVHDQGUHSDLU
x ([WHUQDORLOOHDNV
o 6WHDPRUSUHVVXUHZDVKWKHHQJLQH
o /RDGRQDFKDVVLVG\QDPRPHWHU
o 5RDGWHVWWRGHWHUPLQHWKHVRXUFH
x +LJKRLOWHPSHUDWXUHV
o 0DOIXQFWLRQLQJERRVWDLUKHDWH[FKDQJHU
o /XJGRZQHQJLQHORDGLQJ
o 2YHUIXHOLQJ
o ,QFRUUHFWIXHOLQMHFWLRQWLPLQJ
o 3UREOHPZLWKWKHRLOFRROHURUHQJLQHFRROLQJV\VWHP
x 3LVWRQULQJILWDEQRUPDOO\
o 8VXDOO\FDXVHGE\ZHDU
6ROXWLRQ5HSODFHWKHULQJV
x 3LVWRQULQJIDLOXUH
o 'HWHUPLQHWKHFDXVH
o &KHFNIRURWKHUGDPDJH
6ROXWLRQ5HSODFHWKHULQJV
x 7XUERFKDUJHUVHDOIDLOXUH
6ROXWLRQ5HFRQGLWLRQWKHWXUERFKDUJHUUHFRUHRUUHSODFH
x +LJKRLOVXPSOHYHO
o 7KLVFDXVHVDHUDWLRQ
o 'HWHUPLQHWKHFDXVHRIKLJKRLOOHYHO
o &KHFNIRUSUHVHQFHRIIXHODQGHQJLQHFRRODQWLQRLO
x *OD]HGF\OLQGHUOLQHUVRUVOHHYHV
o &DXVHGE\LPSURSHUEUHDNLQSURFHGXUH
o 3URORQJHGHQJLQHLGOLQJ
6ROXWLRQ5HSODFHF\OLQGHUOLQHUVVOHHYHVRUXVHDJOD]HEXVWHUWRPDFKLQH
FURVVKDWFK
x :RUQF\OLQGHUKHDGYDOYHJXLGHVRUVHDOV
6ROXWLRQ0HDVXUHWRVSHFLILFDWLRQDQGUHFRQGLWLRQWKHF\OLQGHUKHDGLIUHTXLUHG

1$9('75$$ 
/RZ2LO3UHVVXUH
9HULI\WKHSUREOHP
 &KHFNWKHRLOVXPSOHYHO
 ,QVWDOODPDVWHUJDXJHDQDFFXUDWHIOXLGILOOJDXJH
 ,QYHVWLJDWHRLOFRQVXPSWLRQKLVWRU\
 'HWHUPLQHWKHFDXVH
6RPHSRVVLEOHFDXVHVDQGVXJJHVWHGVROXWLRQV
x 5HVWULFWHGRLOILOWHURURLOFRROHUEXQGOH
6ROXWLRQ&KDQJHWKHRLOILOWHUV,IWKHSUREOHPSHUVLVWVFOHDQRUUHSODFHWKHRLO
FRROHUEXQGOHFRUHDQGFKHFNRUFOHDQWKHILOWHUDQGRLOFRROHUE\SDVVYDOYHV
x &RQWDPLQDWHGOXEHIXHO
o 'HWHFWE\RLODQDO\VLVRUE\RGRU
(QJLQHOXEHFRQWDPLQDWHGZLWKIXHOFDQKDYHGDUNHUDSSHDUDQFHDQGIHHOWKLQWR
WKHWRXFK,IWKHFDXVHLVIXHOORFDWHWKHVRXUFH7KLVPD\EHGLIILFXOWDQGWKH
SURFHGXUHYDULHVZLWKWKHW\SHRIIXHOV\VWHPDQGWKHURXWLQJRIWKHIXHOWRWKH
LQMHFWRU
6ROXWLRQ3UHVVXUHWHVWLQJWKHIXHOGHOLYHU\FRPSRQHQWVPD\EHUHTXLUHG
3RURVLW\LQWKHF\OLQGHUKHDGFDVWLQJIDLOHGLQMHFWRU2ULQJVHDOVOHDNLQJIXHO
MXPSHUSLSHVDQGFUDFNHGF\OLQGHUKHDGJDOOHULHVDUHVRPHSRVVLEOHFDXVHV
3HUIRUPUHSDLUVDVUHTXLUHGDQGWKHQVHUYLFHWKHRLODQGILOWHUV
x ([FHVVLYHFUDQNVKDIWEHDULQJFOHDUDQFH
o ,QVSHFWWKHEHDULQJVWRGHWHUPLQHWKHFDXVH
o 9LVXDOO\FKHFNWKHFUDQNMRXUQDOVWRGHWHUPLQHZKHWKHUUHPRYDOLV
UHTXLUHG
6ROXWLRQ5HSODFHWKHEHDULQJVHQVXULQJWKDWWKHFOHDUDQFHRIWKHQHZEHDULQJV
LVFKHFNHG
x ([FHVVLYHFDPVKDIWRUURFNHUVKDIWEHDULQJFOHDUDQFH
6ROXWLRQ5HSODFHWKHEHDULQJV
x 3XPSUHOLHIYDOYHVSULQJIDWLJXHGVWXFNRSHQ
6ROXWLRQ&OHDQWKHYDOYHDQGKRXVLQJUHSODFLQJSDUWVDVQHFHVVDU\&KHFNWKH
E\SDVVGLYHUWHUYDOYHVLQWKHRLOFRROHUDQGILOWHUPRXQWLQJSDG
x 2LOSXPSGHIHFW
6ROXWLRQ5HFRQGLWLRQRUUHSODFHWKHRLOSXPS
x 2LOVXFWLRQSLSHGHIHFW
6ROXWLRQ5HSODFHWKHRLOVXFWLRQSLSH
x 'HIHFWLQRLOSUHVVXUHJDXJHRUVHQGLQJXQLW
6ROXWLRQ5HSODFHWKHRLOSUHVVXUHJDXJHRUVHQGLQJXQLW
x %URNHQGRZQFKHPLFDOO\GHJUDGHGOXEHRLO

1$9('75$$ 
 6ROXWLRQ&KDQJHWKHRLOVDQGILOWHUV

(QJLQH1RLVHV
$YDULHW\RIHQJLQHQRLVHVPD\RFFXU$OWKRXJKVRPHQRLVHVKDYHOLWWOHVLJQLILFDQFH
RWKHUVFDQLQGLFDWHVHULRXVHQJLQHWURXEOHWKDWZLOOUHTXLUHSURPSWDWWHQWLRQWRSUHYHQW
PDMRUGDPDJHWRWKHHQJLQH$OLVWHQLQJURGFDQEHRIKHOSLQORFDWLQJWKHVRXUFHRID
QRLVH7KHURGDFWVVRPHZKDWOLNHWKHVWHWKRVFRSHDGRFWRUXVHVWROLVWHQWRDSDWLHQW¶V
KHDUWEHDWRUEUHDWKLQJ:KHQRQHHQGLVSODFHGDW\RXUHDUDQGWKHRWKHUHQGDWVRPH
SDUWLFXODUSDUWRIWKHHQJLQHQRLVHVIURPWKDWSDUWRIWKHHQJLQHZLOOEHFDUULHGDORQJWKH
URGWR\RXUHDU%\GHWHUPLQLQJWKHDSSUR[LPDWHVRXUFHRIWKHQRLVH\RXFDQIRU
H[DPSOHORFDWHDEURNHQRUQRLV\ULQJLQDSDUWLFXODUF\OLQGHURUDPDLQEHDULQJNQRFN

9DOYHDQG7DSSHW1RLVH
:KHQFKHFNLQJK\GUDXOLFYDOYHOLIWHUVUHPHPEHUWKDWJULWVOXGJHYDUQLVKRURWKHU
IRUHLJQPDWWHUZLOOVHULRXVO\DIIHFWRSHUDWLRQRIWKHVHOLIWHUV,I\RXILQGDQ\IRUHLJQ
VXEVWDQFHLQWKHOLIWHUVRUHQJLQHZKHUHLWPD\EHFLUFXODWHGE\WKHOXEULFDWLRQV\VWHP
\RXQHHGWRGRDWKRURXJKFOHDQLQJMREWRDYRLGDUHSHWLWLRQRIOLIWHUWURXEOH
7RKHOSSUHYHQWOLIWHUWURXEOHFKDQJHWKHHQJLQHRLODQGRLOILOWHUDVUHFRPPHQGHGLQWKH
VHUYLFHPDQXDO)DXOW\YDOYHOLIWHURSHUDWLRQXVXDOO\DSSHDUVXQGHURQHRIWKHIROORZLQJ
FRQGLWLRQV
5DSSLQJQRLVHRQO\ZKHQWKHHQJLQHLVVWDUWHG.:KHQHQJLQHLVVWRSSHGDQ\OLIWHURQD
FDPVKDIWOREHLVXQGHUSUHVVXUHRIWKHYDOYHVSULQJWKHUHIRUHOHDNGRZQRUHVFDSHRI
RLOIURPWKHORZHUFKDPEHUFDQRFFXU:KHQWKHHQJLQHLVVWDUWHGDIHZVHFRQGVPD\
EHUHTXLUHGWRILOOWKHOLIWHUSDUWLFXODUO\LQFROGZHDWKHU,IQRLVHRFFXUVRQO\RFFDVLRQDOO\
LWPD\EHFRQVLGHUHGQRUPDOUHTXLULQJQRFRUUHFWLRQ,IQRLVHRFFXUVGDLO\KRZHYHU
FKHFNIRUDRLOWRRKHDY\IRUSUHYDLOLQJWHPSHUDWXUHVRUEH[FHVVLYHYDUQLVKLQOLIWHU
,QWHUPLWWHQW5DSSLQJ1RLVH.$QLQWHUPLWWHQWUDSSLQJQRLVHWKDWDSSHDUVDQGGLVDSSHDUV
HYHU\IHZVHFRQGVLQGLFDWHVOHDNDJHDWWKHFKHFNEDOOVHDWGXHWRIRUHLJQSDUWLFOHV
YDUQLVKRUGHIHFWLYHVXUIDFHRIWKHFKHFNEDOORUVHDW5HFRQGLWLRQFOHDQDQGRU
UHSODFHOLIWHUVDVQHFHVVDU\
1RLVHDWLGOHDQGORZVSHHG.,IRQHRUPRUHYDOYHOLIWHUVDUHQRLV\RQLGOHDWXSWR
DSSUR[LPDWHO\PSKEXWTXLHWDWKLJKHUVSHHGVLWLQGLFDWHVH[FHVVLYHOHDNGRZQRU
IDXOW\FKHFNEDOOVHDWRQWKHSOXQJHU:LWKHQJLQHLGOLQJOLIWHUVZLWKH[FHVVLYHOHDNGRZQ
UDWHPD\EHVSRWWHGE\SUHVVLQJGRZQRQHDFKURFNHUDUPDERYHWKHSXVKURGZLWK
HTXDOSUHVVXUH5HFRQGLWLRQRUUHSODFHQRLV\OLIWHUV
*HQHUDOO\QRLV\DWDOOVSHHGV.&KHFNIRUKLJKRLOOHYHOLQFUDQNFDVH:LWKWKHHQJLQH
LGOLQJVWULNHHDFKURFNHUDUPDERYHWKHSXVKURGVHYHUDOVKDUSEORZVZLWKDPDOOHWLI
WKHQRLVHGLVDSSHDUVLWLQGLFDWHVWKDWIRUHLJQPDWHULDOZDVNHHSLQJWKHFKHFNEDOOIURP
VHDWLQJ6WRSWKHHQJLQHDQGSODFHWKHOLIWHUVRQWKHFDPVKDIWEDVHFLUFOH,IWKHUHLVODVK
FOHDUDQFHLQDQ\YDOYHWUDLQLWLQGLFDWHVDVWXFNOLIWHUSOXQJHUZRUQOLIWHUERG\ORZHUHQG
RUZRUQFDPVKDIWOREH
/RXGQRLVHDWQRUPDORSHUDWLQJWHPSHUDWXUHRQO\.,IDOLIWHUGHYHORSVDORXGQRLVHZKHQ
WKHHQJLQHLVDWQRUPDORSHUDWLQJWHPSHUDWXUHEXWLVTXLHWZKHQHQJLQHLVEHORZQRUPDO
WHPSHUDWXUHLWLQGLFDWHVDQH[FHVVLYHO\IDVWOHDNGRZQUDWHRUVFRUHGOLIWHUSOXQJHU
5HFRQGLWLRQRUUHSODFHWKHOLIWHU

1$9('75$$ 
&RQQHFWLQJ5RG1RLVH
7KHUHDUHWZRGLVWLQFWW\SHVRIURGNQRFN7KHJXGJHRQSLQHQGRUZULVWSLQRUOLWWOHHQG
EHDULQJPDNHVDOLJKWPHWDOOLFFODFN2IWHQ\RXFDQKHDUWKHGRXEOHFODFNDVWKH
FRQQHFWLQJURGUHYHUVHVWKHSLVWRQGLUHFWLRQ7KHPDLQFRQQHFWLQJURGEHDULQJRUELJ
HQGPDNHVDORXGGHHSHUWRQHGNQRFNDQGLVYHU\EDGQHZV(QJLQHVFDQUXQIRUD
VXUSULVLQJO\ORQJWLPHZLWKOLWWOHHQGNQRFN%LJHQGNQRFNLVXVXDOO\UDSLGO\WHUPLQDO
'LVFRQQHFWLQJWKHVSDUNSOXJZLUHDQGFDUHIXOO\JURXQGLQJLWLQWKHFDVHRIKLJKHQHUJ\
LJQLWLRQDQGWKHQUXQQLQJWKHHQJLQHZLOOFDXVHDOPRVWDOOOLWWOHHQGNQRFNVWR
GLVDSSHDU7KHPDLQVRXUFHRIOLWWOHHQGNQRFNLVWKHFRPEXVWLRQHYHQWKDPPHULQJWKH
SLVWRQGRZQRQWRWKHEHDULQJWDNLQJXSWKHH[FHVVFOHDUDQFHZLWKDFODFN,IWKHZULVW
SLQLVUHDOO\ORRVHWKHQGLVFRQQHFWLQJWKHVSDUNSOXJFDQFKDQJHDGRXEOHFODFNWRD
VLQJOHDVWKHOLJKWO\ORDGHGSLVWRQUHYHUVHVGLUHFWLRQ
'LVFRQQHFWLQJWKHVSDUNSOXJUDUHO\PDNHVELJHQGNQRFNGLVDSSHDUDOWRJHWKHU
7KHUHDOO\WURXEOHVRPHWKLQJDERXWFRQQHFWLQJURGSUREOHPVLVLILWGRHVFHDVHDQHZ
EORFNZLOOEHUHTXLUHGVRWKHULVNRIFRQWLQXLQJWRUXQWKHHQJLQHLVTXLWHKLJK$OZD\V
UXQDQHQJLQHDWORZUSPLI\RXVXVSHFWURGNQRFNRIHLWKHUW\SH1RWJHQHUDOO\NQRZQLV
WKHIDFWWKDWLQHUWLDORDGVRQWKH7'&UHYHUVDORIWKHSLVWRQRQWKHH[KDXVWWRLQWDNH
VWURNHLVZKHQORDGVRQWKHFRQQHFWLQJURGSHDNGXHWRQRGRZQZDUGSUHVVXUHRQWKH
SLVWRQIDFHDQGKLJKVSHHGORDGLQJRIWKHEHDULQJV
7KHQRLVHDFRQQHFWLQJURGPDNHVFDQEHVLPLODUWRGHWRQDWLRQWKHFDXVHRIWKHVRXQG
LVVLPLODUWKHF\OLQGHUULQJVZLWKWKHEDQJLQJRIWKHSLVWRQRQWKHURGEHDULQJVLQWKHRQH
FDVHDQGZLWKWKHVRXQGRIWKHGHWRQDWLRQZDYHKLWWLQJWKHSLVWRQIDFHLQWKHRWKHUEXW
DVKRWFRQQHFWLQJURGVKRXOGPDNHQRLVHDWLGOH$OVRFKDQJLQJLJQLWLRQWLPLQJRU
LQFUHDVLQJRFWDQHZLOOFDXVHSLQJLQJWRJRDZD\EXWDZRUQFRQQHFWLQJURGZLOOFRQWLQXH
WRNQRFN

3LVWRQ3LQ.QRFN
3LVWRQSLQNQRFNLVDVKDUSPHWDOOLFUDSWKDWFDQVRXQGPRUHOLNHDUDWWOHLIDOOWKHSLQV
DUHORRVH,WRULJLQDWHVLQWKHXSSHUSRUWLRQRIWKHHQJLQHDQGLVPRVWQRWLFHDEOHZKHQ
WKHHQJLQHLVLGOLQJDQGWKHHQJLQHLVKRW3LVWRQSLQNQRFNVRXQGVOLNHDGRXEOHNQRFN
DWLGOHVSHHGV,WLVFDXVHGE\DZRUQSLVWRQSLQSLVWRQSLQERVVSLVWRQSLQEXVKLQJRU
ODFNRIOXEULFDWLRQUHVXOWLQJLQZRUQEHDULQJV7RFRUUHFWWKHSUREOHPLQVWDOORYHUVL]HG
SLQVUHSODFHWKHERVVRUEXVKLQJVRUUHSODFHWKHSLVWRQ

3LVWRQ5LQJ1RLVH
7KLVVRXQGFDQEHKHDUGGXULQJDFFHOHUDWLRQDVKLJKSLWFKHGUDWWOLQJRUFOLFNLQJLQWKH
XSSHUSDUWRIWKHF\OLQGHU,WFDQEHFDXVHGE\ZRUQULQJVRUF\OLQGHUVEURNHQSLVWRQ
ULQJODQGVRULQVXIILFLHQWULQJWHQVLRQDJDLQVWWKHF\OLQGHUZDOOV5LQJQRLVHLVFRUUHFWHG
E\UHSODFLQJWKHULQJVSLVWRQVRUVOHHYHVRUUHERULQJWKHF\OLQGHUV

3LVWRQ6ODS
3LVWRQVODSLVFRPPRQO\KHDUGZKHQWKHHQJLQHLVFROGDQGRIWHQJHWVORXGHUZKHQWKH
YHKLFOHDFFHOHUDWHV:KHQDSLVWRQVODSVDJDLQVWWKHF\OLQGHUZDOOWKHUHVXOWLVDKROORZ
EHOOOLNHVRXQG3LVWRQVODSLVFDXVHGE\ZRUQSLVWRQVRUF\OLQGHUVFROODSVHGSLVWRQ
VNLUWVPLVDOLJQHGFRQQHFWLQJURGVH[FHVVLYHSLVWRQWRF\OLQGHUZDOOFOHDUDQFHRUODFN
RIOXEULFDWLRQUHVXOWLQJLQZRUQEHDULQJV&RUUHFWLRQUHTXLUHVHLWKHUUHSODFLQJWKHSLVWRQV
UHERULQJWKHF\OLQGHUUHSODFLQJRUUHDOLJQLQJWKHURGVRUUHSODFLQJWKHEHDULQJV
6KRUWLQJRXWWKHVSDUNSOXJRIWKHDIIHFWHGF\OLQGHUPLJKWTXLHWWKHQRLVH
1$9('75$$ 
&UDQNVKDIW.QRFN
&UDQNVKDIWNQRFNLVDKHDY\GXOOPHWDOOLFNQRFNWKDWLVQRWLFHDEOHZKHQWKHHQJLQHLV
XQGHUORDGRUDFFHOHUDWLQJ:KHQWKHQRLVHLVUHJXODULWFDQEHFRQWULEXWHGWRZRUQ
PDLQEHDULQJV:KHQLUUHJXODUDQGVKDUSWKHQRLVHLVSUREDEO\GXHWRZRUQWKUXVW
EHDULQJV

(QJLQH7HVWLQJ
7KH1DY\SURYLGHVDFFXUDWHDQGGHSHQGDEOHWHVWLQJHTXLSPHQWIRUXVHZLWKLQWKH
PHFKDQLFVKRSV%XWKDYLQJWKHWHVWLQJHTXLSPHQWLQWKHVKRSLV127HQRXJK7KH
VXSHUYLVRUDQGWKHFUHZPXVWNQRZKRZWRXVHWKLVHTXLSPHQWVLQFHSURSHUXVH
SURYLGHVWKHTXLFNHVWDQGVXUHVWPHDQVRIILQGLQJRXWZKDWLVZURQJDQGZKHUHWKHIDXOW
OLHVZLWKDQHQJLQHRUFRPSRQHQW7KUHHRIWKHPRVWZLGHO\WHVWLQJLQVWUXPHQWV
XVHGWRFKHFNDQHQJLQHIRUPHFKDQLFDOSUREOHPVDUHWKHF\OLQGHUFRPSUHVVLRQWHVWHU
YDFXXPJDXJHDQGF\OLQGHUOHDNDJHWHVWHU

&RPSUHVVLRQ7HVW
7KHHQJLQHSRZHUUHVXOWVIURPLJQLWLQJDFRPEXVWLEOHPL[WXUHWKDWKDVEHHQ
FRPSUHVVHGLQWKHFRPEXVWLRQFKDPEHURIDQHQJLQHF\OLQGHU7KHWLJKWHUDJLYHQ
YROXPHRIIXHOPL[WXUHLVVTXHH]HGLQWKH
F\OLQGHUEHIRUHLWLVLJQLWHGWKHJUHDWHUWKH
SRZHUGHYHORSHG8QOHVVDSSUR[LPDWHO\
WKHVDPHSRZHULVGHYHORSHGLQHDFK
F\OLQGHUWKHHQJLQHZLOOUXQXQHYHQO\7KH
F\OLQGHUFRPSUHVVLRQWHVWHULVXVHGWR
PHDVXUHF\OLQGHUSUHVVXUHLQSVLDVWKH
SLVWRQPRYHVWR7'&RQWKHFRPSUHVVLRQ
VWURNHFigure 4-13
6RPHWHUPVDVVRFLDWHGZLWKWKH
FRPSUHVVLRQDUHWKHIROORZLQJ
x &RPSUHVVLRQLJQLWLRQ&,LV
FRPPRQO\XVHGWRGHVFULEHDQ\
GLHVHOHQJLQHRURQHLQZKLFKWKH
F\OLQGHUIXHODLUFKDUJHLVLJQLWHGE\
WKHKHDWRIFRPSUHVVLRQ7KH
HOLPLQDWLRQRIVSDUNSOXJVFRLOV
)LJXUH²&RPSUHVVLRQWHVWHUNLW
LJQLWLRQZLULQJGLVWULEXWRUVDQG
WUDQVLVWRUL]HGLJQLWLRQFRQWUROVLVD
PDMRUIDFWRULQWKHGLHVHO¶VVLPSOLFLW\DQGORZHUFRVWRIPDLQWHQDQFH
x &RPSUHVVLRQUDWLRLVDFRPSDULVRQRIWKHYROXPHRIDLULQDF\OLQGHUEHIRUH
FRPSUHVVLRQZLWKLWVYROXPHDIWHUFRPSUHVVLRQ$FRPSUHVVLRQUDWLRPHDQV
WKDWDWWKHWRSRIWKHFRPSUHVVLRQVWURNHWKHDLULQWKHF\OLQGHUWDNHVXSWKH
YROXPHLWGLGZKHQWKHSLVWRQZDVDWWKHERWWRPRIWKHFRPSUHVVLRQVWURNH.7KH
FRPSUHVVLRQUDWLRVLQDGLHVHOHQJLQHDUHKLJK7KHFRPSUHVVLRQUDWLRLV
GHWHUPLQHGE\FRPSDULQJWKHDPRXQWRIVSDFHLQWKHF\OLQGHUZKHQWKHSLVWRQLV
DWWKHWRSRILWVWUDYHOWRWKHVSDFHDYDLODEOHZKHQWKHSLVWRQLVDWLWVORZHVWSRLQW
RIWUDYHO(Figure 4-14)
x &RPSUHVVLRQSUHVVXUHLVWKHDFWXDOF\OLQGHUSUHVVXUHGHYHORSHGRQWKH
FRPSUHVVLRQVWURNH$FWXDOFRPSUHVVLRQSUHVVXUHVUDQJHIURPSVLWR
SVLLQ&,HQJLQHV7KHKLJKHUWKHFRPSUHVVLRQSUHVVXUHWKHPRUHKHDW
1$9('75$$ 
 GHYHORSHGLQWKHF\OLQGHU+RZHYHUWKHZRUNGRQHE\WKHSLVWRQRQLWV
FRPSUHVVLRQVWURNHPXVW
EHVXEWUDFWHGIURPWKH
ZRUNLWUHFHLYHVWKURXJK
WKHSRZHUVWURNH
,QPHDVXULQJFRPSUHVVLRQ
SUHVVXUHVRIDOOF\OLQGHUVZLWKD
FRPSUHVVLRQJDXJHWKHGLIIHUHQW
F\OLQGHUVRIDQHQJLQHPD\YDU\DV
PXFKDVSRXQGV7KHYDULDWLRQ
LVFDXVHGODUJHO\E\WKHODFNRI
XQLIRUPLW\LQWKHYROXPHRIWKH
FRPEXVWLRQFKDPEHU,WLVQHDUO\
LPSRVVLEOHWRPDNHDOOWKH
FRPEXVWLRQFKDPEHUVLQDF\OLQGHU
KHDGH[DFWO\WKHVDPHVL]H)RU
H[DPSOHLQDJLYHQHQJLQHZLWK
FKDPEHUVWKHVDPHYROXPHWKH
FRPSUHVVLRQSUHVVXUHZRXOGEH
DERXWSRXQGVLQDOOF\OLQGHUV
+RZHYHULIRQHFRPEXVWLRQ
FKDPEHULVFXELFLQFKWRR
VPDOOWKHSUHVVXUHZLOOEHDERXW )LJXUH²&RPSUHVVLRQUDWLRQ
SRXQGVDQGLILWLVFXELF
LQFKWRRODUJHWKHFRPSUHVVLRQSUHVVXUHZRXOGEHDERXWSRXQGV7KLVLVDYDULDWLRQ
RISRXQGV$OVRQRWHWKDWDFDUERQGHSRVLWZLOOUDLVHWKHFRPSUHVVLRQSUHVVXUHDW
DQ\JLYHQUDWLRE\UHGXFLQJWKHFRPEXVWLRQFKDPEHUYROXPH²WKHJUHDWHUWKHGHSRVLW
WKHKLJKHUWKHSUHVVXUH
7RPDNHDFRPSUHVVLRQWHVWILUVWZDUPXSWKHHQJLQH:DUPLQJXSZLOODOORZDOOWKH
HQJLQHSDUWVWRH[SDQGWRQRUPDORSHUDWLQJFRQGLWLRQDQGZLOOHQVXUHDILOPRIRLORQWKH
F\OLQGHUZDOOV5HPHPEHUWKDWWKHRLOILOPRQWKHZDOOVRIWKHF\OLQGHUKHOSVWKH
H[SDQGHGSLVWRQULQJVVHDOWKHFRPSUHVVLRQZLWKLQWKHF\OLQGHU$IWHUWKHHQJLQHLV
ZDUPHGWRRSHUDWLQJWHPSHUDWXUHVKXWLWGRZQDQGUHPRYHDOOWKHVSDUNSOXJV
5HPRYLQJDOOWKHSOXJVZLOOPDNHWKHHQJLQHHDVLHUWRFUDQNZKLOH\RXREWDLQ
FRPSUHVVLRQUHDGLQJVDWHDFKF\OLQGHU7KHWKURWWOHDQGFKRNHVKRXOGEHLQDZLGHRSHQ
SRVLWLRQZKHQFRPSUHVVLRQUHDGLQJVDUHWDNHQ6RPHFRPSUHVVLRQJDXJHVFDQEH
VFUHZHGLQWRWKHVSDUNSOXJKROH0RVWFRPSUHVVLRQJDXJHVKRZHYHUKDYHDWDSHUHG
UXEEHUHQGSOXJDQGPXVWEHKHOGVHFXUHO\LQWKHVSDUNSOXJRSHQLQJXQWLOWKHKLJKHVW
UHDGLQJRIWKHJDXJHLVUHDFKHG
&UDQNWKHHQJLQHZLWKWKHVWDUWLQJPRWRUXQWLOLWPDNHVDWOHDVWIRXUFRPSOHWH
UHYROXWLRQV1RUPDOFRPSUHVVLRQUHDGLQJVIRUJDVROLQHHQJLQHF\OLQGHUVDUHXVXDOO\
SVLRUVOLJKWO\KLJKHU&RPSUHVVLRQWHVWLQJLVIDVWHUDQGVDIHUZKHQWKHUHDUHWZR
PHFKDQLFVDVVLJQHGWRWKHMRE5HPHPEHUWKDWWKHFRPSUHVVLRQWHVWPXVWEH
FRPSOHWHGEHIRUHWKHHQJLQHFRROVRII
8QOHVVWKHFRPSUHVVLRQUHDGLQJVDUHLQWHUSUHWHGFRUUHFWO\LWLVXVHOHVVWRPDNHWKH
WHVWV$Q\ORZUHDGLQJVLQGLFDWHDOHDNDJHSDVWWKHYDOYHVSLVWRQULQJVRUF\OLQGHUKHDG
JDVNHWV%HIRUHWDNLQJDQ\FRUUHFWLYHDFWLRQPDNHDQRWKHUFKHFNWRWU\WRSLQSRLQWWKH
WURXEOH3RXUDSSUR[LPDWHO\DWDEOHVSRRQRIKHDY\RLOLQWRWKHF\OLQGHUWKURXJKWKHVSDUN
SOXJKROHDQGWKHQUHWHVWWKHFRPSUHVVLRQSUHVVXUH,IWKHSUHVVXUHLQFUHDVHVWRD
PRUHQRUPDOUHDGLQJLWPHDQVWKHORVVRIFRPSUHVVLRQLVGXHWROHDNDJHSDVWWKHSLVWRQ
1$9('75$$ 
ULQJV,IDGGLQJRLOGRHVQRWKHOSFRPSUHVVLRQSUHVVXUHWKHFKDQFHVDUHWKDWWKH
OHDNDJHLVSDVWWKHYDOYHV/RZFRPSUHVVLRQEHWZHHQWZRDGMDFHQWF\OLQGHUVLQGLFDWHV
DOHDNLQJRUDEORZQKHDGJDVNHW,IWKHFRPSUHVVLRQSUHVVXUHRIDF\OLQGHULVORZIRU
WKHILUVWIHZSLVWRQVWURNHVDQGWKHQLQFUHDVHVWRQHDUQRUPDODVWLFNLQJYDOYHLV
LQGLFDWHG1HDUQRUPDOFRPSUHVVLRQUHDGLQJVRQDOOF\OLQGHUVLQGLFDWHWKDWWKHHQJLQH
F\OLQGHUVDQGYDOYHVDUHLQIDLUFRQGLWLRQ,QGLFDWLRQVRIYDOYHWURXEOHVE\FRPSUHVVLRQ
WHVWVPD\EHFRQILUPHGE\WDNLQJYDFXXPJDXJHUHDGLQJV

9DFXXP*DXJH7HVW
:KHQDQHQJLQHKDVDQDEQRUPDOFRPSUHVVLRQUHDGLQJLWLVOLNHO\WKDWWKHF\OLQGHUKHDG
ZLOOKDYHWREHUHPRYHGWRUHSDLUWKHWURXEOH1HYHUWKHOHVVWKHPHFKDQLFVVKRXOGWHVW
WKHYDFXXPRIWKHHQJLQHZLWKDJDXJH7KHYDFXXPJDXJHSURYLGHVDPHDQVRIWHVWLQJ
LQWDNHPDQLIROGYDFXXPFUDQNLQJYDFXXPIXHOSXPSYDFXXPDQGERRVWHUSXPS
YDFXXP7KHYDFXXPJDXJHGRHV127UHSODFHRWKHUWHVWHTXLSPHQWEXWUDWKHU
VXSSOHPHQWVLWDQGGLDJQRVHVHQJLQHWURXEOHPRUHFRQFOXVLYHO\
9DFXXPJDXJHUHDGLQJVDUHWDNHQZLWKWKHHQJLQHUXQQLQJDQGPXVWEHDFFXUDWHWREH
RIDQ\YDOXH7KHUHIRUHWKHFRQQHFWLRQEHWZHHQWKHJDXJHDQGLQWDNHPDQLIROGPXVWEH
OHDNSURRI$OVREHIRUHWKHFRQQHFWLRQLVPDGHVHHWKDWWKHRSHQLQJVWRWKHJDXJHDQG
LQWDNHPDQLIROGDUHIUHHIURPGLUWRURWKHUUHVWULFWLRQV:KHQDWHVWLVPDGHDWDQ
HOHYDWLRQRIIHHWRUOHVVDQHQJLQHLQJRRGFRQGLWLRQLGOLQJDWDVSHHGRIDERXW
USPVKRXOGJLYHDVWHDG\UHDGLQJRIIURPWRLQFKHVRQWKHYDFXXPJDXJH
7KHDYHUDJHUHDGLQJZLOOGURSDSSUR[LPDWHO\LQFKRIYDFXXPSHUIHHWDW
DOWLWXGHVRIIHHWDQGKLJKHUDERYHVHDOHYHO
:KHQWKHWKURWWOHLVRSHQHGDQGFORVHGVXGGHQO\WKHYDFXXPUHDGLQJVKRXOGILUVWGURS
WRDERXWLQFKHVZLWKWKHWKURWWOHRSHQDQGWKHQFRPHEDFNWRDKLJKRIDERXW
LQFKHVEHIRUHVHWWOLQJEDFNWRDVWHDG\UHDGLQJDVWKHHQJLQHLGOHV7KLVLVQRUPDOIRUDQ
HQJLQHLQJRRGRSHUDWLQJFRQGLWLRQ
,IWKHJDXJHUHDGLQJGURSVWRDERXWLQFKHVDQGUHPDLQVWKHUHLWZRXOGLQGLFDWH
FRPSUHVVLRQOHDNVEHWZHHQWKHF\OLQGHUZDOOVDQGWKHSLVWRQULQJVRUSRZHUORVVFDXVHG
E\LQFRUUHFWLJQLWLRQWLPLQJDYDFXXPJDXJHSRLQWHULQGLFDWLQJDVWHDG\IRUH[DPSOH
XVXDOO\PHDQVWKDWWKHYDOYHWLPLQJRIWKHHQJLQHLVLQFRUUHFW%HORZQRUPDOUHDGLQJV
WKDWFKDQJHVORZO\EHWZHHQWZROLPLWVVXFKDVDQGLQFKHVFRXOGSRLQWWRD
QXPEHURIWURXEOHV$PRQJWKHPDUHLPSURSHUFDUEXUHWRULGOLQJDGMXVWPHQW
PDODGMXVWHGRUEXUQHGEUHDNHUSRLQWVDQGVSDUNSOXJVZLWKWKHHOHFWURGHVVHWWRR
FORVHO\
$VWLFNLQJYDOYHFRXOGFDXVHWKHJDXJHSRLQWHUWRERXQFHIURPDQRUPDOVWHDG\UHDGLQJ
WRDORZHUUHDGLQJDQGWKHQEDFNWRQRUPDO$EURNHQRUZHDNYDOYHVSULQJZRXOGFDXVH
WKHSRLQWHUWRVZLQJZLGHO\DVWKHHQJLQHLVDFFHOHUDWHG$ORRVHLQWDNHPDQLIROGRUD
OHDNLQJJDVNHWEHWZHHQWKHFDUEXUHWRUDQGPDQLIROGZRXOGVKRZDVWHDG\ORZUHDGLQJ
RQWKHYDFXXPJDXJH
9DFXXPJDXJHWHVWVRQO\KHOSWRORFDWHWKHWURXEOH7KH\DUHQRWDOZD\VFRQFOXVLYHEXW
DV\RXJDLQH[SHULHQFHLQLQWHUSUHWLQJWKHUHDGLQJV\RXFDQXVXDOO\GLDJQRVHHQJLQH
EHKDYLRU

9DFXXP*DXJH
)HZWRROVRUWHVWGHYLFHVDUHPRUHXVHIXODQGYHUVDWLOHWKDQDYDFXXPJDXJH$
YDFXXPJDXJHFDQWHOODVPXFKDERXWWKHLQWHUQDODQGH[WHUQDOZRUNLQJVRIDQHQJLQH
DVWKHFRPELQDWLRQRIDYROWPHWHUFRPSUHVVLRQJDXJHVWHWKRVFRSHDQGWLPLQJOLJKW

1$9('75$$ 
$QHQJLQH
VYDFXXPUHDGLQJVFDQSURYLGHLQIRUPDWLRQDERXWLWVUXQQLQJSDUDPHWHUV
SURYLGHG\RXNQRZKRZWRUHDGWKHJDXJH
$WPRVSKHULFSUHVVXUHLVPHDVXUHGDWSRXQGVVTXDUHLQFKDWVHDOHYHO7KDW
SUHVVXUHFRUUHVSRQGVWRWKHZHLJKWRIDLUKROGLQJDFROXPQRIPHUFXU\LQFKHVLQ
KHLJKW%\GHILQLWLRQYDFXXPLVSUHVVXUHEHORZQRUPDODWPRVSKHUHFRPPRQO\FDXVHG
E\DVXFWLRQWKDWLVWDNLQJWKHDLUPROHFXOHVDZD\IURPDSDUWLFXODUORFDWLRQ,QHQJLQHV
RIFRXUVHWKHDLULVEHLQJVXFNHGLQE\WKHYDFXXPFUHDWHGE\WKHPRYHPHQWRIWKH
SLVWRQV
$OOYDFXXPJDXJHIDFHVDUHJUDGXDWHGLQLQFKHVRIPHUFXU\DOWKRXJKVRPHKDYH
DGGLWLRQDOVFDOHVLQPLOOLPHWHUVRIPHUFXU\
1RWHDOVRWKDWPRVWYDFXXPJDXJHVDUHHTXLSSHGZLWKDQDGGLWLRQDOVFDOHWKDW
PHDVXUHVIXHOSXPSSUHVVXUH7KLVDOORZVWKHXVHUWRFRQQHFWWKHKRVHGLUHFWO\WRWKH
IXHOOLQHHQWHULQJWKHFDUEXUHWRUWRPHDVXUHWKHIXHOSXPS
VSUHVVXUH6LQFHPDQ\IXHO
V\VWHPSUREOHPVFDQEHWUDFHGWRWKHSXPSVWKHPVHOYHVVXFKDWRROFDQVDYHDORWRI
WURXEOHVKRRWLQJWLPH,VWKLVDJUHDWWRRORUZKDW"
7KHPRVWLPSRUWDQWWKLQJWRGRZKHQXVLQJDYDFXXPJDXJHLVWRFRQQHFWLWWRD
FRQVWDQWYDFXXPVRXUFHRQWKHHQJLQH6RPHPDQLIROGVLQFRUSRUDWHDSOXJWKDWPD\EH
UHPRYHGIRUVXFKSXUSRVHV,IQRQHH[LVWVWKHQH[WEHVWSODFHWRFRQQHFWLVWKH3&9
KRVH,IWKDW
VWRRKDUGWRUHDFKFRQQHFWWRWKHSRZHUEUDNHYDFXXPKRVHRQWKH
HQJLQHVLGHRIWKHRQHZD\YDOYHLQWKHKRVH
/DVWO\\RXFDQFRQQHFWWRWKHYDFXXPOLQHDWWKHFDUEXUHWRUEXWPDNHVXUHWKHOLQHKDV
YDFXXPDWLGOH0DQ\GLVWULEXWRUVZHUHGHVLJQHGWRJHWDGYDQFHYDFXXPRQO\ZKHQWKH
WKURWWOHSODWHZDVRSHQHGLQZKLFKFDVHWKHUHZDVQRYDFXXPDWLGOH0DNHVXUH\RX
YH
FRQQHFWHGWKLQJVSURSHUO\

9DFXXP*DXJH6FHQDULRV
7KHIROORZLQJVFHQDULRVDUHW\SLFDOH[DPSOHVDQGDUHQRWDEVROXWH³GURSGHDG´
QXPEHUV5HDGWKHPDLQWHQDQFHPDQXDOVIRUWKHFRUUHFWUHDGLQJIRU\RXUHQJLQH
1RUPDO9DFXXP5HDGLQJ
1RUPDOYDFXXPUHDGLQJLVW\SLFDOO\LQFKHVZLWKQHHGOHKROGLQJVWHDG\7KLV
PHDQVWKDWWKHHQJLQH¶VFRPSUHVVLRQLVILQHDQGWKHUHDUHQRYDFXXPOHDNVRULJQLWLRQ
DQRPDOLHV

$FFHOHUDWLRQ'HFHOHUDWLRQ
D 5DSLGDFFHOHUDWLRQ:KHQWKHHQJLQHLVDFFHOHUDWHGLWVYDFXXPZLOOLQLWLDOO\GURS
FORVHWR]HURDQGWKHQVORZO\VWDUWWRULVH7KLVLVEHFDXVHWKHZLGHRSHQWKURWWOH
SODWHPRPHQWDULO\DOORZVDWPRVSKHULFSUHVVXUHLQHTXDOL]LQJWKHSUHVVXUHLQWKH
LQWDNHV\VWHP
E 'HFHOHUDWLRQ,IWKHHQJLQHLVGHFHOHUDWHGWKURWWOHSODWHFORVHGZKLOHHQJLQHLV
UHYYHGXSWKHYDFXXPZLOOPRPHQWDULO\JRZD\XSIUHTXHQWO\WRLQFKHV
DQGWKHQGURSWRQRUPDO7KLVLVGXHWRUHODWLYHLQHTXDOLW\EHWZHHQWKHFORVHG
WKURWWOHSODWHLQWDNHV\VWHPDQGWKHF\OLQGHU¶VVXFWLRQ

+LJK3HUIRUPDQFH(QJLQHV
+LJKSHUIRUPDQFHHQJLQHV²WKRVHZLWKKLJKOLIWORQJGXUDWLRQODUJHRYHUODS²ZLOOVKRZ
DQRUPDOYDFXXPUHDGLQJORZHUWKDQ³VWRFN´HQJLQHVW\SLFDOO\DURXQGLQFKHV7KH
QHHGOHZLOOUHPDLQVWHDG\EXWDOLWWOH³QHHGOHVKDNH´LVWREHH[SHFWHG7KLVLVEHFDXVH
1$9('75$$ 
RIYDOYHRYHUODSZKHUHERWKLQWDNHDQGH[KDXVWYDOYHVDUHPRPHQWDULO\RSHQWRJHWKHU

(QJLQHZLWK:RUQ5LQJVRU'LOXWHG2LO
1RUPDORSHUDWLRQVKRZVDERXWLQFKHV5DSLGDFFHOHUDWLRQFDXVHVWKHQHHGOHWR
ULVHRQO\WRDERXWLQFKHVQRUPDOZRXOGEH5HDVRQ"/RZHUYDFXXPGXH
WRJDVHVE\SDVVLQJWKHULQJV

6WLFNLQJ9DOYHV
,IWKHSUREOHPLVVWLFNLQJYDOYHVWKHQHHGOHUHPDLQVVWHDG\EXWTXLFNO\IOLFNVGRZQDQG
WKHQEDFNXS7KHGURSGRZQZDUGLVXVXDOO\DURXQGLQFKHVRQWKHVFDOH7KLVIOLFN
RIWKHQHHGOHRFFXUVZKHQDSDUWLFXODUIDXOW\YDOYHLVDFWXDWHG

%XUQHG/HDNLQJ9DOYHV
(QJLQHVWKDWKDYHEXUQHGRUFRQVWDQWO\OHDNLQJYDOYHVZLOOH[KLELWYDFXXPUHDGLQJV
7KHUHLVDQHYHQO\VSDFHGGRZQZDUGIOLFNLQJRIWKHQHHGOHXVXDOO\RYHUDERXW
LQFKHV

3RRUO\6HDWHG9DOYHV
$UHJXODUO\GRZQZDUGIOLFNLQJRIWKHQHHGOHRYHUMXVWLQFKHVLQGLFDWHVSRRUO\VHDWHG
YDOYHV7KLVLVLQFRQWUDVWWRTXLFNPRYHPHQWVRIWKHQHHGOH

:RUQ9DOYH*XLGHV
:KHQ\RXVHHWKHQHHGOHUHJXODUO\VZLQJEDFNDQGIRUWKRYHULQFKHVLWPHDQVWKH
YDOYHJXLGHVDUHZRUQ<RXFDQFKHFNWKLVGLDJQRVLVE\JUDGXDOO\LQFUHDVLQJWKHHQJLQH
VSHHG,IWKHQHHGOHJURZVVWHDG\\RXFDQDVVXPHWKHJXLGHVDUHZRUQ

:HDN9DOYH6SULQJV
:KHQWKHQHHGOHRVFLOODWHVYLROHQWO\RYHULQFKHVDVWKHHQJLQHVSHHGLV
LQFUHDVHGLWPHDQVWKHUHDUHZHDNYDOYHVSULQJV,QWKLVFRQGLWLRQWKHUHDGLQJDWLGOH
FDQEHUHODWLYHO\VWHDG\

9DOYH7LPLQJ,QWDNH/HDN
$ORZVWHDG\UHDGLQJRIDERXWLQFKHVLQGLFDWHVODWHYDOYHWLPLQJRUDSRVVLEOHVOLJKW
LQWDNHOHDN7RVHHLIWKHSUREOHPLVDOHDNVSUD\VWDUWHUIOXLGRYHUWKHLQWDNHDUHD
ZKHUHLWLVEROWHGWRWKHKHDGV,IWKHHQJLQHVPRRWKHVXSRULQFUHDVHVVSHHGWKHUHLVD
OHDN/DWHYDOYHWLPLQJPHDQVORWVRIZRUNWRFRUUHFWWKLQJV

5HWDUGHG,JQLWLRQ7LPLQJ
$VWHDG\EXW³PHGLRFUH´QHHGOHUHDGLQJRIDERXWLQFKHVLQGLFDWHVUHWDUGHGLJQLWLRQ
WLPLQJ7KLVLVHDV\WRIL[URWDWLRQRIWKHGLVWULEXWRU,IWKHVDPHUHDGLQJLVDFFRPSDQLHG
E\DUHJXODUSXOVDWLRQQRWDIOLFNHURIWKHQHHGOHFKHFNWKHJDSRQWKHVSDUNSOXJVRU
IRUGHIHFWLYHEUHDNHUSRLQWV

0DMRU,QWDNH/HDN
$ORZVWHDG\UHDGLQJRILQFKHVPHDQVWKHUHLVDPDMRULQWDNHOHDN&KHFNWKH
FDUEXUHWRUPRXQWLQJIODQJHJDVNHWVDQGPDQLIROGJDVNHWV,IQRWKLQJLVIRXQGJR
WKURXJKHDFKYDFXXPKRVHRQWKHYHKLFOHORRNLQJIRUORRVHFRQQHFWLRQVRUVSOLWKRVHV

1$9('75$$ 
%ORZQ*DVNHW
,IWKHQHHGOHVWDUWVRIIDWQRUPDOYDFXXPEXWGURSVRIILQDUHJXODUPDQQHUVXVSHFWD
EORZQJDVNHW*HQHUDOO\VXFKSUREOHPVDUHDFFRPSDQLHGE\VPRNHDQGRWKHUPRUH
REYLRXVV\PSWRPVVRYHU\IHZKHDGJDVNHWIDLOXUHVDUHGLDJQRVHGE\YDFXXPJDXJHV

&ORJJHG([KDXVW6\VWHP
:KHQDQHQJLQHILUVWVWDUWVDQGLGOHVWKHQHHGOHVKRZVDQRUPDOUHDGLQJEXWDVWKH
HQJLQHVSHHGLQFUHDVHVWKHQHHGOHVORZO\JRHVWR]HURVXVSHFWDFORJJHGH[KDXVW
V\VWHP([FHVVLYHEDFNSUHVVXUHLVWKHFDXVHKHUH

,GOH0L[WXUH
,IWKHFDUEXUHWRU¶VLGOHPL[WXUHLVDGMXVWHGLPSURSHUO\WKHYDFXXPJDXJHQHHGOHZLOO
PRYHVORZO\EDFNDQGIRUWKEHWZHHQDERXWLQFKHV$GMXVWPHQWRIWKHPL[WXUH
VFUHZVZLOOPDNHWKHPRYHPHQWJRDZD\DQGUHWXUQWKHQHHGOHWRQRUPDO

&\OLQGHU/HDNDJH7HVW
$QRWKHUDLGLQORFDWLQJFRPSUHVVLRQOHDNVLVWKHF\OLQGHUOHDNDJHWHVW7KHSULQFLSOH
LQYROYHGLVWKDWRIVLPXODWLQJWKHFRPSUHVVLRQWKDWGHYHORSVLQWKHF\OLQGHUGXULQJ
RSHUDWLRQ&RPSUHVVHGDLULVLQWURGXFHGLQWRWKHF\OLQGHUWKURXJKWKHVSDUNSOXJRU
LQMHFWRUKROHDQGE\OLVWHQLQJDQGREVHUYLQJDWFHUWDLQNH\SRLQWV\RXFDQPDNHVRPH
EDVLFGHGXFWLRQV
7KHF\OLQGHUOHDNDJHWHVWHULVXVHGWRWHVW
F\OLQGHUOHDNDJHE\DSSO\LQJUHJXODWHGDLUWR
WKHF\OLQGHUDWDFRQWUROOHGYROXPHDQG
SUHVVXUHDQGSURGXFLQJDSHUFHQWDJHRI
OHDNDJHVSHFLILFDWLRQ7KHUHDUHFRPPHUFLDO
F\OLQGHUOHDNDJHWHVWHUV(Figure 4-15)
DYDLODEOHEXWDFWXDOO\WKHWHVWPD\EH
FRQGXFWHGZLWKPDWHULDOVUHDGLO\DYDLODEOHLQ
PRVWUHSDLUVKRSV,QDGGLWLRQWRWKHVXSSO\
RIFRPSUHVVHGDLUDGHYLFHIRUDWWDFKLQJWKH
VRXUFHRIDLUWRWKHF\OLQGHULVUHTXLUHG)RUD
JDVROLQHHQJLQHWKLVGHYLFHFDQEHPDGHE\
XVLQJDQROGVSDUNSOXJRIWKHFRUUHFWVL]HIRU
WKHHQJLQHWREHWHVWHG%\UHPRYLQJWKH
LQVXODWRUDQGZHOGLQJDSQHXPDWLFYDOYH
VWHPWRWKHWKUHDGHGVHFWLRQRIWKHVSDUN
SOXJ\RXZLOOKDYHDGHYLFHIRULQWURGXFLQJ )LJXUH²&\OLQGHUOHDNDJH
WKHFRPSUHVVHGDLULQWRWKHF\OLQGHU WHVWHU
7KHQH[WVWHSLVWRSODFHWKHSLVWRQDW7'&
RU³URFN´SRVLWLRQEHWZHHQWKHFRPSUHVVLRQDQGSRZHUVWURNHV7KHQ\RXFDQLQWURGXFH
WKHFRPSUHVVHGDLULQWRWKHF\OLQGHU1RWHWKDWWKHHQJLQHZLOOWHQGWRVSLQ1RZE\
OLVWHQLQJDWWKHFDUEXUHWRUWKURWWOHERG\RULQWDNHPDQLIROGWKHH[KDXVWSLSHDQGWKHRLO
ILOOHUSLSHFUDQNFDVHDQGE\REVHUYLQJWKHFRRODQWLQWKHUDGLDWRUZKHQDSSOLFDEOH
\RXFDQSLQSRLQWWKHDUHDRIDLUORVV$ORXGKLVVLQJRIDLUDWWKHLQWDNHPDQLIROGDUHD
ZRXOGLQGLFDWHDOHDNLQJLQWDNHYDOYHRUYDOYHV([FHVVLYHKLVVLQJRIDLUDWWKHRLOILOOHU
WXEHFUDQNFDVHZRXOGLQGLFDWHDQH[FHVVLYHDLUOHDNSDVWWKHSLVWRQULQJV%XEEOHV
REVHUYHGLQWKHFRRODQWDWWKHUDGLDWRUZRXOGLQGLFDWHDOHDNLQJKHDGJDVNHW
$VLQYDFXXPWHVWLQJLQGLFDWLRQVDUHQRWFRQFOXVLYH)RULQVWDQFHWKHOHDNLQJKHDG
1$9('75$$ 
JDVNHWPD\SURYHWREHDFUDFNHGKHDGRUWKHEDGULQJVPD\EHDVFRUHGF\OLQGHUZDOO
7KHLPSRUWDQWWKLQJLVWKDWWKHVRXUFHRIWURXEOHKDVEHHQSLQSRLQWHGWRDVSHFLILFDUHD
DQGDIDLUO\EURDGDFFXUDWHHVWLPDWHRIWKHUHSDLUVRUDGMXVWPHQWVUHTXLUHGFDQEH
PDGHZLWKRXWGLVPDQWOLQJWKHHQJLQH
,QPDNLQJDF\OLQGHUOHDNDJHWHVWUHPRYHDOOWKHVSDUNSOXJVVRWKDWHDFKSLVWRQFDQEH
SRVLWLRQHGZLWKRXWWKHUHVLVWDQFHRIFRPSUHVVLRQRIWKHUHPDLQLQJF\OLQGHUV7KH
FRPPHUFLDOWHVWHUVVXFKDVWKHRQHVKRZQLQFigure 4-15KDYHDJDXJHLQGLFDWLQJD
SHUFHQWDJHRIDLUORVV7KHJDXJHLVFRQQHFWHGWRDVSULQJORDGHGGLDSKUDJP7KH
VRXUFHRIDLULVFRQQHFWHGWRWKHLQVWUXPHQWDQGFRXQWHUEDODQFHVWKHDFWLRQRIWKH
VSULQJDJDLQVWWKHGLDSKUDJP%\DGMXVWLQJWKHVSULQJWHQVLRQ\RXFDQFDOLEUDWHWKH
JDXJHSURSHUO\DJDLQVWDYDULHW\RIDLUSUHVVXUHVRXUFHVZLWKLQDJLYHQWROHUDQFH

*$8*(&$5(DQG0$,17(1$1&(
$VDVXSHUYLVRU\RXZLOOEHUHVSRQVLEOHIRUWKHFDUHDQGPDLQWHQDQFHRIWKHHQJLQH
WHVWLQJHTXLSPHQWVXFKDVWKHF\OLQGHUFRPSUHVVLRQWHVWHUYDFXXPJDXJHDQG
F\OLQGHUOHDNDJHWHVWHU$VWKHVXSHUYLVRU\RXPXVWLPSUHVVXSRQWKHOHVVH[SHULHQFHG
PHFKDQLFVWKDWWKHVHSUHFLVLRQJDXJHVDQGWHVWHUVDUHIUDJLOHLQVWUXPHQWVWKDWFDQEH
GDPDJHGWKURXJKLPSURSHUXVHRUURXJKKDQGOLQJ7KH\VKRXOGEHSXWEDFNLQWKHFDVH
WKH\FDPHLQDQGUHWXUQHGWRDVDIHSODFHLQWKHWRROURRPLPPHGLDWHO\DIWHUEHLQJXVHG
VRWKH\DUHQRWO\LQJDURXQGZLWKWKHSRVVLELOLW\WREHGDPDJHG.HHSLQJWKHJDXJHV
DQGWHVWHUVFOHDQLVDERXWDOOWKHPDLQWHQDQFHWKDWLVUHTXLUHGLIKDQGOHGSURSHUO\,I
WKH\DUHGURSSHGVWHSSHGRQEURNHQRUMDUUHGRXWRIFDOLEUDWLRQWKHJDXJHVRUWHVWHUV
ZLOOSUREDEO\KDYHWREHUHWXUQHGWRWKHPDQXIDFWXUHUIRUUHSDLURUUHSODFHPHQW

9$/9(69$/9(0(&+$1,606DQG&</,1'(5+($'6
6(59,&,1*
(YHQLIDQHQJLQHKDVEHHQSURSHUO\PDLQWDLQHGDQGVHUYLFHGWKHILUVWPDMRUUHSDLUWKH
HQJLQHZLOOQHHGLVDQRYHUKDXOLQYROYLQJWKHYDOYHV

9DOYH7URXEOHV
6RPHRIWKHFRPPRQYDOYHWURXEOHVWKDW\RXPD\HQFRXQWHULQZRUNLQJZLWKHQJLQHV
DQGWKHLUSRVVLEOHFDXVHVDUHLQGLFDWHGEHORZ
6WLFNLQJYDOYHVZLOOSURGXFHXQXVXDOQRLVHDWWKHFDPIROORZHUVSXVKURGVDQGURFNHU
DUPVDQGPD\FDXVHWKHHQJLQHWRPLVILUH6WLFNLQJLVXVXDOO\FDXVHGE\UHVLQRXV
GHSRVLWVOHIWE\LPSURSHUOXEHRLORUIXHO7KHFDXVHFRXOGDOVREHGXHWRZRUQYDOYH
JXLGHVDZDUSHGYDOYHVWHPLQVXIILFLHQWRLOFROGHQJLQHRSHUDWLRQRURYHUKHDWLQJ
7RIUHHVWLFNLQJYDOYHVZLWKRXWKDYLQJWRGLVDVVHPEOHWKHHQJLQHXVHRQHRIVHYHUDO
DSSURYHGFRPPHUFLDOVROYHQWV,IWKHHQJLQHLVGLVDVVHPEOHGXVHHLWKHUDFRPPHUFLDO
VROYHQWRUDPL[WXUHRIKDOIOXEHRLODQGKDOINHURVHQHWRUHPRYHWKHUHVLQV

:$51,1* 
'RQRWXVHWKHNHURVHQHPL[WXUHRQDQDVVHPEOHGHQJLQHVLQFHDVPDOODPRXQWRIWKLV
PL[WXUHVHWWOLQJLQDF\OLQGHUFRXOGFDXVHDVHULRXVH[SORVLRQ
%HQWYDOYHVRUVOLJKWO\ZDUSHGYDOYHVWHQGWRKDQJRSHQ$YDOYHWKDWKDQJVRSHQQRW
RQO\SUHYHQWVWKHF\OLQGHUIURPILULQJEXWDOVRLVOLNHO\WREHVWUXFNE\WKHSLVWRQDQG
EHQWVRWKDWLWFDQQRWVHDWSURSHUO\%HQWYDOYHVDUHJHQHUDOO\IURPWKHPHHWLQJEHWZHHQ
WKHSLVWRQDQGYDOYH&DXVHVKHUHW\SLFDOO\LQFOXGHDEURNHQWLPLQJFKDLQRUEHOWZHDN

1$9('75$$ 
RUEURNHQYDOYHVSULQJVRYHUUHYYLQJWKHHQJLQHYDOYHVWLFNLQJLQVXIILFLHQWJXLGH
FOHDUDQFHRUOXEULFDWLRQRYHUKHDWLQJHWFDQGLQVXIILFLHQWYDOYHWRSLVWRQFOHDUDQFH
H[FHVVLYHYDOYHOLIWYDOYHUHOLHIVQRWFXWGHHSO\HQRXJKLQWRSLVWRQVZURQJSLVWRQVQRW
HQRXJKGHFNKHLJKWKHDGVPLOOHGWRRPXFKHWF6\PSWRPVRIZDUSHGRUVOLJKWO\EHQW
YDOYHVZLOOXVXDOO\VKRZXSDVGDPDJHWRWKHVXUIDFHRIWKHYDOYHKHDG7ROHVVHQWKH
SRVVLELOLW\WKDWF\OLQGHUKHDGYDOYHVZLOOEHEHQWRUGDPDJHGGXULQJRYHUKDXO1(9(5
SODFHDF\OLQGHUKHDGGLUHFWO\RQDVWHHOGHFNRUJUDWLQJXVHDSURWHFWLYHPDWHULDOVXFK
DVZRRGRUFDUGERDUG$OVR1(9(5SU\DYDOYHRSHQZLWKDVFUHZGULYHURUVLPLODUWRRO
%XUQHGYDOYHVDUHLQGLFDWHGE\LUUHJXODUH[KDXVWJDVWHPSHUDWXUHVDQGVRPHWLPHVE\
H[FHVVLYHQRLVH,QJHQHUDOWKHSULPDU\FDXVHVRIEXUQHGYDOYHVDUHDVWLFNLQJYDOYH
LQVXIILFLHQWYDOYHWDSSHWFOHDUDQFHDGLVWRUWHGVHDWRYHUKHDWHGHQJLQHOHDQIXHODLU
PL[WXUHSUHLJQLWLRQGHWRQDWLRQYDOYHVHDWOHDNDJHRUYDOYHKHDGVWKDWKDYHEHHQ
H[FHVVLYHO\UHJURXQG
7KHSULQFLSDOFDXVHRIEXUQHGH[KDXVWYDOYHVLVVPDOOSDUWLFOHVRIFDUERQWKDWORGJH
EHWZHHQWKHYDOYHKHDGDQGWKHYDOYHVHDW7KHVHSDUWLFOHVFRPHIURPLQFRPSOHWH
FRPEXVWLRQRIWKHIXHORURLOOHIWE\WKHSLVWRQULQJVLQWKHF\OLQGHU7KHSDUWLFOHVKROGWKH
YDOYHRSHQMXVWHQRXJKWRSUHYHQWWKHYDOYHKHDGIURPWRXFKLQJWKHYDOYHVHDW7KH
YDOYHLVFRROHGE\VHYHUDOPHDQVLQFOXGLQJLWVFRQWDFWZLWKWKHYDOYHVHDW:KHQFDUERQ
SDUWLFOHVSUHYHQWFRQWDFWWKHKHDWQRUPDOO\WUDQVIHUUHGIURPWKHYDOYHKHDGWRWKHVHDW
UHPDLQVLQWKHYDOYHKHDG7KHYDOYHVHDWVHOGRPEXUQVEHFDXVHWKHZDWHUMDFNHWV
VXUURXQGLQJWKHVHDWXVXDOO\SURYLGHHQRXJKFRROLQJWRNHHSLWVWHPSHUDWXUHEHORZD
GDQJHURXVSRLQW
9DOYHEUHDNDJHFDQKDSSHQWRHLWKHUWKHLQWDNHRUH[KDXVWYDOYHVDQGWKH\JHQHUDOO\
EUHDNLQRQHRIWZRSODFHVZKHUHWKHKHDGLVMRLQHGWRWKHVWHPRUZKHUHWKHNHHSHU
JURYHVDUHPDFKLQHGLQWRWKHHQGRIWKHVWHP1HYHUWKHOHVVEUHDNDJHRIWKHYDOYHVLV
GHVWUXFWLYHGXHWRWKHSLHFHVIDOOLQJLQWRWKHFRPEXVWLRQFKDPEHUDQGLQIOLFWLQJGDPDJH
RQWKHSLVWRQDQGKHDG9DOYHEUHDNDJHPD\RFFXUE\YDOYHRYHUKHDWLQJGHWRQDWLRQ
H[FHVVLYHWDSSHWFOHDUDQFHVHDWHFFHQWULFWRVWHPFRFNHGVSULQJRUUHWDLQHURU
VFUDWFKHVRQWKHVWHPFDXVHGE\LPSURSHUFOHDQLQJ
/RRVHYDOYHVHDWVFDQEHLQVWDOOHGRQO\E\LQVWDOOLQJWKHPSURSHUO\&OHDQWKHFRXQWHU
ERUHWKRURXJKO\WRUHPRYHDOOFDUERQEHIRUHVKULQNLQJLQDQLQVHUW&KLOOWKHYDOYHVHDW
ZLWKGU\LFHDQGSODFHWKHF\OLQGHUKHDGLQERLOLQJZDWHUIRUDSSUR[LPDWHO\PLQXWHV
WKHQGULYHWKHLQVHUWLQWRWKHFRXQWHUERUHZLWKDYDOYHLQVHUWLQVWDOOLQJWRRO1HYHUVWULNH
DYDOYHVHDWGLUHFWO\&RQGXFWWKHGULYLQJLQRSHUDWLRQTXLFNO\EHIRUHWKHLQVHUWUHDFKHV
WKHWHPSHUDWXUHRIWKHF\OLQGHUKHDG:KHQUHSODFLQJDGDPDJHGYDOYHZLWKDQHZRQH
LQVSHFWWKHYDOYHJXLGHVIRUH[FHVVLYHZHDU,IWKHYDOYHPRYHVIURPVLGHWRVLGHDVLW
VHDWVUHSODFHWKHJXLGHV

9DOYH$GMXVWPHQWV
:KHQPHFKDQLFDOVROLGOLIWHUVDUHXVHGWKHYDOYHVUHTXLUHSHULRGLFDGMXVWPHQW3URSHU
DQGXQLIRUPYDOYHDGMXVWPHQWVDUHUHTXLUHGIRUDVPRRWKUXQQLQJHQJLQH,QFRUUHFW
YDOYHDGMXVWPHQWZLOOXSVHWWKHDPRXQWRIDLUIXHOPL[WXUHSXOOHGLQWRWKHF\OLQGHU,WDOVR
DIIHFWVYDOYHOLIWDQGGXUDWLRQ7KLVZLOODIIHFWFRPEXVWLRQDQGUHGXFHHQJLQHHIILFLHQF\
8QOHVVWKHFOHDUDQFHEHWZHHQYDOYHVWHPVDQGURFNHUDUPVRUYDOYHOLIWHUVLVDGMXVWHG
DFFRUGLQJWRWKHPDQXIDFWXUHU¶VVSHFLILFDWLRQVWKHYDOYHVZLOOQRWRSHQRUFORVHDWWKH
SURSHUWLPHDQGHQJLQHSHUIRUPDQFHZLOOEHDIIHFWHG7RRJUHDWDFOHDUDQFHZLOOFDXVH
WKHYDOYHVWRRSHQODWH([FHVVLYHFOHDUDQFHPD\DOVRSUHYHQWDYDOYHIURPRSHQLQJIDU
HQRXJKDQGORQJHQRXJKWRDGPLWDIXOOFKDUJHRIDLURUIXHOPL[WXUHZLWKHLWKHUDGLHVHO
RUJDVROLQHHQJLQHRULWZLOOSUHYHQWWKHHVFDSHRIVRPHH[KDXVWJDVHVIURPWKH
1$9('75$$ 
F\OLQGHU$UHGXFHGFKDUJHLQWKHF\OLQGHUREYLRXVO\UHVXOWVLQHQJLQHSRZHUORVV
([KDXVWJDVHVWKDWUHPDLQLQWKHF\OLQGHUWDNHXSVSDFHDQGZKHQFRPELQHGZLWKWKH
LQFRPLQJFKDUJHUHGXFHWKHHIIHFWLYHQHVVRIWKHPL[WXUH9DOYHVDGMXVWHGZLWKWRROLWWOH
FOHDUDQFHZLOORYHUKHDWDQGZDUS:DUSHGYDOYHVFDQQRWVHDWSURSHUO\DQGZLOOSHUPLW
WKHHVFDSLQJFRPEXVWLRQIODPHWREXUQERWKWKHYDOYHDQGYDOYHVHDW
:KHQUHDVVHPEOLQJDQHQJLQHDIWHUUHFRQGLWLRQLQJWKHYDOYHVPDNHVXUHWKHDGMXVWLQJ
VFUHZVDUHEDFNHGRIIEHIRUHURWDWLQJWKHHQJLQH$YDOYHWKDWLVWRRWLJKWFRXOGVWULNH
WKHSLVWRQDQGGDPDJHHLWKHUWKHSLVWRQRUWKHYDOYHRUERWK$GMXVWWKHYDOYHV
DFFRUGLQJWRWKHPDQXIDFWXUHU¶VVSHFLILFDWLRQVIROORZLQJWKHUHFRPPHQGHGSURFHGXUH 

2QDQ\HQJLQHZKHUHYDOYHDGMXVWPHQWVKDYHEHHQPDGHEHVXUHWKDWWKHDGMXVWPHQW
ORFNVDUHWLJKWDQGWKDWWKHYDOYHPHFKDQLVPFRYHUVDQGJDVNHWVDUHLQSODFHDQG
VHFXUHO\IDVWHQHGWRSUHYHQWRLO
OHDNV

2YHUKHDG9DOYHV
7KHUHDUHVHYHUDOGLIIHUHQW
PHWKRGVRIDGMXVWLQJWKHYDOYHV
RQDQRYHUKHDGFDPHQJLQH,Q
PDQ\RYHUKHDGFDPGHVLJQVWKH
YDOYHVDUHDGMXVWHGOLNHWKH
PHFKDQLFDOOLIWHUVLQDSXVKURG
HQJLQH0RVWRYHUKHDGYDOYHVDUH
DGMXVWHG³KRW´WKDWLVYDOYH
FOHDUDQFHUHFRPPHQGDWLRQVDUH
JLYHQIRUDQHQJLQHDWRSHUDWLQJ
WHPSHUDWXUHV%HIRUHYDOYH
DGMXVWPHQWVFDQEHSURSHUO\
HIIHFWHGWKHHQJLQHPXVWEHUXQ
DQGEURXJKWXSWRQRUPDO
RSHUDWLQJWHPSHUDWXUH
7RDGMXVWDYDOYHUHPRYHWKH
YDOYHFRYHUDQGPHDVXUHWKH
FOHDUDQFHEHWZHHQWKHYDOYH )LJXUH$GMXVWLQJWKHYDOYHVRQDQ
VWHPDQGWKHURFNHUDUP/RRVHQ RYHUKHDGFDPHQJLQH
WKHORFNQXWDQGWXUQWKHDGMXVWLQJ
VFUHZLQWKHURFNHUDUPLQWKH
PDQQHUVKRZQLQFigure 4-162QHQJLQHVZLWKVWXGPRXQWHGURFNHUDUPVPDNHWKH
DGMXVWPHQWE\WXUQLQJWKHVWXGQXW$URFNHUDUPDGMXVWPHQWVFUHZLVWXUQHGXQWLOWKH
FRUUHFWVL]HIHHOHUJDXJHILWVEHWZHHQWKHFDPOREHDQGWKHIROORZHUYDOYHVKLPRU
YDOYHVWHP

1$9('75$$ 
9DOYH5HPRYDO
7RUHPRYHWKHYDOYHVIURPWKHF\OLQGHU
KHDGWKHYDOYHVSULQJUHWDLQHUVDQGWKH
YDOYHVSULQJVPXVWEHUHPRYHG7RDLG
LQVSULQJDQGUHWDLQHUUHPRYDOXVHD
YDOYHVSULQJFRPSUHVVRUWRFRPSUHVV
WKHVSULQJ(Figure 4-17).)LUVWDGMXVWWKH
WRROWRILWWKHYDOYHDVVHPEO\DQGWKHQ
SURFHHGDVIROORZV

:$51,1* 
9DOYHVSULQJVDUHXQGHUFRQVLGHUDEOH
WHQVLRQDQGFDQIO\IURPWKHF\OLQGHU
KHDGZLWKFRQVLGHUDEOHIRUFH:HDU
SURSHUIDFHDQGH\HSURWHFWLRQZKHQ
FRPSUHVVLQJVSULQJVDQGUHPRYLQJYDOYH
NHHSHUV )LJXUH²9DOYHVSULQJFRPSUHVVRU
 'HSUHVVWKHKDQGOHRIWKHVSULQJ
FRPSUHVVRUWRROXQWLOWKHYDOYHVSULQJLVFRPSUHVVHG(Figure 4-17). 
 5HPRYHWKHXSSHUUHWDLQHUULQJIURPWKHYDOYHVWHP
 5HPRYHWKHYDOYHVSULQJ
 5HPRYHWKHORZHUVSDFHUDQGUHPRYHWKHYDOYHIURPWKHKHDG

9DOYH*ULQGLQJ
9DOYHJULQGLQJLVGRQHE\PDFKLQLQJDIUHVKVPRRWKVXUIDFHRQWKHYDOYHIDFHVDQGWKH
YDOYHVWHPWLSV9DOYHIDFHVFDQEXUQSLWDQGZHDUDVWKHYDOYHVRSHQDQGFORVH
GXULQJHQJLQHRSHUDWLRQ9DOYHVWHP
WLSVZHDUEHFDXVHRIIULFWLRQIURP
WKHURFNHUDUPVRUIROORZHUV

:$51,1* 
:HDUDIDFHVKLHOGZKHQJULQGLQJ
YDOYHV7KHJULQGLQJVWRQHFRXOG
VKDWWHUWKURZLQJGHEULVLQWR\RXU
IDFH

9DOYH*ULQG0DFKLQH
$YDOYHJULQGPDFKLQHLVXVHGWR
UHVXUIDFHYDOYHIDFHVDQGVWHPV
(Figure 4-18).$OWKRXJKWKHUHDUH
VRPHYDULDWLRQVLQGHVLJQPRVW
YDOYHJULQGPDFKLQHVDUHVLPLODU
7KH\XVHDJULQGLQJVWRQHWR
UHPRYHDWKLQOD\HURIPHWDOIURP
WKHYDOYHIDFHDQGWKHYDOYHVWHP
WLS


)LJXUH²9DOYHJULQGPDFKLQH
1$9('75$$ 
%HIRUHJULQGLQJDYDOYHGUHVVWKHVWRQHE\XVLQJDGLDPRQGWLSSHGFXWWLQJDWWDFKPHQW
WRWUXHWKHJULQGLQJVXUIDFH7KHFXWWLQJWRROLVJHQHUDOO\SURYLGHGZLWKWKHYDOYHJULQG
PDFKLQH)ROORZWKHHTXLSPHQWPDQXIDFWXUHU¶VLQVWUXFWLRQV

:$51,1* 
%HFDUHIXOZKHQXVLQJDGLDPRQGFXWWLQJWRROWRGUHVVDVWRQH:HDUH\HSURWHFWLRQDQG
IHHGWKHWRROLQWRWKHVWRQHVORZO\,IWKHWRROLVIHGLQWRRIDVWWRRORUVWRQHEUHDNDJH
PD\RFFXU
7KHFKXFNDQJOHLVJHQHUDOO\VHWE\ORRVHQLQJDORFNRXWDQGURWDWLQJWKHJULQGLQJ
PDFKLQH¶VFKXFNDVVHPEO\WRWKHGHVLUHGFXWWLQJDQJOH$GHJUHHVFDOHLVSURYLGHGVR
WKDWWKHDQJOHFDQEHSUHFLVHO\DGMXVWHG
$QLQWHUIHUHQFHDQJOHDƒGLIIHUHQFHEHWZHHQYDOYHIDFHDQJOHDQGYDOYHVHDWDQJOHLV
UHFRPPHQGHGIRUVRPHROGHUHQJLQHV,IIRUH[DPSOHWKHYDOYHVHDWDQJOHLVƒWKH
FKXFNLVVHWWRJULQGWKHYDOYHIDFHWRƒ7KHLQWHUIHUHQFHDQJOHSURYLGHVDWKLQOLQHRI
FRQWDFWEHWZHHQWKHYDOYHIDFHDQGWKHYDOYHVHDWUHGXFLQJWKHYDOYH¶VEUHDNLQWLPH
2OGHUHQJLQHVZKLFKKDYHKDUGHQHGYDOYHVDQGVHDWVGRQRWUHTXLUHDQLQWHUIHUHQFH
DQJOH7KHYDOYHIDFHDQGYDOYHVHDWVKRXOGEHJURXQGWRPDWFKLQJDQJOHV
'LUHFWWKHFRRODQWRQWKHYDOYHKHDGZKLOHJULQGLQJ0RYHWKHYDOYHLQWRWKHVWRQHVORZO\
WRSUHYHQWYDOYHRUVWRQHGDPDJH2QO\FXWRUJULQGDYDOYHIDFHHQRXJKWRUHPRYHWKH
GDUNSLWV,IWKHYDOYHIDFHLVVKLQ\DOOWKHZD\DURXQGVWRSJULQGLQJ
&KXFNWKHYDOYHLQWKHYDOYHJULQGPDFKLQHE\LQVHUWLQJWKHYDOYHVWHPLQWRWKHFKXFN
0DNHVXUHWKHVWHPLVLQVHUWHGVRWKDWWKHFKXFNJUDVSVWKHPDFKLQHGVXUIDFHQHDUHVW
WKHYDOYHKHDG7KHFKXFNPXVWQRWFODPSRQWRDQXQPDFKLQHGVXUIDFHRUUXQRXWZLOO
UHVXOW

*ULQGLQJWKH9DOYH)DFH
7XUQRQWKHYDOYHJULQGPDFKLQHDQGWKHFRROLQJIOXLG*UDGXDOO\IHHGWKHYDOYHIDFHLQWR
WKHVWRQH$WWKHVDPHWLPHVORZO\PRYHWKHYDOYHEDFNDQGIRUWKRYHUWKHVWRQH8VH
WKHIXOOIDFHRIWKHVWRQHEXWGRQRWOHWWKHYDOYHIDFHPRYHRXWRIFRQWDFWZLWKWKHVWRQH
ZKLOHJULQGLQJ
*ULQGWKHYDOYHRQO\ORQJHQRXJKWR³FOHDQXS´LWVIDFH:KHQWKHIXOOIDFHORRNVVKLQ\
ZLWKQRGDUNHQHGSLWVVKXWRIIWKHPDFKLQHDQGLQVSHFWWKHIDFH/RRNFDUHIXOO\IRUSLWV
DQGJURRYHV
6RPHYDOYHUHIDFLQJPDFKLQHVDUHHTXLSSHGZLWKDFDUELGHWLSLQVWHDGRIDJULQGLQJ
ZKHHO
*ULQGLQJE\UHPRYLQJPHWDOIURPWKHYDOYHIDFHZLOOLQFUHDVHYDOYHVWHPKHLJKW
GLVWDQFHWKHYDOYHVWHPH[WHQGVDERYHWKHVXUIDFHRIWKHKHDG7KLVDIIHFWVWKHVSULQJ
WHQVLRQDQGYDOYHWUDLQJHRPHWU\*ULQGWKHIDFHRIHDFKYDOYHDVOLWWOHDVSRVVLEOH
,IWKHYDOYHKHDGZREEOHVDVLWWXUQVRQWKHYDOYHJULQGPDFKLQHWKHYDOYHLVHLWKHUEHQW
RUFKXFNHGLPSURSHUO\6KXWRIIWKHPDFKLQHDQGILQGWKHFDXVH
$VKDUSYDOYHPDUJLQLQGLFDWHVH[FHVVYDOYHIDFHUHPRYDODQGUHTXLUHVYDOYH
UHSODFHPHQW0DQXIDFWXUHUVJLYHDVSHFLILFDWLRQIRUPLQLPXPYDOYHPDUJLQWKLFNQHVV,I
WKHPDUJLQLVWRRWKLQLWZLOOQRWGLVVLSDWHKHDWIDVWHQRXJK7KHKHDGRIWKHYDOYHFDQ
DFWXDOO\EHJLQWRPHOWEXUQDQGEORZRXWRIWKHH[KDXVWSRUW
,IQRWQRWLFHGGXULQJLQLWLDOLQVSHFWLRQDEXUQHGYDOYHZLOOVKRZXSGXULQJJULQGLQJ
RSHUDWLRQV([FHVVJULQGLQJZLOOEHQHHGHGWRUHPRYHWKHGHHSSLWVDQGJURRYHVIRXQG
RQDEXUQHGYDOYH5HSODFHWKHYDOYHLILWLVEXUQHG
1$9('75$$ 
5HSHDWWKHJULQGLQJDQGLQVSHFWLQJRSHUDWLRQRQWKHRWKHUYDOYHV5HWXUQHDFKJURXQG
YDOYHWRLWVSODFHLQDQRUJDQL]LQJWUD\8VHGYDOYHVVKRXOGEHUHWXUQHGWRWKHVDPH
YDOYHJXLGHLQWKHF\OLQGHUKHDG7KHVWHPVPD\KDYHEHHQVHOHFWILWDWWKHIDFWRU\

*ULQGLQJ9DOYH6WHP7LS
$VHFRQGVWRQHRQWKHYDOYHJULQGPDFKLQHLVQRUPDOO\SURYLGHGIRUWUXLQJWKHYDOYH
VWHPWLSV
$IWHUJULQGLQJWKHWLSIODW\RXPD\KDYHWRFKDPIHUWKHWLS,IVRPRXQWWKHYDOYHLQWKH
9EORFNFKXFNWKDWLVDWDQDQJOHWRWKHVWRQH6ORZO\URWDWHWKHYDOYHLQWKHFKXFNDV
\RXIHHGWKHWLSLQWRWKHVWRQH
*ULQGDVOLWWOHRIIWKHVWHPWLSDVSRVVLEOH0DQ\VWHPVDUHKDUGHQHG7RRPXFKJULQGLQJ
ZLOOFXWWKURXJKWKHKDUGHQHGOD\HUDQGUHVXOWLQUDSLGZHDUZKHQWKHYDOYHLVUHWXUQHG
WRVHUYLFH
$QLQGLFDWRULVSURYLGHGRQWKHYDOYHJULQGPDFKLQHWRVKRZWKHGHSWKRIFXWIRUERWKWKH
YDOYHIDFHDQGWKHYDOYHVWHPWLS*HQHUDOO\WKHVDPHDPRXQWRIPHWDOVKRXOGEH
UHPRYHGIURPWKHIDFHDQGWKHWLS7KLVZLOOKHOSNHHSYDOYHWUDLQJHRPHWU\FRUUHFW

9DOYH*XLGH6HUYLFLQJ
9DOYHJXLGHVVXSSRUWWKHYDOYHVLQWKHF\OLQGHUKHDG7KH\DUHPDFKLQHGWRDGLDPHWHU
WKDWLVDIHZWKRXVDQGWKVRIDQLQFKODUJHU
WKDQWKHGLDPHWHURIWKHYDOYHVWHPV
SURYLGLQJDYHU\VPDOOFOHDUDQFHEHWZHHQ
WKHVWHPDQGWKHJXLGH7KLVFOHDUDQFHLV
LPSRUWDQWIRUDQXPEHURIUHDVRQV,W
SUHYHQWVWKHOXEULFDWLQJRLOIURPEHLQJGUDZQ
SDVWWKHYDOYHVWHPDQGLQWRWKHFRPEXVWLRQ
FKDPEHUGXULQJWKHLQWDNHVWURNHSUHYHQWV
EXUQWJDVHVIURPHQWHULQJWKHFUDQNFDVH
DUHDSDVWWKHYDOYHVWHPVGXULQJWKHH[KDXVW
VWURNHDQGKHOSVNHHSWKHYDOYHFRRO7KH
VPDOOYDOYHJXLGHFOHDUDQFHDOVRNHHSVWKH
YDOYHIDFHLQSHUIHFWDOLJQPHQWZLWKWKHYDOYH
VHDW
$OWKRXJKYDOYHJXLGHVPD\EHFDVWZLWKWKH
KHDGUHPRYDEOHYDOYHJXLGHLQVHUWVDUH
XVHGLQPRVWFDVHV5HPRYDEOHJXLGH
LQVHUWVDUHSUHVVILWLQWRWKHF\OLQGHUKHDG
(Figure 4-19). )LJXUH²9DOYHJXLGHV

&KHFNLQJ6WHPWR*XLGH&OHDUDQFH
%HIRUHFKHFNLQJYDOYHVWHPWRJXLGHFOHDUDQFHFOHDQWKHYDOYHVWHPZLWKVROYHQWWR
UHPRYHDOOJXPDQGYDUQLVK&OHDQWKHYDOYHJXLGHVZLWKVROYHQWDQGRUDZLUHW\SH
H[SDQGLQJYDOYHJXLGHFOHDQLQJWRRO7KHQLQVHUWWKHSURSHUYDOYHLQWRLWVJXLGHDQGKROG
WKHKHDGDJDLQVWWKHYDOYHVHDWWLJKWO\0RXQWDGLDOLQGLFDWRURQWKHYDOYHVSULQJRIWKH
F\OLQGHUKHDGVRWKDWWKHLQGLFDWRU¶VIRRWUHVWVDJDLQVWWKHYDOYHVWHPDWDƒDQJOH
0RYHWKHYDOYHVOLJKWO\RIILWVVHDWDQGPHDVXUHWKHYDOYHJXLGHWRVWHPFOHDUDQFHE\
PRYLQJWKHVWHPEDFNDQGIRUWKWRDFWXDWHWKHGLDOLQGLFDWRU,IWKHGLDOLQGLFDWRUUHDGLQJ
LVQRWZLWKLQWKHPDQXIDFWXUHU¶VVSHFLILFDWLRQVGHWHUPLQHLIWKHVWHPRUWKHJXLGHLV
UHVSRQVLEOHIRUWKHH[FHVVLYHFOHDUDQFH
1$9('75$$ 
,QDQDOWHUQDWHPHWKRGRIFKHFNLQJWKHYDOYHVWHPWRJXLGHFOHDUDQFHWKHGLDOLQGLFDWRU
LVPRXQWHGRQWKHFRPEXVWLRQVLGHRIWKHF\OLQGHUKHDG%HIRUHPRXQWLQJWKHLQGLFDWRU
PRYHWKHYDOYHKHDGDZD\IURPLWVVHDWDSUHGHWHUPLQHGGLVWDQFHHLWKHUE\DVSHFLDO
FROODUWRROZKLFKLVSODFHGRQWKHYDOYHVWHPEHWZHHQWKHKHDGRIWKHYDOYHDQGWKH
JXLGHRUE\VLPSO\PHDVXULQJWKHGLVWDQFHEHWZHHQWKHYDOYHKHDGDQGWKHVHDWZLWKD
VFDOH$IWHUSRVLWLRQLQJWKHYDOYHDQGPRXQWLQJWKHGLDOLQGLFDWRUPRYHWKHYDOYHKHDG
EDFNDQGIRUWKWRDFWXDWHWKHLQGLFDWRU,IWKHLQGLFDWRUVKRZVPRUHFOHDUDQFHWKDQ
VSHFLILHGPHDVXUHWKHYDOYHVWHPZLWKDPLFURPHWHU&RPSDUHWKHVWHP¶VGLDPHWHUWR
VSHFLILFDWLRQVWRGHWHUPLQHZKHWKHUWKHSUREOHPLVFDXVHGE\DZRUQYDOYHJXLGHRU
ZRUQYDOYHVWHP
2WKHUPHDVXULQJWHFKQLTXHVDUHDYDLODEOHWRWKHPHFKDQLF$ERUHJDXJHD
PLFURPHWHURUDQLQVLGHFDOLSHUW\SHVPDOOKROHJDXJHFDQEHXVHGWRGHWHUPLQHYDOYH
JXLGHZHDU5HPHPEHUJXLGHVGRQRWZHDUXQLIRUPO\7KHUHIRUHSOXJVYDOYHVWHPVRU
SLORWVVKRXOGQHYHUEHXVHGWRPHDVXUHYDOYHJXLGHV0HDVXUHWKHLQVLGHGLDPHWHURI
WKHJXLGHVDWVHYHUDOGLIIHUHQWSRLQWV&DUHIXOPHDVXUHPHQWDQGLQVSHFWLRQRIWKHJXLGHV
ZLOOKHOSGHWHFWEHOOPRXWKLQJRUHOOLSWLFDOZHDU7KHVHFRQGLWLRQVQRUPDOO\RFFXUDWWKH
HQGVRIWKHJXLGHV

.QXUOLQJ
.QXUOLQJLVRQHRIWKHIDVWHVWPHWKRGVRIUHVWRULQJWKHLQVLGHGLDPHWHURIDZRUQYDOYH
JXLGH,WLVWKHPHWKRGXVXDOO\FKRVHQWRUHFRQGLWLRQLQWHJUDOJXLGHV.QXUOLQJUDLVHVWKH
VXUIDFHRIWKHJXLGH¶VLQVLGHGLDPHWHUE\FXWWLQJWLQ\IXUURZVWKURXJKWKHPHWDO$VWKH
NQXUOLQJWRROFXWVLQWRWKHJXLGHPHWDOLVUDLVHGRUSXVKHGXSRQHLWKHUVLGHRIWKHFXWV
7KLVGHFUHDVHVWKHGLDPHWHURIWKHJXLGHKROH$EXUQLVKHURUUHDPHULVXVHGWRSUHVV
WKHULGJHVIODWDQGVKDYHRIIWKHSHDNV7KHILQDOUHVXOWSURGXFHVWKHSURSHUVL]HKROH
DQGUHVWRUHVWKHFRUUHFWJXLGHWRVWHPFOHDUDQFH.QXUOLQJFDQEHGRQHZLWKHLWKHUD
WDSW\SHNQXUOLQJWRRORUDSRZHUGULYHQWRRO:LWKSRZHUNQXUOLQJDGULOOVSHHGUHGXFHU
LVXVXDOO\UHTXLUHG

5HDPLQJ
5HDPLQJLQFUHDVHVWKHGLDPHWHURIWKHJXLGHKROHVRLWFDQEHILWWHGZLWKDQRYHUVL]HG
YDOYHYDOYHZLWKDODUJHUVWHP5HDPLQJFDQDOVREHXVHGWRUHVWRUHWKHJXLGHWRLWV
RULJLQDOGLDPHWHUDIWHULQVWDOOLQJLQVHUWVRUNQXUOLQJ7KHDGYDQWDJHRIUHDPLQJIRUDQ
RYHUVL]HGYDOYHLVWKDWWKHILQLVKHGSURGXFWLVWRWDOO\QHZ7KLVJXLGHLVVWUDLJKWWKH
YDOYHLVQHZDQGWKHFOHDUDQFHLVDFFXUDWH,QVWDOOLQJDQRYHUVL]HGYDOYHLVJHQHUDOO\
FRQVLGHUHGWREHVXSHULRUWRNQXUOLQJ7KHSURFHVVLVDOVRUHODWLYHO\TXLFNDQGHDV\7KH
RQO\WRROUHTXLUHGLVDUHDPHU

7KLQ:DOO,QVHUWV
7KHXVHRIWKLQZDOOLQVHUWVRIIHUVDQXPEHURILPSRUWDQWDGYDQWDJHVRYHUNQXUOLQJDQG
UHDPLQJ7KHOLQHUVSURYLGHWKHEHQHILWVRIDEURQ]HJXLGHVXUIDFHLQFOXGLQJEHWWHU
OXEULFDWLRQZKLFKUHGXFHVZHDUDQGWLJKWHUFOHDUDQFHV7KLQZDOOOLQHUVFDQEHXVHGDV
HLWKHULQWHJUDORUUHSODFHPHQWJXLGHVZKLFKDUHHLWKHUFDVWLURQRUEURQ]H7KLQZDOO
OLQHUVDUHIDVWHUHDVLHUDQGOHVVH[SHQVLYHWRLQVWDOOWKDQQHZJXLGHV,QVWDOOLQJWKLQ
ZDOOJXLGHOLQHUVDOVRPDLQWDLQVJXLGHFHQWHULQJZLWKUHVSHFWWRWKHYDOYHVHDWV

1$9('75$$ 
7KUHDGHG%URQ]H,QVHUWV
7KHXVHRIWKUHDGHGEURQ]HLQVHUWVLV
DQRWKHUPHWKRGXVHGWRUHVWRUHZRUQ
JXLGHV,QWKLVPHWKRGWKHZRUQJXLGHV
DUHWDSSHGDQGWKHWKUHDGHGEURQ]H
LQVHUWVDUHLQVWDOOHGLQWKHWDSSHGKROHV
7KH\SURYLGHEHWWHUOXEULFDWLRQH[FHOOHQW
ZHDUTXDOLWLHVDQGWLJKWFOHDUDQFHEXW
WKH\DUHPRUHH[SHQVLYHDQGGLIILFXOWWR
LQVWDOO

9DOYH6HDW*ULQGLQJ
$IWHULQVWDOOLQJQHZYDOYHVHDWVRUZKHQ
WKHROGVHDWVDUHLQVHUYLFHDEOHFRQGLWLRQ
JULQGRUFXWWKHIDFHVRIWKHVHDWV7KH
HTXLSPHQWXVHGWRJULQGYDOYHVHDWVLVD
YDOYHVHDWJULQGHU(Figure 4-20). )LJXUH²9DOYHVHDWJULQGLQJ
7ZRJHQHUDOW\SHVRIYDOYHVHDWJULQGHUV
DUHLQXVH2QHLVDFRQFHQWULFJULQGHUWKHRWKHUDQHFFHQWULFJULQGHU2QO\WKH
FRQFHQWULFJULQGHULVGLVFXVVHGKHUHEHFDXVHRILWVJUHDWHUDYDLODELOLW\
,QWKHFRQFHQWULFYDOYHVHDWJULQGHUDJULQGLQJVWRQHRIWKHSURSHUVKDSHDQGDQJOHLV
URWDWHGLQWKHYDOYHVHDWDQGWKHVWRQHLVNHSWFRQFHQWULFZLWKWKHYDOYHJXLGHE\PHDQV
RIDVHOIFHQWHULQJSLORWWKDWLVLQVWDOOHGLQWKHJXLGH&KHFNWKHVHOIFHQWHULQJSLORWIRU
WUXHQHVVEHIRUHXVLQJ
7RJULQGDYDOYHVHDWLQVWDOOWKHFRUUHFWVL]HSLORWPHWDOVKDIWWKDWILWVLQWRWKHYDOYH
JXLGHDQGVXSSRUWVWKHFXWWLQJVWRQHRUWKHFDUELGHFXWWHU7KHSLORWVKRXOGILWVQXJO\LQ
WKHYDOYHJXLGHDQGVKRXOGQRWZLJJOH$GDPDJHGSLORWZLOOFDXVHWKHVHDWSRVLWLRQWR
PRYHLQUHODWLRQWRWKHYDOYHJXLGH7KHYDOYHJXLGHPXVWEHNHSWFOHDQDQGLQJRRG
FRQGLWLRQ0RVWFRQFHQWULFJULQGHUVDXWRPDWLFDOO\OLIWWKHVWRQHRIIWKHYDOYHVHDWDERXW
RQFHHYHU\UHYROXWLRQWRDOORZWKHVWRQHWRFOHDQLWVHOIRIGXVWDQGJULWE\FHQWULIXJDO
DFWLRQ
6HOHFWWKHFRUUHFWVWRQHIRUWKHYDOYHVHDW,WPXVWEHVOLJKWO\ODUJHULQGLDPHWHUWKDQWKH
VHDWDQGPXVWDOVRKDYHWKHFRUUHFWIDFHDQJOH
'UHVVWKHVWRQHXVLQJWKHGLDPRQGFXWWHUSURYLGHGZLWKWKHJULQGLQJHTXLSPHQW6HWWKH
FXWWHUWRWKHFRUUHFWDQJOHXVXDOO\ƒRUƒ6ORZO\IHHGWKHGLDPRQGFXWWHULQWRWKH
VWRQHZKLOHVSLQQLQJWKHVWRQHZLWKWKHSRZHUKHDG&XWRQO\HQRXJKWRFOHDQXSDQG
WUXHWKHVWRQH
7RXVHKDQGFXWWHUVIROORZWKHVDPHSURFHGXUHVH[SODLQHGIRUJULQGLQJVWRQHV)LWWKH
FRUUHFWVL]HSLORWVHFXUHO\LQWRWKHJXLGH6HOHFWWKHFRUUHFWGLDPHWHUDQGDQJOHFXWWHU
)LWWKHFXWWHUGRZQRYHUWKHSLORW7KHQZKLOHDSSO\LQJDYHU\OLJKWGRZQZDUGIRUFHWXUQ
WKHFXWWHURQWKHVHDW0DNHVXUH\RXWXUQWKHFXWWHULQWKHGLUHFWLRQLQGLFDWHGE\WKH
DUURZRQWKHWRRO5HPRYHRQO\HQRXJKPDWHULDOWRFOHDQXSWKHVHDWDQGPDNHLWWRWDOO\
EXUQLVKHG
7RWHVWWKHFRQWDFWEHWZHHQWKHYDOYHVHDWDQGWKHYDOYHPDUNOLQHVZLWKDVRIWSHQFLO
DERXWLQFKDSDUWDURXQGWKHHQWLUHIDFHRIWKHYDOYH1H[WSXWWKHYDOYHLQSODFHDQG
URWDWHXVLQJDVOLJKWSUHVVXUHRQHKDOIWXUQWRWKHULJKWDQGWKHQRQHKDOIWXUQWRWKH
OHIW,IURWDWLQJUHPRYHVWKHSHQFLOPDUNVWKHVHDWLQJLVJRRG
$QRWKHUPHWKRGIRUFKHFNLQJWKHYDOYHVHDWLQJLVWRFRDWWKHYDOYHIDFHOLJKWO\ZLWK
1$9('75$$ 
3UXVVLDQEOXHDQGWXUQLWDERXWRQHIRXUWKWXUQLQWKHVHDW,IWKH3UXVVLDQEOXHWUDQVIHUV
HYHQO\WRWKHYDOYHVHDWLWLVFRQFHQWULFZLWKWKHYDOYHJXLGH%HVXUHWRZDVKDOOWKH
3UXVVLDQEOXHIURPWKHVHDWDQGYDOYH7KHQOLJKWO\FRDWWKHYDOYHVHDWZLWK3UXVVLDQ
EOXH,IWKHEOXHDJDLQWUDQVIHUVHYHQO\WKLVWLPHWRWKHYDOYHZKHQLWLVWXUQHGLQWKH
VHDW\RXFDQFRQVLGHUWKHVHDWLQJWREHQRUPDO
3UXVVLDQEOXHLVDGHHSEOXHSLJPHQWPL[HGZLWKDJUHDVHOLNHVXEVWDQFHWRVWDLQPHWDO
WKDWLVRIWHQXVHGWRFKHFNWKHFRQWDFWSRLQWEHWZHHQWKHYDOYHIDFHDQGYDOYHVHDWV
$SSO\DVPDOODPRXQWRI3UXVVLDQEOXHRQWKHYDOYHVHDWRUIDFH7DSWKHYDOYHGRZQRQ
WKHVHDWWRPDUNWKH3UXVVLDQEOXHDQGPDNHWKHFRQWDFWSRLQWYLVLEOH

9DOYH6HDW,QVHUW5HSODFHPHQW
9DOYHVHDWUHSODFHPHQWLVQHHGHGZKHQDYDOYHVHDWLVFUDFNHGEXUQHGSLWWHGRU
UHFHVVHGLQWKHF\OLQGHUKHDG5HSODFHPHQWLVRQO\QHHGHGZKHQZHDURUGDPDJHLV
VHYHUH1RUPDOO\YDOYHVHDWVFDQEHPDFKLQHGDQGUHWXUQHGWRVHUYLFH
7RUHPRYHDSUHVVHGLQYDOYHVHDWVSOLWWKHROGVHDWZLWKDVKDUSFKLVHO7KHQSU\WKH
VHDWRXWRIWKHF\OLQGHUKHDG7RUHPRYHDQLQWHJUDOVHDWXVHDVHDWFXWWLQJWRROWR
PDFKLQHWKHVHDWIURPWKHF\OLQGHUKHDG([WUHPHFDUHPXVWEHWDNHQQRWWRGDPDJH
WKHKHDG
7RLQVWDOODYDOYHVHDWDWHFKQLTXHXVHGLVWRVKULQNWKHVHDWE\FKLOOLQJLWLQGU\LFH7KH
VHDWZLOOH[SDQGZKHQUHWXUQHGWRURRPWHPSHUDWXUH7KLVKHOSVORFNWKHVHDWLQWKH
F\OLQGHUKHDG8VHDGULYLQJWRROWRIRUFHWKHVHDWLQWRWKHUHFHVVLQWKHKHDG6HDW
LQVWDOODWLRQWRROVYDU\)ROORZWKHPDQXIDFWXUHU¶VGLUHFWLRQV
6WDONLQJWKHYDOYHVHDWLQYROYHVSODFLQJVPDOOGHQWVLQWKHF\OLQGHUKHDGQH[WWRWKH
VHDW7KHVWDNHVIRUFHWKHKHDGPHWDORYHUWKHVHDWDQGNHHSWKHVHDWIURPIDOOLQJRXW
7RSFXWWLQJPD\EHQHHGHGWRPDFKLQHWKHWRSRIWKHVHDWIOXVKZLWKWKHVXUIDFHRIWKH
FRPEXVWLRQFKDPEHU

9DOYH6SULQJ7HVWLQJ
&RUURVLRQDQGPHWDOIDWLJXHDUHFRPPRQFDXVHVRIYDOYHVSULQJIDLOXUH$IWHUSURORQJHG
XVHYDOYHVSULQJVWHQGWRZHDNHQORVHWHQVLRQRUHYHQEUHDN%URNHQYDOYHVSULQJV
FDXVHH[FHVVLYHYDOYHQRLVHDQGPD\FDXVH
HUUDWLFH[KDXVWJDVWHPSHUDWXUHV:KHQD
YDOYHVSULQJEUHDNVVHULRXVGDPDJHFDQ
RFFXU:KHQDVSULQJEUHDNVLWPD\FROODSVH
HQRXJKWRDOORZWKHYDOYHWRGURSLQWRWKH
F\OLQGHUZKHUHLWFDQFDXVHGDPDJH
6LPLODUO\WKHYDOYHVWHPNHHSHUVPD\
UHOHDVHWKHYDOYHDQGDOORZLWWRGURSLQWRWKH
F\OLQGHUFDXVLQJVHYHUHGDPDJHWRWKH
SLVWRQF\OLQGHUKHDGF\OLQGHUDQGDGMRLQLQJ
SDUWV'XULQJHQJLQHVHUYLFHDOZD\VWHVW
HDFKYDOYHVSULQJWRPDNHVXUHLWLVLQ
ZRUNLQJFRQGLWLRQ
9DOYHVSULQJVTXDUHQHVVDVVKRZQLQ
Figure 4-21FDQEHFKHFNHGZLWKD
FRPELQDWLRQVTXDUH3ODFHWKHVSULQJQH[WWR
WKHVTXDUHRQDIODWVXUIDFH5RWDWHWKH
VSULQJZKLOHFKHFNLQJIRUDJDSEHWZHHQWKH )LJXUH²$FRPELQDWLRQ
VLGHRIWKHVSULQJDQGWKHVTXDUH5HSODFH VTXDUHXVHGWRFKHFNYDOYH
1$9('75$$ VSULQJVTXDUHQHVV 
WKHVSULQJLILWLVQRWVTXDUH1RWPRUHWKDQ
´YDULDQFHLVWKHQRUPZKLOHURWDWLQJWKH
VSULQJ
9DOYHVSULQJIUHHKHLJKWFDQEHPHDVXUHG
ZLWKWKHFRPELQDWLRQVTXDUHRUZLWKDYDOYH
VSULQJWHVWHU(Figures 4-22)6LPSO\PHDVXUH
WKHOHQJWKRIHDFKVSULQJLQDQRUPDO
XQFRPSUHVVHGFRQGLWLRQ,IWRRORQJRUWRR
VKRUWUHSODFHWKHVSULQJ
9DOYHVSULQJWHQVLRQRUSUHVVXUHLV
PHDVXUHGZLWKDYDOYHVSULQJWHVWHU(Figure
4-22)&RPSUHVVWKHVSULQJWRWKHVSHFLILHG
KHLJKWDQGUHDGWKHVFDOH6SULQJSUHVVXUH
PXVWEHZLWKLQVSHFLILFDWLRQV,IVSULQJ
SUHVVXUHLVWRRORZWKHVSULQJKDVZHDNHQHG
DQGQHHGVUHSODFHPHQWRUVKLPPLQJ7KH
YDOYHVSULQJWHQVLRQPXVWEHZLWKLQRI )LJXUH²$YDOYHVSULQJ
WKHRULJLQDOWHQVLRQVSHFLILFDWLRQ,IQRW WHVWHU
UHSODFHWKHYDOYH

9DOYH/LIWHU6HUYLFLQJ
7KHUHDUHWZRW\SHVRIYDOYHOLIWHUVWKHVROLGW\SHDQGWKHK\GUDXOLFW\SH3URFHGXUHVIRU
UHPRYLQJDQGVHUYLFLQJWKHWZRW\SHVDUHTXLWHGLIIHUHQW
6ROLGOLIWHUVDUHUHPRYHGIURPWKHFDPVKDIWVLGHRQVRPHHQJLQHV7KLVUHTXLUHV
UHPRYDORIWKHFDPVKDIW7KHOLIWHUVPXVWEHKHOGXSE\FOLSVRUZLUHVVRWKDWWKH
FDPVKDIWFDQEHH[WUDFWHG7KHQWKHFOLSVRUZLUHVDUHUHPRYHGVRWKDWWKHOLIWHUVPD\
EHH[WUDFWHG0RVWYDOYHOLIWHUVFDQEHH[WUDFWHGIURPWKHSXVKURGRUYDOYHVLGHRIWKH
HQJLQHEORFNLQZKLFKFDVHH[WUDFWLRQRIWKHFDPVKDIWLVQRWQHFHVVDU\%HVXUHWRNHHS
WKHOLIWHUVLQWKHSURSHURUGHUVRWKDWWKH\PD\EHUHSODFHGLQWKHVDPHERUHVIURP
ZKLFKWKH\ZHUHUHPRYHG
,IWKHOLIWHUVFUHZIDFHLVZRUQRUSLWWHGLWPD\EHUHIDFHGRQDYDOYHUHIDFLQJPDFKLQH
,IWKHOLIWHUERUHLQWKHEORFNEHFRPHVZRUQLW
PD\EHUHERUHGE\UHDPLQJWKHQRYHUVL]HG
OLIWHUVPXVWEHLQVWDOOHG
7KHFRQWDFWVXUIDFHEHWZHHQDOLIWHUDQGD
FDPOREHLVRQHRIWKHKLJKHVWIULFWLRQDQG
ZHDUSRLQWVLQDQHQJLQH+\GUDXOLFOLIWHUV
FDQDOVRZHDULQWHUQDOO\FDXVLQJYDOYH
FODWWHURUWDSSLQJQRLVH
,QVSHFWWKHERWWRPVXUIDFHWKDWFRQWDFWVZLWK
WKHFDPOREHRIHDFKOLIWHUIRUZHDU$Q
XQZRUQOLIWHUZLOOKDYHDVOLJKWKXPSRU
FRQYH[VKDSHRQWKHERWWRP$ZRUQOLIWHU
ZLOOEHIODWRUFRQFDYHRQWKHERWWRP
5HSODFHWKHOLIWHUVLIWKHERWWRPLVZRUQ
1HYHULQVWDOOXVHGOLIWHUVRQDQHZFDPVKDIW
8VHGOLIWHUVZLOOFDXVHUDSLGFDPOREHZHDU
DQGDGGLWLRQDOOLIWHUZHDU,QVWDOOQHZOLIWHUV )LJXUH²+\GUDXOLFOLIWHUV

1$9('75$$ 
ZKHQHYHUDFDPVKDIWLVUHSODFHG
/LIWHUOHDNGRZQUDWHLVPHDVXUHGE\WLPLQJKRZORQJLWWDNHVWRSXVKWKHOLIWHUSOXQJHUWR
WKHERWWRPRILWVVWURNHXQGHUFRQWUROOHGFRQGLWLRQV

+\GUDXOLF/LIWHUV
2QVRPHHQJLQHVK\GUDXOLFOLIWHUVVKRZQLQFigure 4-23,DUHWHVWHGE\WKHOHDNGRZQ
UDWHWHVW,QWHVWLQJLQVHUWDIHHOHUJDXJHEHWZHHQWKHURFNHUDUPDQGWKHYDOYHVWHP
DQGQRWHWKHWLPHLWWDNHVWKHYDOYHOLIWHUWROHDNHQRXJKRLOWRSHUPLWWKHYDOYHWRVHDW
$VWKHYDOYHVHDWVWKHIHHOHUJDXJHEHFRPHVORRVHDQGVLJQDOVWKHHQGRIWKHWHVW,I
WKHOHDNGRZQUDWHWLPHLVWRRVKRUWWKHOLIWHULVGHIHFWLYHDQGPXVWEHUHSODFHG,QDQ\
FDVHEHVXUHWRIROORZWKHPDQXIDFWXUHU¶VUHFRPPHQGHGSURFHGXUHVIRUSHUIRUPLQJWKLV
WHVW
7RUHPRYHWKHK\GUDXOLFOLIWHUVUHPRYHWKHSXVKURG2QHQJLQHVZLWKVKDIWPRXQWHG
URFNHUDUPV\RXFDQPRYHWKHURFNHUDUPE\FRPSUHVVLQJWKHVSULQJVRWKDWWKH
SXVKURGFDQEHUHPRYHG7KXVWKHURFNHUDUPDVVHPEO\GRHV127KDYHWREH
UHPRYHG
$IWHUWKHOLIWHUKDVEHHQUHPRYHGFKHFNWKHERWWRPRUFDPVLGHWRHQVXUHWKDWLWLVIODW
7RGRWKLVSODFHDVWUDLJKWHGJHDFURVVWKHOLIWHUERWWRP,IOLJKWFDQEHVHHQEHWZHHQ
WKHVWUDLJKWHGJHDQGWKHOLIWHUWKHOLIWHUVKRXOGEHGLVFDUGHG
:KHQGLVDVVHPEOLQJWKHOLIWHUEHVXUHWRFOHDQDOOWKHSDUWVLQDFOHDQLQJVROYHQW
5HDVVHPEOHDQGILOOWKHOLIWHUZLWKFOHDQOLJKWHQJLQHRLO$OVRPDNHVXUHWKDWDOOOLIWHUV
DUHUHSODFHGLQWKHVDPHERUHIURPZKLFKWKH\ZHUHUHPRYHG:RUNRQRQHOLIWHUDWD
WLPHVRWKDWSDUWVDUHQRWPL[HG

&DPVKDIW&KHFNLQJ
7KHFDPVKDIWPXVWEHFKHFNHGIRUEHDULQJMRXUQDORUFDPZHDUDQGDOLJQPHQW,Q
FKHFNLQJDOLJQPHQWSODFHWKHFDPVKDIWLQDVHWRI9EORFNVDQGXVHDGLDOLQGLFDWRUWR
FKHFNWKHUXQRXWRIWKHMRXUQDOVZKHQWKHVKDIWLVWXUQHG-RXUQDOVVKRXOGEHFKHFNHG
ZLWKDPLFURPHWHUDQGWKHUHDGLQJFRPSDUHGWRWKHPDQXIDFWXUHU¶VVSHFLILFDWLRQV7KH
FDPZHDUVKRXOGEHPHDVXUHGZLWKDPLFURPHWHUKRZHYHULIZHDUVKRZVDFURVVWKH
IXOOIDFHRIWKHFDP\RXFDQEHDOPRVWFHUWDLQWKDWH[FHVVLYHZHDUKDVWDNHQSODFH

&DPVKDIW%HDULQJ5HSODFHPHQW
&DPEHDULQJGLDPHWHULQGLFDWHVFDPEHDULQJZHDU0HDVXUHEHDULQJGLDPHWHUZLWKD
ERUHJDXJHRUDWHOHVFRSLQJJDXJHDQGDQRXWVLGHPLFURPHWHU)LJXUH$²'LDO
ERUHJDXJHLVXVHGWRTXLFNO\DQGDFFXUDWHO\PHDVXUHF\OLQGHUZHDU%²7HOHVFRSLQJ
JDXJHXVHGWRPHDVXUHLQWHUQDOSDUWERUHVRURSHQLQJV&²0LFURPHWHUXVHGIRU
PHDVXULQJH[WHUQDOGLPHQVLRQVGLDPHWHUVRUWKLFNQHVVHV
,IWKHEHDULQJVDUHZRUQWKH\PXVWEHUHSODFHG*HQHUDOO\WKHPHFKDQLFZLOOUHSODFHWKH
FDPEHDULQJVGXULQJDQHQJLQHRYHUKDXOVLQFHWKH\DUHFULWLFDOWRHQJLQHRLOSUHVVXUH

1$9('75$$ 
 )LJXUH²7RROVXVHGIRUFDPVKDIWEHDULQJUHSODFHPHQW
7KHWZRSLHFHFDPEHDULQJVXVHGRQPDQ\2+&HQJLQHVVLPSO\VQDSLQWRSODFHOLNH
URGDQGPDLQEHDULQJV+RZHYHURQHSLHFHFDPEHDULQJVPXVWEHIRUFHGLQDQGRXWRI
WKHEORFNRUKHDGZLWKDVSHFLDOWRRO 
:KHQLQVWDOOLQJFDPEHDULQJVGRQRWGHQWRUPDUWKHEHDULQJVXUIDFHV$OVRPDNHVXUH
\RXDOLJQWKHRLOKROHVLQWKHHQJLQHZLWKWKHKROHVLQWKHFDPEHDULQJV6LQFHH[DFW
SURFHGXUHVYDU\UHIHUWRWKH2(0IRUGHWDLOV

9DOYH7LPLQJ
7KHUHODWLRQVKLSEHWZHHQWKHFDPVKDIWDQGWKHFUDQNVKDIWGHWHUPLQHVWKHYDOYHWLPLQJ
*HDUVGULYHFKDLQVDQGUHLQIRUFHGQHRSUHQHEHOWVDUHXVHGWRGULYHWKHFDPVKDIWVWKDW
RSHQDQGDOORZWKHYDOYHVWRFORVHLQUHODWLRQWRWKHSRVLWLRQRIWKHSLVWRQVLQWKH
F\OLQGHUV7KHJHDUGULYHVSURFNHWVRUFRJVDVWKHFDVHPD\EHRIWKHFDPVKDIWDQG
FUDQNVKDIWVDUHNH\HGLQSRVLWLRQVRWKH\FDQQRWVOLS
:LWKGLUHFWO\GULYHQWLPLQJJHDUVRQHJHDUXVXDOO\KDVDPDUNRQWZRDGMDFHQWWHHWK
DQGWKHRWKHUDPDUNRQRQO\RQHWRRWK7RWLPHWKHYDOYHVSURSHUO\\RXQHHGWRPHVK
WKHJHDUVVRWKDWWKHWZRPDUNHGWHHWKRIWKHRQHJHDUVWUDGGOHWKHVLQJOHPDUNHGWRRWK
RIWKHRWKHUJHDU,QFKDLQGULYHQVSURFNHWV\RXFDQREWDLQFRUUHFWWLPLQJE\KDYLQJD
FHUWDLQQXPEHURIFKDLQWHHWKEHWZHHQWKHPDUNVRUE\OLQLQJXSWKHPDUNVZLWKD
VWUDLJKWHGJH(QJLQHVXVLQJDFRQWLQXRXVQHRSUHQHEHOWKDYHVSURFNHWVRUFRJV
DWWDFKHGWRWKHFDPVKDIWDQGFUDQNVKDIW7KHEHOWKDVVTXDUHVKDSHGLQWHUQDOWHHWKWKDW
PHVKZLWKWKHWHHWKRQWKHVSURFNHWV$OOHQJLQHVZLWKWKLVV\VWHPXVHDWLPLQJEHOW
WHQVLRQHU7LPLQJPDUNVRQWKLVV\VWHPYDU\
ZLWKHDFKPDQXIDFWXUHU

&5$1.6+$)7
6(59,&,1*
%HDULQJ&DS5HPRYDO
:KHQUHPRYLQJEHDULQJFDSVLIWKH\DUHQRW
DOUHDG\PDUNHGEHVXUHWRPDUNWKHPVR
WKH\ZLOOEHUHSODFHGRQWKHVDPHMRXUQDO
IURPZKLFKWKH\ZHUHUHPRYHG,IEHDULQJ
FDSVVWLFNFDUHIXOO\ZRUNWKHPORRVHE\
XVLQJDVRIWIDFHGKDPPHUWRDYRLG
GLVWRUWLQJWKHPDQGWDSSLQJWKHFDSOLJKWO\
RQRQHVLGHDQGWKHQWKHRWKHU )LJXUH²$EURNHQ
1$9('75$$ FUDQNVKDIW 
&UDQNVKDIW5HPRYDO
7KHFUDQNVKDIWLVRQHRIWKHPRVWKLJKO\VWUHVVHGHQJLQHFRPSRQHQWV7KHVWUHVV
LQFUHDVHVIRXUWLPHVDVWKHHQJLQHVSHHGGRXEOHV7KHFUDQNVKDIWPXVWEHUHMHFWHGLI
WKHUHLVDQ\VLJQRIDFUDFNEHFDXVHDFUDFNHGFUDQNVKDIWPD\EUHDNLILWFRQWLQXHVLQ
VHUYLFH(Figure 4-25).&UDQNVKDIWFUDFNVLQFDQEHGHWHFWHGLQLWLDOO\ZLWKDFORVHYLVXDO
LQVSHFWLRQ
2QFHWKHEHDULQJFDSVKDYH
EHHQUHPRYHGOLIWWKH
FUDQNVKDIWRXWRIWKHHQJLQH
EORFN8VXDOO\RQHRUWZR
SHRSOHGRWKLVVHHPLQJO\
VLPSOHRSHUDWLRQE\KDQG
:LWKODUJHUFUDQNVKDIWVXVHD
KRLVWDVGHPRQVWUDWHGLQ
Figure 4-26E\OLIWLQJDERYH
WKHFHQWHUZLWKDURSHVOLQJ
DURXQGWZRRIWKHWKURZV

&$87,21 
'RQRW³EDQJ´DURXQGRUSXW
XQQHFHVVDU\VWUHVVRQWKH
FUDQNVKDIWFDXVLQJGDPDJH
WKDWZLOOKDYHWREHUHSDLUHG
SULRUWRWKHFUDQNVKDIWEHLQJ
UHLQVWDOOHGLQWRWKHHQJLQH
ZKLFKZLOOUHVXOWLQQHHGOHVV )LJXUH²5HPRYLQJWKHFUDQNVKDIWZLWKDKRLVW
GRZQWLPHDQGH[SHQVH

&UDQNVKDIW-RXUQDO&KHFN
-RXUQDOVZHDURXWRIURXQGDQGEHFRPHWDSHUHG2XWRIURXQGDQGWDSHUDUHPHDVXUHG
XVLQJDPLFURPHWHUWRWDNHPHDVXUHPHQWVDWDQXPEHURIGLIIHUHQWORFDWLRQVRQHDFK
MRXUQDO5RXJKMRXUQDOVDQGVOLJKWEHQGVFDQEHUHFWLILHGE\JULQGLQJWKHMRXUQDOVRQWUXH
FHQWHUV)RUJHGVKDIWVZLWKH[FHVVEHQGVKRXOGEHVWUDLJKWHQHGEHIRUHJULQGLQJ
7KHSUHIHUUHGPHWKRGRIPHDVXULQJFUDQNVKDIWMRXUQDOVLVDVIROORZV5HPRYHWKH
FUDQNVKDIWIURPWKHHQJLQHEORFNDQGFOHDQWKHVXUIDFHVWREHPHDVXUHG8VLQJWKH
RXWVLGHPLFURPHWHUPHDVXUHWKHMRXUQDOVDWVHYHUDOSRLQWVIURPVLGHWRVLGHDQGIURP
WRSWRERWWRPDFURVVWKHEHDULQJVXUIDFH(Figure 4-27)0HDVXUHPHQWVDURXQGWKH
MRXUQDOZLOOVKRZLIWKHMRXUQDOLVRXWRIURXQG
7KRVHPHDVXUHPHQWVDFURVVWKHVXUIDFHVKRZLIWKHMRXUQDOLVWDSHUHG,IRQHVLGHRID
FUDQNVKDIWMRXUQDOLVZRUQPRUHWKDQWKHRWKHUWKHMRXUQDOLVWDSHUHG7RPHDVXUH
MRXUQDOWDSHUXVHWKHRXWVLGHPLFURPHWHU0HDVXUHERWKHQGVRIHDFKMRXUQDO-RXUQDOV
WKDWDUHWDSHUHGRURXWRIURXQGPRUHWKDQPXVWEHUHJURXQG%HVXUHWKDW\RX
DOZD\VUHIHUWRPDQXIDFWXUHU¶VVSHFLILFDWLRQVZKHQSHUIRUPLQJDQ\FUDQNVKDIWZRUN,I
QRWZLWKLQVSHFOLPLWVVHQGWKHFUDQNVKDIWIRUWXUQLQJ

1$9('75$$ 
 )LJXUH²0HDVXULQJMRXUQDOV

&KHFNLQJRU%HDULQJ)LW
<RXVKRXOGDOZD\VFKHFNEHDULQJILWRURLO
FOHDUDQFHZKHQLQVWDOOLQJQHZEHDULQJV
:KHQWKHEHDULQJFDSVDUHRII\RXVKRXOG
PHDVXUHWKHMRXUQDOVVRWKDW\RXFDQ
GHWHFWZHDURXWRIURXQGQHVVRUWDSHU
<RXFDQFKHFNEHDULQJFOHDUDQFHZLWK
HLWKHUIHHOHUVWRFNRU3ODVWLJDJH(Figure 4-
28).
3ODVWLJDJHLVDVPDOOSODVWLFVWULQJWKDWLV
XVHGWRPHDVXUHDYHU\WLJKWFOHDUDQFH
EHWZHHQWZRHQJLQHKDOIFLUFOHPHWDO
EHDULQJVWKDWHQFORVHDVSLQQLQJFLUFXODU
FUDQNVKDIWFDPVKDIWRUSLVWRQWLHURGHQG
3ODVWLJDJHLVFXWDQGODLGDFURVVWKHZLGWK
RIWKHFRQWDFWVXUIDFH7KHWZRKDOIFLUFOH )LJXUH²8VLQJ3ODVWLJDJHWR
EHDULQJVDUHDVVHPEOHGDQGWLJKWHQHGWR FKHFNEHDULQJFOHDUDQFH
IDFWRU\VSHFLILFDWLRQVWKHQGLVDVVHPEOHG
WRH[DPLQHWKH3ODVWLJDJHZLGWK
7KHZLGWKRIWKHFRPSUHVVHG3ODVWLJDJHLQGLFDWHVFOHDUDQFHEHWZHHQWKHSDUWV7KH
UDQJHRI3ODVWLJDJHLVGHWHUPLQHGE\LWVFRORUJUHHQIRULQFKUHGIRU
DQGEOXHIRULQFKFOHDUDQFHV
%HIRUHFKHFNLQJEHDULQJFOHDUDQFHZLWK3ODVWLJDJHZLSHWKHMRXUQDODQGWKHEHDULQJ
FOHDQRIRLO7KHQSODFHDVWULSRIWKH3ODVWLJDJHOHQJWKZLVHLQWKHFHQWHURIWKHEHDULQJ
FDS,QVWDOOWKHFDSQH[WDQGWLJKWHQLWLQWRSODFH:KHQWKHFDSLVUHPRYHG\RXFDQ
PHDVXUHWKHDPRXQWRIIODWWHQLQJRIWKHVWULSZLWKDVSHFLDOVFDOH'R127UHPRYHWKH
IODWWHQHGVWULSIURPWKHFDSRUWKHMRXUQDOWRPHDVXUHWKHZLGWKEXWPHDVXUHLWLQSODFH
1RWRQO\GRHVWKHDPRXQWRIIODWWHQLQJPHDVXUHEHDULQJFOHDUDQFHEXWXQHYHQ
IODWWHQLQJDOVRLQGLFDWHVDWDSHUHGRUZRUQFUDQNVKDIWMRXUQDORUEHDULQJ

&$87,21 
'RQRWWXUQWKHFUDQNVKDIWZLWKWKH3ODVWLJDJHLQSODFH
:KHQXVLQJIHHOHUVWRFNWRFKHFNPDLQEHDULQJFOHDUDQFHVSODFHDSLHFHRIVWRFNRIWKH
1$9('75$$ 
FRUUHFWVL]HDQGWKLFNQHVVLQWKHEHDULQJFDSDIWHULWLVUHPRYHG&RDWWKHIHHOHUVWRFN
OLJKWO\ZLWKRLO7KHQUHSODFHDQGWLJKWHQWKHEHDULQJFDS1RWHWKHHDVHZLWKZKLFKWKH
FUDQNVKDIWFDQEHWXUQHG$VDZRUGRIFDXWLRQGRQRWFRPSOHWHO\URWDWHWKHHQJLQH
ZKLFKFRXOGGDPDJHWKHEHDULQJ7XUQLWRQO\DERXWDQLQFKLQRQHGLUHFWLRQRUWKHRWKHU
,IWKHFUDQNVKDIWLVORFNHGRUGUDJVQRWLFHDEO\DIWHUWKHEHDULQJFDSKDVEHHQUHSODFHG
DQGWLJKWHQHGWKHQWKHEHDULQJFOHDUDQFHLVOHVVWKDQWKHWKLFNQHVVRIWKHIHHOHUVWRFN
,ILWGRHVQRWWLJKWHQRUGUDJSODFHDQDGGLWLRQDOWKLFNQHVVRIIHHOHUVWRFNRQWRSRIWKH
ILUVWDQGDJDLQFKHFNWKHHDVHRIFUDQNVKDIWPRYHPHQW&OHDUDQFHQRUPDOO\VKRXOGEH
DERXWLQFK%HVXUHWRFKHFNWKHHQJLQHPDQXDOIRUH[DFWVSHFLILFDWLRQV

&UDQNVKDIW,QVWDOODWLRQ
,QVWDOOWKHPDLQEHDULQJXSSHUKDOYHVIROORZLQJWKHRUGHUHVWDEOLVKHGGXULQJ
GLVDVVHPEO\$OLJQWKHKROHVLQHDFKEHDULQJVKHOOZLWKLWVPDWLQJSRUWLQWKHF\OLQGHU
EORFN$SSO\DILOPRIHQJLQHRLOWRHDFKEHDULQJZHDUVXUIDFHDQGFUDQNVKDIWMRXUQDO
/XEULFDWHWKHEDFNRIWKHEHDULQJV
0DNHFHUWDLQWKHFUDQNVKDIWLVFOHDQSULRUWRLQVWDOOLQJLWLQWKHF\OLQGHUEORFN&DUHIXOO\
OLIWDQGLQVWDOOWKHFUDQNVKDIWLQWRWKHF\OLQGHUEORFNXVLQJDKRLVWDQGVOLQJVSRVLWLRQHGWR
EDODQFHWKHZHLJKW6OLGHWKHWKUXVWZDVKHUXSSHUKDOYHVLQWRWKHF\OLQGHUEORFNDWWKH
SURSHUORFDWLRQV(QVXUHWKHOXEULFDWLRQJURRYHVLQHDFKEHDULQJKDOIDUHSRVLWLRQHGWR
IDFHWRZDUGWKHFUDQNVKDIWZHDUVXUIDFH,QVWDOOWKHPDLQEHDULQJORZHUKDOYHVRQWRWKHLU
UHVSHFWLYHEHDULQJFDSVREVHUYLQJWKHRUGHUHVWDEOLVKHGGXULQJGLVDVVHPEO\$WWKLV
SRLQWLQWKHUHDVVHPEO\DEHDULQJFOHDUDQFHFKHFNXVLQJ3ODVWLJDJHPD\EHSHUIRUPHG
$SSO\DILOPRIHQJLQHRLOWRWKHZHDUVXUIDFHRIHDFKEHDULQJVKHOO,QVWDOOWKHPDLQ
EHDULQJFDSVDFFRUGLQJWRWKHRUGHUREVHUYHGGXULQJGLVDVVHPEO\,QVWDOOWKHEHDULQJ
FDSPRXQWLQJEROWVDQGZDVKHUV6QXJWKHEROWVEXWGRQRWWLJKWHQDVWKHPDQXDOPD\
VSHFLI\DVSHFLILFWLJKWHQLQJVHTXHQFH$IWHUFKHFNLQJWKHVHUYLFHPDQXDOWLJKWHQWKH
EHDULQJFDSEROWVWRVSHFLILFDWLRQ

&UDQNVKDIW(QG3OD\&KHFN
&UDQNVKDIWHQGSOD\LVWKHDPRXQWRIIURQWWRUHDUPRYHPHQWRIWKHFUDQNVKDIWLQWKH
EORFN,WLVFRQWUROOHGE\WKHFOHDUDQFHEHWZHHQWKHPDLQWKUXVWEHDULQJDQGWKH
FUDQNVKDIWWKUXVWVXUIDFHRUMRXUQDO&UDQNVKDIWHQGSOD\ZLOOEHFRPHH[FHVVLYHLIWKH
WKUXVWEHDULQJVDUHZRUQSURGXFLQJDVKDUSLUUHJXODUNQRFN,IWKHZHDULVFRQVLGHUDEOH
WKHNQRFNZLOORFFXUHDFKWLPHWKHFOXWFKLVHQJDJHGRUUHOHDVHGWKLVDFWLRQFDXVHV
VXGGHQHQGZLVHPRYHPHQWRIWKHFUDQNVKDIW

1$9('75$$ 
&UDQNVKDIWHQGSOD\VKRXOGRQO\
EHDIHZWKRXVDQGWKVRIDQLQFK
7RPHDVXUHWKLVHQGSOD\\RX
FDQXVHDIHHOHUJDXJHDVVKRZQ
LQFigure 4-29RUPRXQWDGLDO
LQGLFDWRURQWKHEORFN3RVLWLRQ
WKHGLDOLQGLFDWRUDJDLQVWWKH
FUDQNVKDIWVRWKDWWKHLQGLFDWRU
VWHPLVSDUDOOHOWRWKHFUDQN
FHQWHUOLQH
3U\WKHFUDQNVKDIWEDFNDQGIRUWK
LQWKHEORFN,QGLFDWRUPRYHPHQW
HTXDOVFUDQNVKDIWHQGSOD\
&RPSDUHWKHPHDVXUHPHQWVWR
WKHVSHFLILFDWLRQV,IWKHHQGSOD\
LVLQFRUUHFWFKHFNWKHWKUXVW
EHDULQJLQVHUWVL]HDQGWKH
FUDQNVKDIWWKUXVWMRXUQDOZLGWK

&UDQNVKDIW6WRUDJH
:KHQUHPRYLQJWKHFUDQNVKDIW )LJXUH²&KHFNLQJFUDQNVKDIWHQG
ZLWKULJJLQJEHVXUHWRSURWHFW SOD\XVLQJDIHHOHUJDXJH
PDFKLQHGVXUIDFHV$YRLGOD\LQJ
GRZQDFUDQNVKDIWEHFDXVHLWFDQZDUSRXWRIVKDSHRUEHFRPHEHQW:KHQVWRULQJD
FUDQNVKDIWPDNHFHUWDLQLWKDVVXSSRUWDORQJWKHVKDIW¶VHQWLUHOHQJWKWRSUHYHQW
ZDUSLQJ,IWKHFUDQNVKDIWLVVPDOOHQRXJKLWPD\EHSRVVLEOHWRVLPSO\VWDQGLWRQWKH
IO\ZKHHOHQG$OVRGRQRWVWRUHFUDQNVKDIWRUEHDULQJSDUWVRQDQ\PHWDOVXUIDFH:KHQ
DVKDIWLVUHPRYHGIURPWKHHQJLQHLWVKRXOGEHSODFHGRQDZRRGHQSODQNZLWKDOO
MRXUQDOVXUIDFHVSURWHFWHG,IWKHVKDIWLVWREHH[SRVHGIRUVRPHWLPHLWLVEHVWWR
SURWHFWHDFKMRXUQDOVXUIDFHZLWKDFRDWLQJRIKHDY\JUHDVH

&</,1'(56(59,&,1*
7KHUHDUHFHUWDLQOLPLWVWRZKLFKF\OLQGHUVPD\EHFRPHWDSHUHGRURXWRIURXQGEHIRUH
WKH\UHTXLUHUHILQLVKLQJ,IWKH\KDYHRQO\DVOLJKWWDSHURUDUHRQO\VOLJKWO\RXWRIURXQG
FRQVXOWWKHPDQXIDFWXUHU¶VPDQXDOIRUWKHPD[LPXPDOORZDEOHWDSHURURXWRIURXQG
QHZVWDQGDUGULQJVFDQEHLQVWDOOHG
:KHQF\OLQGHUZHDUJRHVEH\RQGWKHSRLQWUHFRPPHQGHGLQWKHHQJLQHPDQXIDFWXUHU¶V
VSHFLILFDWLRQVORVVRIFRPSUHVVLRQKLJKRLOFRQVXPSWLRQSRRUSHUIRUPDQFHDQGKHDY\
FDUERQDFFXPXODWLRQVLQWKHF\OLQGHUZLOOUHVXOW,QVXFKFDVHVWKHRQO\ZD\WRSXWWKH
HQJLQHEDFNLQWRJRRGRSHUDWLQJFRQGLWLRQLVWRUHILQLVKWKHF\OLQGHUVDQGILWQHZSLVWRQV
RURYHUVL]HGSLVWRQVDQGULQJV

&\OLQGHU:DOOV&KHFN
$VDILUVWVWHSLQFKHFNLQJF\OLQGHUZDOOVZLSHWKHPFOHDQDQGH[DPLQHWKHPFDUHIXOO\
IRUVFRUHGSODFHVDQGVSRWW\ZHDUZKLFKVKRZVXSDVGDUNXQSROLVKHGVSRWVRQWKH
ZDOOV+ROGLQJDGURSOLJKWDWWKHRSSRVLWHHQGRIWKHF\OLQGHUIURPWKHH\HZLOOKHOSLQ
WKHH[DPLQDWLRQ,IVFRUHVRUVSRWVDUHIRXQG\RXVKRXOGUHILQLVKWKHF\OLQGHUZDOOV
1H[WPHDVXUHWKHF\OLQGHUVIRUWDSHUDQGRYDOZHDU7KLVFDQEHGRQHZLWKDQLQVLGH
PLFURPHWHURUE\DVSHFLDOGLDOLQGLFDWRU$VWKHGLDOLQGLFDWRULVPRYHGXSDQGGRZQLQ
1$9('75$$ 
WKHF\OLQGHUDQGWXUQHGIURPRQHSRVLWLRQWRDQRWKHUDQ\LUUHJXODULWLHVZLOOFDXVHWKH
QHHGOHWRPRYH7KLVZLOOLQGLFDWHKRZPDQ\WKRXVDQGWKVRIDQLQFKWKHF\OLQGHULVRXW
RIURXQGRUWDSHUHG7KHSHUPLVVLEOHDPRXQWRIWDSHURURXWRIURXQGQHVVLQDF\OLQGHU
YDULHVVRPHZKDWZLWKGLIIHUHQWHQJLQHV(QJLQHPDQXIDFWXUHUVLVVXHUHFRPPHQGDWLRQV
EDVHGRQH[SHULHQFHZLWKWKHLURZQHQJLQHV:KHQWKHUHFRPPHQGDWLRQVDUH
H[FHHGHGWKHF\OLQGHUVKDYHWREHUHILQLVKHG
&\OLQGHUWDSHULVWKHGLIIHUHQFHLQWKH
GLDPHWHUVPHDVXUHGDWWKHWRSRIWKH
F\OLQGHUDQGDWWKHERWWRPRIWKHF\OLQGHU,W
LVFDXVHGE\OHVVOXEULFDWLQJRLODWWKHWRSRI
WKHF\OLQGHUDQGPRUHRLOVSODVKLQJRQWKH
ORZHUDUHDRIWKHF\OLQGHU$VDUHVXOWWKH
WRSRIWKHF\OLQGHUZHDUVIDVWHUODUJHUWKDQ
WKHERWWRPSURGXFLQJWDSHU
&\OLQGHURXWRIURXQGQHVVLVDGLIIHUHQFHLQ
F\OLQGHUGLDPHWHUZKHQPHDVXUHGIURQWWR
UHDUDQGVLGHWRVLGHLQWKHEORFN3LVWRQ
WKUXVWDFWLRQQRUPDOO\PDNHVWKHF\OLQGHU
ZHDUPRUHDWULJKWDQJOHVWRWKHFHQWHUOLQH
RIWKHFUDQNVKDIW0D[LPXPDOORZDEOH
F\OLQGHURXWRIURXQGLVW\SLFDOO\´
$GLDOERUHJDXJHLVDWRROXVHGWRTXLFNO\
DQGDFFXUDWHO\PHDVXUHF\OLQGHUZHDU )LJXUH²'LDOERUHJDXJH
(Figure 4-30).6OLGHWKHERUHJDXJHXSDQG
GRZQWKHF\OLQGHU

&\OLQGHU5HILQLVKLQJ
7KHUHDUHWZRPHWKRGVRIUHILQLVKLQJF\OLQGHUVKRQLQJDQGERULQJ&\OLQGHUVDUH
UHILQLVKHGE\KRQLQJZKHQZHDULVQRWWRRJUHDWRWKHUZLVHWKH\DUHERUHGZLWKD
PDFKLQHDQGRYHUVL]HGSLVWRQVDQGULQJVDUHLQVWDOOHG
&\OLQGHUKRQLQJLVXVHGWRWUXHZRUQF\OLQGHUVDQGWREUHDNWKHJOD]HRQXVHGF\OLQGHUV
EHIRUHLQVWDOOLQJQHZSLVWRQULQJV,WPXVWDOVREHXVHGWRVPRRWKURXJKF\OLQGHUVDIWHU
ERULQJ
7KHWHUPGHJOD]LQJLVJHQHUDOO\XVHGZKHQUHIHUULQJWRYHU\OLJKWKRQLQJWKDWVLPSO\
VFXIIVWKHF\OLQGHUZDOOWRDLGULQJEUHDNLQ7KHJOD]HGF\OLQGHUZDOOFDXVHVULQJVWR
VNDWHRQWKHKLJKO\SROLVKHGILQLVKDQGGLVFRXUDJHVWKHPLQXWHDPRXQWRIZHDUZKLFK
LVQHFHVVDU\WRPDWHSLVWRQULQJVZLWKWKHERUH

&\OLQGHU+RQLQJ
$F\OLQGHUKRQHSURGXFHVSUHFLVHO\WH[WXUHGFURVVKDWFKHGSDWWHUQRQWKHF\OLQGHUZDOO
WRDLGULQJVHDWLQJDQGVHDOLQJ7LQ\VFUDWFKHVIURPWKHKRQHFDXVHLQLWLDOULQJDQG
F\OLQGHUZDOOEUHDNLQZHDU7KLVPDNHVWKHULQJILWLQWKHF\OLQGHUSHUIHFWO\DIWHURQO\D
IHZPLQXWHVRIHQJLQHRSHUDWLRQ
7KHUHDUHVHYHUDOW\SHVRIKRQHV

x %UXVKKRQH²KDVVPDOOEDOOVRIDEUDVLYHPDWHULDOIRUPHGRQWKHHQGVRIURXQG
PHWDOEUXVKEULVWOHV,WLVGHVLUDEOHZKHQWKHF\OLQGHULVLQJRRGFRQGLWLRQDQG
UHTXLUHVYHU\OLWWOHKRQLQJ(Figure 4-31, View A)
1$9('75$$ 
 x )OH[KRQH²KDVKDUGIODWDEUDVLYHVWRQHVDWWDFKHGWRVSULQJORDGHGPRYDEOH
DUPV,WLVXVHGZKHQWKHF\OLQGHUZHDULVVOLJKWDQGDPRGHUDWHDPRXQWRI
KRQLQJLVQHHGHG(Figure 4-3, View B)

x 5LJLGKRQHVL]LQJKRQH²KDVDGMXVWDEOHVWRQHVWKDWORFNLQWRDSUHVHWSRVLWLRQ

,WZLOOUHPRYHDVPDOODPRXQWRIF\OLQGHUWDSHURURXWRIURXQGQHVV(Figure 4-31,
View C).$ULJLGKRQHZLOODFFXUDWHO\UHPRYHPRUHF\OLQGHUPDWHULDOWKDQDIOH[
KRQH7KLVW\SHRIKRQHVKRXOGEHXVHGLQEDGO\ZRUQF\OLQGHUVWKDWDUHVWLOO
ZLWKLQVSHFZHDUOLPLWV

x +RQLQJPDFKLQH²DODUJHSLHFHRIHTXLSPHQWXVHGWRULJLGKRQHWKHF\OLQGHUV
7KLVW\SHRIPDFKLQHLVRIWHQIRXQGLQDPDFKLQHVKRSDQGLVXVHGDIWHUERULQJ
(Figure 4-31, View D).

)LJXUH²7\SHRIKRQHV

$ULJLGKRQHRUDKRQLQJPDFKLQHFDQEHXVHGOLNHDERULQJEDUWRWUXHDF\OLQGHUZKHQ
ZHDUGRHVQRWH[FHHGDFFHSWDEOHOLPLWV'RQRWKRQHPRUHWKDQPDQXIDFWXUHU¶V
UHFRPPHQGDWLRQV
$IWHUKRQLQJLWLVYHU\LPSRUWDQWWRUHPRYHDOOKRQLQJJULWELWVRIVWRQHDQGPHWDOIURP
LQVLGHWKHHQJLQH,IWKLVJULWLVQRWUHPRYHGLWZLOODFWOLNHJULQGLQJFRPSRXQGRQ
EHDULQJVULQJVDQGRWKHUYLWDOHQJLQHSDUWV
)LUVWZDVKRXWWKHF\OLQGHUVZLWKDZDUPVROXWLRQRIZDWHUDQGVRDS$VRIWEULVWOH
EUXVKQRWDZLUHEUXVKZLOOTXLFNO\ORRVHQSDUWLFOHVLQVLGHWKHKRQLQJPDUNVRQWKH
F\OLQGHUZDOOV$IWHUZDVKLQJULQVHWKHEORFNWKRURXJKO\ZLWKFOHDQKRWZDWHUDQGEORZ
WKHF\OLQGHUVGU\ZLWKFRPSUHVVHGDLU
1H[WVRDNDFOHDQVKRSUDJLQIUHVKHQJLQHRLODQGZLSHWKHF\OLQGHUGRZQWKRURXJKO\
ZLWKWKHRLOVRDNHGUDJ7KHKHDY\RLOZLOOSLFNXSDQ\UHPDLQLQJJULWHPEHGGHGLQWKH
F\OLQGHU¶VKRQLQJPDUNV:LSHWKHF\OLQGHUVGRZQXQWLOWKHUDJFRPHVRXWSHUIHFWO\
FOHDQ
$IWHUFOHDQLQJDQGRLOLQJUHFKHFNWKHF\OLQGHUIRUVFRULQJDQGVFUDWFKHV,IKRQLQJGLG
QRWFOHDQXSDOOWKHYHUWLFDOVFUDWFKHVLQWKHF\OLQGHUF\OLQGHUERULQJRUVOHHYLQJPD\EH
QHHGHG

&\OLQGHU%RULQJ
&\OLQGHUERULQJLVQHHGHGWRUHPRYHGHHSVFUDWFKHVVFRULQJRUH[FHVVZHDUIURPWKH
F\OLQGHUZDOOV,WLQYROYHVPDFKLQLQJWKHF\OLQGHUVWRDODUJHUGLDPHWHU$IWHUERULQJ
1$9('75$$ 
RYHUVL]HGSLVWRQVPXVWEHLQVWDOOHGLQWKHHQJLQH
7KHPDFKLQHVKRSZLOOXVHDODUJHERULQJEDUPDFKLQHWRROWRFXWDWKLQOD\HURIPHWDO
RIIWKHF\OLQGHUZDOOV1RUPDOO\DF\OLQGHUEORFNLVERUHGLQLQFUHPHQWVRI´RU
PP
2YHUERUHOLPLWW\SLFDOO\´±´LVWKHODUJHVWSRVVLEOHGLDPHWHULQFUHDVHWR
ZKLFKDF\OLQGHUFDQEHERUHG,WLVVSHFLILHGE\WKHHQJLQHPDQXIDFWXUHUDQGFDQYDU\
ZLWKEORFNGHVLJQ,IWKHRYHUERUHOLPLWLVH[FHHGHGWKHF\OLQGHUZDOOFDQEHFRPHWRR
WKLQ7KHZDOOFDQGLVWRUWRUFUDFNZKHQXVHGIURPFRPEXVWLRQKHDWRUSUHVVXUH
2YHUVL]HGSLVWRQVDQGULQJVDUHUHTXLUHGWRILWDF\OLQGHUEORFNWKDWKDVKDGLWVF\OLQGHUV
ERUHGRXW7KHSLVWRQVPXVWPDWFKWKHRYHUVL]HRIWKHF\OLQGHUV
%RULQJF\OLQGHUVDQGLQVWDOOLQJRYHUVL]HGSLVWRQVZLOOKHOSUHVWRUHWKHHQJLQHWROLNHQHZ
FRQGLWLRQ1HZSLVWRQVDQGULQJVZLOORSHUDWHRQIUHVKO\PDFKLQHGF\OLQGHUVXUIDFHV
SURYLGLQJH[FHOOHQWULQJVHDOLQJDQGUHQHZHGOLIHWRWKHHQJLQH
&\OLQGHUVOHHYLQJLQYROYHVPDFKLQLQJRQHRUPRUHRIWKHF\OLQGHUVRYHUVL]HDQG
SUHVVLQJLQDF\OLQGHUOLQHU6OHHYLQJLVQHHGHGZKHQWKHGDPDJHWRWKHF\OLQGHUZDOOLV
WRRVHYHUHWRFRUUHFWZLWKERULQJ
6OHHYLQJDOORZVWKHEDGF\OLQGHUWREHUHVWRUHGWRLWVRULJLQDOGLDPHWHU7KHVDPHVL]H
SLVWRQVFDQEHUHXVHG,IRQO\RQHF\OLQGHULVGDPDJHGIRULQVWDQFHDOORIWKHRWKHU
SLVWRQVDQGF\OLQGHUVPD\EHJRRGDQGXVDEOH7KLVSURYLGHVVDYLQJVLQWLPHDQG
PRQH\

&\OLQGHU/LQHUV3ODFHPHQW
8VLQJUHSODFHDEOHF\OLQGHUOLQHUVFDQVDYHWLPHDQGFRVWO\PDFKLQHZRUN)LUVW
GHWHUPLQHWKHW\SHRIOLQHUVZHWRUGU\WKDWDUHXVHGLQWKHXQLWEHLQJUHEXLOW'U\OLQHUV
GRQRWUHTXLUHDZDWHUVHDODQGFDQVLPSO\EHSXOOHGRXWDQGWKHQHZOLQHUSUHVVHGLQWR
SODFH:HWOLQHUVKDYHJURRYHVFXWLQWRWKHPIRUILWWLQJ2ULQJVHDOVWRSUHYHQWZDWHU
OHDNDJHLQWRWKHFUDQNFDVH

&$87,21 
:KHQLQVWDOOLQJWKHZHWW\SHRIOLQHUVXVHFDUHWRSUHYHQWGDPDJHWRWKH2ULQJVHDOV

'U\&\OLQGHU/LQHUV
%HIRUHLQVWDOOLQJSUHVVILWGU\VOHHYHVLQVSHFWDQGPHDVXUHWKHF\OLQGHUGLDPHWHUV,IWKH
F\OLQGHUVDUHGLVWRUWHGWKHEORFNPXVWEHUHERUHGWRDFFHSWRYHUVL]HGOLQHUV2WKHUZLVH
WKHVOHHYHVPD\FRQIRUPWRWKHGLVWRUWHGF\OLQGHUV,QVRPHFDVHVDLUSRFNHWVZLOOIRUP
EHWZHHQWKHVOHHYHVDQGWKHEORFNFDXVLQJORFDOL]HGKRWVSRWVWKDWRIWHQUHVXOWLQD
EUHDNGRZQRIWKHFRQWDFWVXUIDFHV&KHFNWKHF\OLQGHUVOHHYH¶VRXWVLGHGLDPHWHUZLWK
DQRXWVLGHPLFURPHWHU%HIRUHLQVWDOOLQJWKHVOHHYHKHDWWKHEORFNDQGSDFNWKHVOHHYH
ZLWKGU\LFH$IWHUUHPRYLQJWKHGU\LFHIURPWKHVOHHYHFRDWLWZLWKDQDSSURSULDWH
OXEULFDQWDQGSUHVVRUGULYHLWLQWRWKHF\OLQGHUXQWLOLWWRXFKHVWKHOLSDWWKHERWWRPRIWKH
F\OLQGHU7RGULYHWKHVOHHYHGRZQLQWRWKHF\OLQGHUXVHDF\OLQGHUGULYHURUKDPPHUDQG
DVOHHYHGULYHU
:KHQLQVWDOOHGSURSHUO\WKHVOHHYHZLOOH[WHQGVOLJKWO\DERYHWKHGHFNRIWKHEORFN$
ERULQJEDUZLWKDIDFHWRROLQVWDOOHGLQWKHFXWWHUKHDGLVXVHGWRPDFKLQHWKHWRSRIWKH
VOHHYHIOXVKZLWKWKHGHFN$IWHULQVWDOODWLRQWKHVOHHYHVKRXOGEHERUHGWRWKHGHVLUHG
VL]HMXVWOLNHDQ\RWKHUF\OLQGHU7KHVOHHYHGF\OLQGHULVWKHQFKDPIHUHGDQGZDVKHG
7KHLPSRUWDQWIDFWRUVWRFRQVLGHUZKHQLQVWDOOLQJDGU\OLQHUZLWKDIODQJHLQFOXGHWKH
1$9('75$$ 
IROORZLQJ
x ,IILWWHGFRUUHFWO\DIODQJHGOLQHUVKRXOGHQWHUWKHF\OLQGHUEORFNRQHKDOIWRWKUHH
TXDUWHUVRILWVOHQJWKDQGUHTXLUHRQO\DOLJKWWDSSLQJWRJHQWO\VHWLWLQSODFH
DJDLQVWWKHEDVHRIWKHFRXQWHUERUH
x $OLQHUWKDWLVORRVHZLOOQRWPDNHSURSHUFRQWDFWZLWKWKHF\OLQGHUEORFNDQGZLOO
UHVXOWLQSRRUKHDWGLVVLSDWLRQ$ORRVHILWFDQEHVSRWWHGE\DQDFFXPXODWLRQRI
FDUERQGHSRVLWVRQWKHOLQHU¶VRXWVLGHGLDPHWHUDQGGLVWLQFWGDUNDUHDVFDXVHGE\
WKHUHVWULFWHGKHDW7KLVRFFXUVEHFDXVHWKHGHSRVLWVZLOODFWDVDKHDWGDP
ZKLFKUHVWULFWVWKHKHDWIURPEHLQJGLVVLSDWHGLQWRWKHEORFNDQGFRRODQW
x $OLQHUWKDWLVWLJKWFDQFDXVHVHULRXVGDPDJH²HYHQPRUHGDPDJHWKDQRQHWKDW
LVWRRORRVH%ORFNGLVWRUWLRQOLQHUFROODSVHSRRUKHDWWUDQVIHUKRWVSRWVDQG
VFXIILQJDUHFRPPRQUHVXOWVRIH[FHVVLYHWLJKWQHVV

:HW&\OLQGHU/LQHUV
%HIRUHLQVWDOOLQJDZHWF\OLQGHUOLQHUFOHDQDOOGHSRVLWVIURPXQGHUWKHOLQHU¶VIODQJHDQG
WKHPDWLQJFRXQWHUERUHLQWKHF\OLQGHUEORFN7KHOLQHUPXVWUHVWIODWO\LQWKHFRXQWHUERUH
WRSUHYHQWGLVWRUWLRQLIWKHIODQJHVXUIDFHLVXQHYHQUHPDFKLQHLW
&OHDQWKHORZHUVHDOLQJVXUIDFHVLQWKHEORFNDQGRQWKHOLQHUWRSUHYHQWFRRODQWOHDNV
ZKHQWKHOLQHULVLQVWDOOHG3ODFHQHZVHDOVRQWKHOLQHUDQGOXEULFDWHERWKWKHVHDOVDQG
PDWLQJVXUIDFHVLQWKHEORFN&KHFNWREHVXUHWKHVHDOVDUHQRWWZLVWHGRUFULPSHG$
UROORUWZLVWLQFUHDVHVWKHGHQVLW\RIWKHVHDOLQWKHDUHDRIWKHWZLVW7KHGHQVHDUHD
SURGXFHGE\WKHWZLVWFUHDWHVDKDUGVSRWWKDWDWWUDFWVKHDW$WZLVWHGVHDOFDQDOVR
GLVWRUWWKHOLQHUUHGXFHWKHSLVWRQRSHUDWLQJFOHDUDQFHDQGSURPRWHIDLOXUH
7RUHPRYHWZLVWVIURPVHDOVLQVHUWWKHVKDIWRIDVPDOOVFUHZGULYHUXQGHUWKHVHDODWD
ULJKWDQJOHWRWKHVHDOJURRYHDQGURWDWHWKHVFUHZGULYHUDURXQGWKHOLQHUWKUHHRUIRXU
WLPHV2Q2ULQJVDSDUWLQJOLQHLVXVXDOO\YLVLEOHLQWKHFHQWHURIWKHRXWVLGHGLDPHWHURI
WKHVHDO7KLVOLQHVKRXOGEHSDUDOOHOWRWKHJURRYHZKHQWKHWZLVWLVHOLPLQDWHG
,QVHUWWKHOLQHULQWRWKHF\OLQGHUXQWLOLWFRQWDFWVWKHFUHYLFHVHDOSODFHWKHSDOPVRI\RXU
KDQGVRQWKHXSSHUHQGRIWKHOLQHUDQGSXVKLWGRZQZDUGZLWKTXLFNHYHQSUHVVXUH
7RFRQWLQXHWKHLQVWDOODWLRQWDSWKHOLQHUQHDULWVLQVLGHGLDPHWHUZLWKDODUJHVRIWIDFHG
KDPPHU7DSDOWHUQDWHO\IURPVLGHWRVLGHJUDGXDOO\ZRUNLQJDURXQGWKHHQWLUH
FLUFXPIHUHQFHRIWKHOLQHU:KHQWKHOLQHULV´DERYHWKHGHFNEORZVRPH
FRPSUHVVHGDLULQWRWKHFRXQWHUERUHWRUHPRYHDQ\PDWHULDOWKDWPD\KDYH
DFFXPXODWHG'HSRVLWVLQWKHFRXQWHUERUHFDQFDXVHGLVWRUWLRQRIWKHOLQHU:KHQWKH
FRXQWHUERUHLVFOHDQFRQWLQXHWRGULYHWKHOLQHUIXOO\LQWRWKHEORFN
$IWHUWKHOLQHULVVHDWHGSURSHUO\FOHDQWKHOLQHUIODQJHZLWKDEUDVVZLUHEUXVKWRHQVXUH
DQDFFXUDWHPHDVXUHPHQWRIWKHIODQJHKHLJKWDERYHWKHEORFNGHFN&KHFNWKHIODQJH
KHLJKWDERYHWKHEORFNGHFNXVLQJDVOHGGLDODUUDQJHPHQW
,IDF\OLQGHUEORFNGHFNLVUHVXUIDFHGWKHF\OLQGHUEORFNFRXQWHUERUHGHSWKPXVWEH
UHFXWWRVSHFLILFDWLRQV,IWKHF\OLQGHUEORFNGHFNKDVQRWEHHQUHVXUIDFHGEXWWKHUHLV
H[FHVVLYHSLWWLQJRUHURVLRQRIWKHF\OLQGHUEORFNFRXQWHUERUHUHFXWWKHFRXQWHUERUHDV
UHTXLUHG
6KLPVDUHDOVRDYDLODEOHWRUHHVWDEOLVKWKHFRUUHFWIODQJHKHLJKW6KLPVDUH
PDQXIDFWXUHGLQYDULRXVWKLFNQHVVHV8VHRQO\WKHQXPEHURIVKLPVQHFHVVDU\WRREWDLQ
WKHFRUUHFWOLQHUKHLJKW&KHFNWKHVKLP¶VWKLFNQHVVZLWKDPLFURPHWHU,IPRUHWKDQRQH
VKLPLVUHTXLUHGSRVLWLRQWKHWKLFNHVWVKLPRQWKHERWWRPRIWKHFRXQWHUERUH3RVLWLRQ
WKHVKLPVLQWRWKHF\OLQGHUOLQHUFRXQWHUERUH
1$9('75$$ 
:KHQLQVWDOODWLRQLVFRPSOHWHFDUHIXOO\FOHDQWKHF\OLQGHUOLQHUDVSUHYLRXVO\GHVFULEHG
&KHFNWKHOLQHUGLDPHWHUXVLQJDGLDOERUHJDXJH7DNHUHDGLQJVDWƒDSDUWDWWZR
OHYHOV
$IWHULQVWDOOLQJDQHZZHWOLQHUFKHFNWKHWRSRIWKHEORFNDQGWKHF\OLQGHUKHDGVIRU
IODWQHVV&KHFNWKHFRXQWHUERUHGHSWKVIRUZDYLQHVVDQGYDULDWLRQV%HVXUH
FRXQWHUERUHVDUHFOHDQDQGIUHHRIGLUWDQGFDUERQ$OVRPHDVXUHWKHOLQHUIODQJH
KHLJKW

3,67216DQG5,1*66(59,&,1*
:KHQVHUYLFHLVUHTXLUHGRQSLVWRQVDQGULQJVWKH\PXVWILUVWEHUHPRYHGIURPWKH
HQJLQH:KHUHUHPRYDOLVWREHIURPWKHWRSRIWKHF\OLQGHUEORFNWDNHWKHF\OLQGHUKHDG
RIIDQGH[DPLQHWKHF\OLQGHUIRUZHDU,IWKHF\OLQGHULVZRUQWKHUHZLOOEHDULGJHDWWKH
XSSHUOLPLWRIWKHWRSULQJWUDYHO5HPRYHWKLVULGJH,IQRWUHPRYHGLWZLOOGDPDJHWKH
SLVWRQDQGULQJVDVWKH\DUHIRUFHGRXWRIWKHWRSRIWKHF\OLQGHU
7RUHPRYHWKLVULGJHXVHDUHDPHU%HIRUHSODFLQJWKHULGJHUHDPHULQWKHF\OLQGHUEH
VXUHWKHSLVWRQKDVEHHQSODFHGDW%'&6WXIIUDJVLQWRWKHF\OLQGHUWRSURWHFWWKHSLVWRQ
DQGSLVWRQULQJVIURPPHWDOVKDYLQJVGXULQJWKHUHDPLQJRSHUDWLRQ%HVXUHWRDGMXVW
WKHFXWWHUVWRWKHFRUUHFWGHSWKRIFXW$IWHUWKHUHDPLQJRSHUDWLRQLVFRPSOHWHUHPRYH
WKHUDJVDQGZLSHWKHF\OLQGHUZDOOFOHDQ5HSHDWWKHRSHUDWLRQIRUHDFKF\OLQGHU
%HIRUH\RXFDQGHWDFKWKHFRQQHFWLQJURGVIURPWKHFUDQNVKDIW\RXPXVWUHPRYHWKH
RLOSDQ:LWKWKHF\OLQGHUKHDGDQGRLOSDQRIIFUDQNWKHHQJLQHVRWKDWWKHSLVWRQRIWKH
1RF\OLQGHULVQHDU%'&([DPLQHWKHSLVWRQURGDQGURGFDSIRULGHQWLI\LQJPDUNV
DQGLIQRQHFDQEHVHHQPDUNWKHPZLWKQXPEHULQJGLHVWRHQVXUHUHSODFLQJWKHPLQ
WKHVDPHF\OLQGHUVIURPZKLFKWKH\ZHUHUHPRYHG5HPRYHWKHURGQXWVDQGFDSWKHP
ZLWKDZUHQFKDQGVOLGHWKHURGDQGSLVWRQDVVHPEO\XSLQWRWKHF\OLQGHUDZD\IURPWKH
FUDQNVKDIWDQGRXWRIWKHF\OLQGHU3ODFHWKHDVVHPEO\RQDZRUNEHQFKDQGUHSHDWWKLV
RSHUDWLRQXQWLODOOSLVWRQDQGURGDVVHPEOLHVKDYHEHHQUHPRYHG

3LVWRQ&OHDQLQJ
$IWHUWKHSLVWRQDVVHPEOLHVDUHUHPRYHGIURPWKHHQJLQHDQGGLVDVVHPEOHGFOHDQWKHP
ZLWKDGHWHUJHQWVROXWLRQRUDQDSSURYHGVROYHQWDQGEORZQGU\ZLWKFRPSUHVVHGDLU7R
UHPRYHVWXEERUQFDUERQGHSRVLWVXVHDFKHPLFDOVROYHQWWKDWGRHVQRWKDUPWKH
SLVWRQ¶VVXUIDFHFRDWLQJ1HYHUVFUDSHWKHSLVWRQZLWKDJURRYHFOHDQHURUDEURNHQ
SLVWRQULQJ+DUGVFUDSLQJZLOOVFUDWFKWKHPDFKLQHGVXUIDFHVRIWKHSLVWRQ7KHWZREHVW
PHWKRGVRIFOHDQLQJSLVWRQVDUHFKHPLFDODQGEHDGFOHDQLQJ
x &KHPLFDOVRDNLQJLQDUHFRPPHQGHGSLVWRQFOHDQHUZLOOVRIWHQWKHFDUERQRQWKH
SLVWRQ7KHFDUERQFDQWKHQEHHDVLO\UHPRYHGXVLQJDSUHVVXUHULQVHWKDWZLOO
PLQLPL]HDQ\FKDQFHRIGDPDJH%HVXUHWRIROORZWKHVROXWLRQPDQXIDFWXUHU¶V
LQVWUXFWLRQVIRUSURSHUXVH
x ,QEHDGFOHDQLQJWKHSLVWRQVDUHEODVWHGZLWKJODVVEHDGVFUXVKHGZDOQXW
VKHOOVRURWKHUPDWHULDOXVLQJDPDFKLQH$IWHUWKLVWKHSLVWRQVDUHFOHDQHGDV
DIWHUWKHFKHPLFDOVRDNLQJPHWKRGIROORZLQJWKHPDQXIDFWXUHU¶VLQVWUXFWLRQVRQ
WKHXVHRIWKHFOHDQLQJSURGXFW
$IWHUWKHSLVWRQVKDYHEHHQFOHDQHGOLJKWO\HQJUDYHWKHSURSHUERUHQXPEHURQWKH
ERWWRPRIWKHSLVWRQWRHQVXUHWKHSLVWRQLVUHLQVWDOOHGLQWKHSURSHUF\OLQGHU

1$9('75$$ 
 :$51,1* 
1HYHUXVHJDVROLQHWRFOHDQSDUWV*DVROLQHLVKLJKO\YRODWLOHDQGWKHVOLJKWHVWVSDUNRU
IODPHFRXOGLJQLWHWKHIXPHVFDXVLQJDGHDGO\ILUH

:$51,1* 
8VHH[WUHPHFDUHZKHQXVLQJDQDLUJXQ:HDUJRJJOHVDQGDYRLGDLPLQJWKHJXQDW
\RXUVHOIRUDQ\RQHHOVH,IDLULVLQMHFWHGLQWRWKHEORRGVWUHDPGHDWKFRXOGUHVXOW

3LVWRQ)LWWLQJ
3LVWRQVDUHPDGHRIDOXPLQXPZKLFKLVSURQHWRZHDUDQGGDPDJH,WLVFULWLFDOWKDW
HDFKSLVWRQEHFKHFNHGWKRURXJKO\/RRNIRUFUDFNHGVNLUWVZRUQULQJJURRYHVFUDFNHG
ULQJODQGVZRUQSLQERUHVDQGDQ\RWKHUZHDURUGDPDJH7URXEOHWKDWFRXOGDIIHFW
SLVWRQSHUIRUPDQFHDQGVHUYLFHOLIHPXVWEHLGHQWLILHG
$IWHUWKHSLVWRQKDVEHHQFOHDQHGXVHDODUJHRXWVLGHPLFURPHWHUWRPHDVXUHSLVWRQ
ZHDU&RPSDUHWKHUHDGLQJVWRWKHVSHFLILFDWLRQVWRGHWHUPLQHWKHDPRXQWRIZHDUWKDW
KDVRFFXUUHG7KHVSHFLILFDWLRQVZLOOGHWDLOWKHPHDVXUHPHQWVDQGDOORZDEOHFOHDUDQFHV
DVZHOODVWKHPD[LPXPDQGPLQLPXPDOORZDEOHSLVWRQDQGF\OLQGHUZDOOWDSHU0RVWRI
WKHSLVWRQVHQFRXQWHUHGZLOOEHFDPJURXQGSLVWRQV$SLVWRQKDVDPDMRUD[LVDQG
PLQRUD[LV7KHPDMRUD[LVLVDWULJKWDQJOHVWRWKHSLVWRQSLQDQGWKHPLQRUD[LVLV
SDUDOOHOWRWKHSLVWRQSLQ%RWKWUXQNDQGFURVVKHDGSLVWRQVDUHIUHTXHQWO\FDPJURXQG
VRWKDWWKH\DUHVOLJKWO\HOOLSWLFDOUDWKHUWKDQSHUIHFWO\URXQG$FDPJURXQGSLVWRQLV
FRQVWUXFWHGVRWKDWLWVGLDPHWHUSDUDOOHOWRWKHPLQRUD[LVLVOHVVWKDQWKDWDORQJWKH
PDMRUD[LV7KLVLVGRQHWRFRPSHQVDWHIRUWKHGLIIHUHQWUDWHVRIWKHUPDOH[SDQVLRQWKDW
RFFXULQWKHSLVWRQ¶VPLQRUDQGPDMRUD[LVGLDPHWHUV(Figure 4-32)6LQFHWKHSLQERUH
ERVVFDXVHVWKHPLQRUD[LVWREHWKLFNHUWKDQWKHPDMRUD[LVLWH[SDQGVPRUHDVLW
KHDWVXS7KHUHIRUHWKHGLDPHWHUSDUDOOHOWRWKLVD[LVLVVPDOOHUWRDOORZIRUJUHDWHU
H[SDQVLRQ
3LVWRQVL]HLVPHDVXUHGRQWKHVNLUWMXVWEHORZWKHSLVWRQSLQKROH$GMXVWWKH
PLFURPHWHUIRUDVOLJKWGUDJLWLVSXOOHGRYHUWKHSLVWRQ,IWKHSLVWRQZHDUH[FHHGV
VSHFLILFDWLRQVUHSODFHRUNQXUOWKHSLVWRQV
3LVWRQWDSHULVPHDVXUHGE\FRPSDULQJSLVWRQGLDPHWHUDWWKHWRSHYHQZLWKWKHSLQ
KROHRIWKHVNLUWWRSLVWRQGLDPHWHUDWWKHERWWRPRIWKHVNLUW7KHGLIIHUHQFHEHWZHHQ
WKHWZRPHDVXUHPHQWVHTXDOVSLVWRQWDSHU,IWDSHULVQRWZLWKLQWKHVHUYLFHPDQXDO
OLPLWVUHSODFHRUNQXUOWKHSLVWRQ
3LVWRQNQXUOLQJFDQEHXVHGWRLQFUHDVHWKHGLDPHWHURIWKHVNLUWDIHZWKRXVDQGWKVRI
DQLQFK.QXUOLQJPDNHVGHQWVLQWKHVNLUWVSXVKLQJXSWKHPHWDOQH[WWRWKHGHQWV7KLV
LQFUHDVHVWKHSLVWRQGLDPHWHU
7RILQGWKHSLVWRQFOHDUDQFHVXEWUDFWWKHSLVWRQGLDPHWHUIURPWKHF\OLQGHUGLDPHWHU
7KHGLIIHUHQFHEHWZHHQWKHF\OLQGHUGLDPHWHUPHDVXUHPHQWDQGWKHSLVWRQGLDPHWHU
PHDVXUHPHQWZLOOHTXDOSLVWRQFOHDUDQFH
$YHUDJHSLVWRQWRF\OLQGHUFOHDUDQFHLVDERXW´6LQFHVSHFLILFDWLRQVYDU\DOZD\V
UHIHUWRWKHVHUYLFHPDQXDO
$QRWKHUZD\RIPHDVXULQJSLVWRQFOHDUDQFHLVXVLQJDORQJIODWIHHOHUJDXJHZKLFKLV
SODFHGRQWKHSLVWRQVNLUWWKHQWKHJDXJHDQGSLVWRQDUHSXVKHGLQWRWKHF\OLQGHU$
VSULQJVFDOHLVXVHGWRSXOOWKHIHHOHUJDXJHRXWRIWKHF\OLQGHU:KHQWKHVSULQJVFDOH
UHDGLQJHTXDOVVSHFLILFDWLRQVWKHVL]HRIWKHIHHOHUJDXJHHTXDOVSLVWRQFOHDUDQFH

1$9('75$$ 
 )LJXUH²&DPJURXQGSLVWRQVDUHHOOLSWLFDOLQVKDSH
:KHQSLVWRQWRF\OLQGHUFOHDUDQFHLVH[FHVVLYHGRWKHIROORZLQJ
x .QXUOWKHSLVWRQV
x ,QVWDOOQHZVWDQGDUGVL]H
SLVWRQVSURYLGLQJ
F\OLQGHUVDUHQRWZRUQ
EH\RQGVSHFLILFDWLRQV
x %RUHWKHF\OLQGHUVDQG
LQVWDOORYHUVL]HGSLVWRQV
x 6OHHYHWKHF\OLQGHUV

3LVWRQ3LQV)LWWLQJ
'HSHQGLQJRQWKHW\SHDQGPDNH
RIHQJLQHWKHSLVWRQSLQPD\
HLWKHUEHIUHHIORDWLQJRUSUHVVILW
x )UHHIORDWLQJZKHUHWKH
SLQZLOOWXUQLQERWKWKHURG
DQGSLVWRQ(Figure 4-33). 
x 3UHVVILWZKHUHWKHSLQLV
IRUFHILWLQWRWKHURGEXW
)LJXUH²$IUHHIORDWLQJSLVWRQ
1$9('75$$ 
 WXUQVLQWKHSLVWRQ
'XULQJSLVWRQDQGURGVHUYLFHFKHFNWKHSLQFOHDUDQFHRQERWKIUHHIORDWLQJDQGSUHVV
ILWSLQV&KHFNWKHSLQWRFRQQHFWLQJURGILWRQWKHIUHHIORDWLQJSLVWRQSLQV:LWKSUHVVILW
SLQVWKHSLVWRQSLQVKRXOGEHORFNHGWLJKWO\LQWKHFRQQHFWLQJURG
7RFKHFNH[FHVVLYHSLVWRQSLQFOHDUDQFHFODPSWKHFRQQHFWLQJURG,EHDPOLJKWO\LQD
YLVHDQGKROGLQJWKHSLVWRQVWUDLJKWXSURFNWKHSLVWRQ,ISOD\FDQEHGHWHFWHGWKHSLQ
URGEXVKLQJRUSLVWRQERUHLVZRUQ$VPDOOWHOHVFRSLQJJDXJHDQGDQRXWVLGH
PLFURPHWHUVKRXOGEHXVHGWRGHWHUPLQHH[DFWFOHDUDQFHDIWHUSLQUHPRYDO
7RUHPRYHDIUHHIORDWLQJSLQIURPWKHSLVWRQXVHVQDSULQJSOLHUVWRFRPSUHVVDQGILW
RXWWKHVQDSULQJVRQHDFKHQGRIWKHSLQ7KHQSXVKWKHSLQRXWRIWKHSLVWRQZLWK\RXU
WKXPE,QVRPHFDVHVDEUDVVGULIWDQGOLJKWKDPPHUEORZVPD\EHQHHGHGWRGULYHWKH
SLQIURPWKHSLVWRQ
:KHQWKHSLQLVZRUQLWVKRXOGEHUHSODFHG,IWKHSLQERUHLQWKHSLVWRQPHDVXUHVODUJHU
WKDQVSHFLILFDWLRQVWKHSLVWRQPXVWJHQHUDOO\EHUHSODFHG,QVRPHFDVHVWKHSLQERUHV
FDQEHUHDPHGODUJHUDQGRYHUVL]HGSLVWRQSLQVFDQEHXVHG
7RUHPRYHDSUHVVHGLQSLVWRQSLQ\RXZLOOQHHGWRXVHDSUHVVDQGDGULYHUVHWXS

:$51,1* 
:KHQSUHVVLQJRXWSLVWRQSLQVZHDUH\HSURWHFWLRQDQGPDNHVXUHWKHSLVWRQLV
VHFXUHG
0HDVXUHSLQDQGSLQERUHZHDU&RPSDUH\RXUPHDVXUHPHQWVWRWKHVSHFLILFDWLRQVDQG
UHSODFHRUUHSDLUSDUWVDVQHHGHG,IQHHGHGVHQGQHZSLVWRQVDQGSLQVWRWKHPDFKLQH
VKRSIRUILWWLQJ
%HIRUHLQVWDOOLQJDSLVWRQSLQPDNHVXUHWKHSLVWRQLVIDFLQJLQWKHULJKWGLUHFWLRQLQ
UHODWLRQWRWKHFRQQHFWLQJURG1RUPDOO\DSLVWRQZLOOKDYHDPDUNLQJRQLWVKHDGWKDW
VKRXOGSRLQWWRZDUGWKHIURQWRIWKHHQJLQH
2QHHGJHRIWKHFRQQHFWLQJURG¶VELJHQGERUHHQGPXVWIDFHWKHRXWVLGHRIWKHFUDQN
MRXUQDOGXULQJSLVWRQLQVWDOODWLRQ7KHURGPD\DOVRKDYHDQRLOVSUD\KROHRUURG
QXPEHUVWKDWPXVWIDFHLQDVSHFLILHGGLUHFWLRQ&KHFNWKHYHKLFOH¶VVKRSPDQXDOIRU
GLUHFWLRQV
7RVWDUWDSUHVVHGLQSLVWRQSLQWDSLWLQWRWKHSLVWRQERUHZLWKDEUDVVKDPPHU7KHQ
XVHDSUHVVWRIRUFHWKHSLQLQWRWKHSLVWRQ7KHFRQQHFWLQJURGVPDOOHQGPXVWEH
FHQWHUHGRQWKHSLQ
$IWHUSXVKLQJDIUHHIORDWLQJSLVWRQSLQLQWRWKHSLVWRQLQVWDOOWKHVQDSULQJVWRVHFXUH
WKHSLQ0DNHVXUHWKHVQDSULQJVDUHIXOO\VHDWHGLQWKHLUJURRYHV

3LVWRQ5LQJV)LWWLQJ
%HIRUHLQVWDOOLQJSLVWRQULQJVWKHSLVWRQVKRXOGEHFOHDQHGDQGWKHULQJJURRYHV
FKHFNHGIRUFDUERQRUGLUWGHSRVLWV5LQJVPXVWEHLQVWDOOHGZLWKWKHWRSVLGHXSWR
SURYLGHSURSHURLOFRQWURO5HIHUWRWKHVHUYLFHPDQXDOIRUWKHSURSHULQVWUXFWLRQVRQWKH
SLVWRQULQJVEHLQJLQVWDOOHG*HQHUDOO\HDFKQHZULQJVHWFRQWDLQVDQLQVWUXFWLRQVKHHW

1$9('75$$ 
,QVWDOOWKHFRPSUHVVLRQULQJVRQWKHSLVWRQ
DQGVWDJJHUWKHULQJJDSV7RDYRLG
RYHUVWUHVVLQJWKHULQJVGXULQJLQVWDOODWLRQ
GRQRWVSUHDGWKHULQJVPRUHWKDQQHHGHGWR
VOLSWKHPRQWRWKHSLVWRQ8VLQJDULQJ
H[SDQGHUZLOOPDNHWKLVWDVNPXFKHDVLHU
(Figure 4-34).
7KHXVHRIDULQJH[SDQGHUSUHYHQWVWKH
SRVVLELOLW\RIRYHUVSUHDGLQJWKHULQJV6HOHFW
WKHFRUUHFWULQJIRUWKHULQJJURRYH8VHWKH
ULQJH[SDQGHUWRROWRH[SDQGWKHSLVWRQULQJ
DQGWKHQSODFHWKHULQJDQGWRRORYHUWKH
SLVWRQ6HWWKHULQJLQWKHJURRYHDQG
UHOHDVHWKHWRRO'RXEOHFKHFNWKH
LQVWDOODWLRQWRPDNHVXUHWKDWWKHULQJLVLQ
WKHULJKWJURRYHDQGLVQRWXSVLGHGRZQ
)LJXUH²$SLVWRQULQJ
*HQHUDOO\WKHRLOFRQWUROULQJVDUH
LQVWDOOHGZLWKWKHVFUDSLQJHGJH
GRZQ0DNHVXUHWKDWWKHULQJ
HQGVGRQRWRYHUODS,QVWDOOWKH
ERWWRPULQJZLWKWKHJDS
SRVLWLRQHGƒIURPWKHWRSRLOULQJ
JDS$FRPPRQPHWKRGIRU
FKHFNLQJWKHULQJJDSDQG
FOHDUDQFHLVVKRZQLQFigure 4-35
7RGHWHUPLQHZKHWKHUWKHULQJKDV
WKHSURSHUHQGJDSSODFHLWLQWKH
F\OLQGHUSXVKLQJLWDERXWKDOIZD\
GRZQLQWKHF\OLQGHUERUH:LWK
WKHULQJVTXDUHZLWKWKHF\OLQGHU
ERUHXVHDSLVWRQWRVWUDLJKWHQ
WKHULQJLQWKHF\OLQGHUPHDVXUH
WKHJDSEHWZHHQWKHULQJHQGV
ZLWKWKHIHHOHUJDXJH,IWKHJDSLV
OHVVWKDQWKHPLQLPXPVSHFLILHG
UHPRYHWKHULQJDQGGUHVVHQGV
ZLWKDILQHFXWPLOOILOHXQWLOFRUUHFW )LJXUH²&KHFNLQJSLVWRQULQJJDS
FOHDUDQFHLVREWDLQHG

23(5$7,21$/7(67,1*
/DUJHHQJLQHVDUHH[SHQVLYHLWHPV5HSDLUVDVHYLGHQFHGE\WKHSUHFHGLQJRYHUKDXO
SURFHGXUHVDUHFRVWO\DQGWLPHFRQVXPLQJ7KHHQJLQHPXVWEHSURSHUO\UXQLQEHIRUH
EHLQJUHOHDVHGIRUXVH%HFDXVHRIWKLVWRJHWWKHPRVWRXWRIWKHQHZO\RYHUKDXOHG
HQJLQHXVHSURSHULQLWLDOVWDUWXSDQGUXQLQSURFHGXUHV7KHGXUDELOLW\DQGVHUYLFHOLIHRI
DUHEXLOWHQJLQHDUHGLUHFWO\DIIHFWHGE\WKHTXDOLW\RIWKHUXQLQSURFHGXUHV
$QHQJLQHFDQEHUXQLQXVLQJRQHRIWKUHHPHWKRGV
 +LJKZD\UXQLQ
 (QJLQHG\QDPRPHWHUU
1$9('75$$ 
  &KDVVLVG\QDPRPHWHU
7KHH[DFWSURFHGXUHIRUWKHUXQLQZLOOYDU\GHSHQGLQJRQWKHW\SHRIPHWKRGXVHGEXW
LQDOOFDVHVWKHUHEXLOWHQJLQHPXVWEHSURSHUO\SUHSDUHGEHIRUHVWDUWLQJIRUWKHILUVW
WLPH

3UHVWDUWXS
5HJDUGOHVVRIWKHPHWKRGXVHGIRUHQJLQHUXQLQWKHHQJLQHPXVWEHSURSHUO\SUHSDUHG
EHIRUHVWDUWLQJIRUWKHILUVWWLPH7KHIROORZLQJPD\EHXVHGDVDJHQHUDOJXLGH
/XEULFDWLRQ6\VWHP7KHOXEULFDWLQJRLOILOPRIWKHURWDWLQJSDUWVDQGEHDULQJVRIDQ
RYHUKDXOHGHQJLQHLVXVXDOO\LQVXIILFLHQWIRUSURSHUOXEULFDWLRQZKHQWKHHQJLQHLV
VWDUWHGIRUWKHILUVWWLPHDIWHUDQRYHUKDXO,QVWDOOQHZRLOILOWHUVDQGILOODSUHVVXUH
SUHOXEULFDWRUXVXDOO\DQHOHFWULFDOO\RUSQHXPDWLFDOO\DFWXDWHGRLOSXPSZLWKWKH2(0
UHFRPPHQGHGRLODQGFRQQHFWWKHVXSSO\OLQHWRWKHPDLQRLOJDOOHU\3ULPHWKHHQJLQH
OXEULFDWLRQV\VWHPZLWKVXIILFLHQWRLO7KHUHDUHYDULRXVSRLQWVRQWKHHQJLQHLQWRZKLFK
WKHSUHVVXUHOLQHPD\EHWDSSHGEXWLIQRRWKHULVDSSDUHQWWKHRLOJDXJHOLQHPD\EH
GLVFRQQHFWHGDQGWKHSUHVVXUHWDQNDSSOLHGDWWKDWSRLQW5HPRYHWKHRLOOHYHOGLSVWLFN
DQGFKHFNWKHFUDQNFDVHOHYHO$GGRLOLIQHFHVVDU\WREULQJLWWRWKHIXOOPDUNRQWKH
GLSVWLFN

:$51,1* 
'212729(5),//([FHVVLYHRYHUILOOLQJRIWKHOXEULFDWLRQV\VWHPZLOOFDXVHGDPDJH
:KHQXVLQJDSUHOXEULFDWRULWLVXQQHFHVVDU\WRSULPHWKHRLOILOWHUV6RPH2(0VSUHIHU
WKDWWKHRLOILOWHUVDUHQHYHUSULPHGGXHWRWKHULVNRIFRQWDPLQDWLQJWKHRLOGXULQJWKH
SURFHGXUH:KHQSULPLQJILOWHUVSRXUWKHRLOLQWRWKHLQOHWVLGHRIWKHILOWHUDQGQHYHULQWR
WKHRXWOHWVLGH
7XUERFKDUJHU'LVFRQQHFWWKHWXUERFKDUJHURLOLQOHWOLQHDQGSRXUDSSUR[LPDWHO\RQH
SLQWRIFOHDQHQJLQHRLOLQWRWKHWXUERHQVXULQJWKDWWKHEHDULQJVDUHOXEULFDWHGIRUWKH
VWDUWXS5HFRQQHFWWKHRLOOLQH
$LU,QWDNH6\VWHP&KHFNWKHLQWHJULW\RIWKHDLULQWDNHV\VWHPFKHFNLQJDOOWKHKRVH
FODPSVVXSSRUWFODPSVSLSLQJFKDUJHDLUFOHDQHUDQGWKHDLUFOHDQHUHOHPHQWV
$OZD\VUHSODFHWKHDLUFOHDQHUHOHPHQWDIWHUDQHQJLQHRYHUKDXO
&RROLQJ6\VWHP)LWDQHZFRRODQWILOWHUDQGLIUHTXLUHGVHSDUDWHFRQGLWLRQLQJ
DGGLWLYHV)LOOWKHFRROLQJV\VWHPZLWKWKHUHFRPPHQGHGFRRODQWPL[WXUH(QVXUHWKDWDOO
RUDWOHDVWPRVWDLULVSXUJHGIURPWKHFRROLQJV\VWHP5HPRYHDSOXJIURPWKHZDWHU
PDQLIROGGXULQJILOOLQJWRIDFLOLWDWHDLUWRHVFDSH
)XHO6\VWHP,QVWDOOQHZIXHOILOWHUVSULPLQJWKHPDVUHTXLUHGZLWKWKHFRUUHFWJUDGHRI
ILOWHUHGIXHO1H[WSULPHWKHIXHOV\VWHPE\DFWXDWLQJDKDQGSXPSRUH[WHUQDOSULPLQJ
SXPS

:$51,1* 
$YRLGSULPLQJDIXHOV\VWHPE\FKDUJLQJWKHIXHOWDQNVZLWKFRPSUHVVHGDLU7KLV
SUDFWLFHFDQEHSDUWLFXODUO\GDQJHURXVZKHQDPELHQWWHPSHUDWXUHVDUHKLJK
(OHFWULFDO6\VWHP(QVXUHWKDWWKHEDWWHULHVKROGDSURSHUOHYHORIFKDUJH7KLVLV
HVSHFLDOO\FULWLFDOZLWKVRPHHOHFWURQLFDOO\PDQDJHGHQJLQHVLQZKLFKWKH
HQJLQHHOHFWURQLFFRQWUROPRGXOHUHTXLUHVDVSHFLILFPLQLPXPRSHUDWLQJYROWDJH
5HFKHFNDOOPRXQWLQJEROWVDQGEHVXUHWKDWDOOEHOWGULYHVDUHLQSODFHDQGSURSHU

1$9('75$$ 
WHQVLRQ&KHFNDURXQGWRHQVXUHWKHUHDUHQRORRVHREMHFWVRULWHPVO\LQJDURXQGWRJHW
FDXJKWLQWRPRYLQJFRPSRQHQWV

,QLWLDO6WDUWXSDQG5XQLQ
8SRQVWDUWLQJWKHQHZO\RYHUKDXOHGHQJLQHLI\RXGRQRWREVHUYHDQ\RLOSUHVVXUHLQWKH
ILUVWWRVHFRQGVVKXWWKHHQJLQHGRZQDQGILQGWKHFDXVH,IRLOSUHVVXUHLV
REVHUYHGDOORZWKHHQJLQHWRZDUPXSDWDQLGOH'R127ORDGWKHHQJLQHEHIRUHLWLV
IXOO\ZDUPHGXS'XULQJWKLVZDUPXSSHULRGFKHFNIRUDQ\OHDNVDQGOLVWHQIRUDQ\
DEQRUPDOQRLVHVWKDWFRXOGLQGLFDWHWURXEOH$IWHUWKHZDUPXSSHULRGVKXWWKHHQJLQH
GRZQDQGFKHFNDOOIOXLGOHYHOVUHSDLUDQ\OHDNVDQGUHWRUTXH,QWKHFDVHRIDQ\EROWV
WLJKWHQDVUHTXLUHG
$IWHUGRLQJDWKRURXJKUHLQVSHFWLRQRIWKHYHKLFOHUHVWDUWWKHHQJLQHDQGSUHSDUHIRUD
URDGWHVW,QWKHFDVHRIURDGW\SHYHKLFOHVVXFKDVSLFNXSVWUDFWRUWUDLOHUVDQGGXPS
WUXFNVRSHUDWHDQ\DX[LOLDU\FRPSRQHQWVVXFKDVDGXPSEHGDQGKRRNDWUDLOHUXSWR
WKHWUDFWRUEHIRUHKHDGLQJRXWRQWKHURDG
2QFHRQWKHURDGEULQJWKHYHKLFOHXSWRVSHHGDQGWHVWWKHSHUIRUPDQFHWKURXJKWKH
WRUTXHULVHSURILOH2SHUDWHWKURXJKDOOWKHRSHUDWLQJJHDUVDQGORDGVDVIHDVLEOH$URDG
WHVWRIDWOHDVWPLQXWHVDIWHUWKHVSHFLILHGHQJLQHRSHUDWLQJWHPSHUDWXUHKDVEHHQ
UHDFKHGLVXVXDOO\DGHTXDWHWREUHDNLQDUHEXLOWHQJLQH:KHQGLDJQRVLQJHQJLQH
PDOIXQFWLRQVWKHURDGWHVWGXUDWLRQZLOOGHSHQGRQWKHGDWDUHYHDOHGGXULQJWKHURXWH

0LOH+RXU&KHFN
7KHPRVWSUREDEOHWLPHIRUDQHZO\RYHUKDXOHGHQJLQHWRPDOIXQFWLRQLVGXULQJLWVLQLWLDO
UXQLQDQGEUHDNLQSHULRG7KHUHIRUHLWLVDEVROXWHO\QHFHVVDU\WKDWZKHQWKHVHXQLWV
DUHUHWXUQHGWRVHUYLFHWKH\DUHGRQHVRZLWKVSHFLDOLQVWUXFWLRQVWRWKHGLVSDWFKHUDQG
\DUGERVVIRULQVWDQFHRQO\OLJKWORDGVIRUWKHILUVWPLOHVKRXUVDQGZDWFKDOO
IOXLGOHYHOVWHPSHUDWXUHVDQGSUHVVXUHVFDUHIXOO\/DVWHQVXUHWKDWWKHXQLWLVEURXJKW
LQWRWKHVKRSDIWHUWKHEUHDNLQSHULRGIRUDQRLODQGILOWHUFKDQJH7KHXQLWLVQRZUHDG\
IRUIXOOVHUYLFH

6XPPDU\
7KLVFKDSWHUSUHVHQWHGLQIRUPDWLRQRQHQJLQHWURXEOHVKRRWLQJDQGRYHUKDXOWKDW\RXDV
VXSHUYLVRUZLOOEHDEOHWRXVHWRKHOS\RXUPHFKDQLFVGRDQHIILFLHQWDQGFRPSHWHQWMRE
PDLQWDLQLQJWKH1&)¶VDXWRPRWLYHDQGKHDY\HTXLSPHQWHQJLQHV7KLVLQIRUPDWLRQ
LQFOXGHGDGLVFXVVLRQRIWKHGLIIHUHQWW\SHVRIKRUVHSRZHUJUDSKVDQGGLDJUDPVXVHGWR
GHVFULEHHQJLQHSHUIRUPDQFHFDXVHVRISRZHUORVVDQGIDLOXUHDQGFDUHDQG
PDLQWHQDQFHRIHQJLQHJDXJHVDQGWHVWHTXLSPHQW7KLVFKDSWHUDOVRSURYLGHG
WURXEOHVKRRWLQJJXLGHOLQHVIRUYDULRXVHQJLQHFRPSRQHQWVVXFKDVYDOYHVFDPVKDIWV
FUDQNVKDIWVF\OLQGHUVDQGSLVWRQV)LQDOO\\RXZHUHJLYHQLQIRUPDWLRQRQSHUIRUPLQJD
SUHVWDUWFKHFNRIDOOV\VWHPVDQGFRPSRQHQWVDVZHOODVDUXQLQWRPDNHVXUHWKH
YHKLFOHHTXLSPHQWLVUHDG\IRUXVH

1$9('75$$ 
5HYLHZ4XHVWLRQV6HOHFWWKH&RUUHFW5HVSRQVH
 7UXHRU)DOVH2EVHUYLQJWKHKLJKHVWGHJUHHRIFOHDQOLQHVVLQKDQGOLQJHQJLQH
SDUWVGXULQJRYHUKDXOLVDQHOHPHQWDU\SULQFLSOHWKDWDSSOLHVWRHQJLQH
WURXEOHVKRRWLQJDQGRYHUKDXO

$ 7UXH
% )DOVH

 7KHDPRXQWRIZRUNSURGXFHGRQWKHSRZHUVWURNHFDQEHGHWHUPLQHGE\ZKDW
IRUPXOD"

$ 7RUTXH[3UHVVXUH
% )RUFH[3UHVVXUH
& )RUFH['LVWDQFH
' 'LVWDQFH[7LPH

 +RUVHSRZHUZDVWKH³LQYHQWLRQ´RIBBBBBBB

$ -DPHV:DWW
% 5XGROI'LHVHO
& -RKQ:DLWH
' 1LNRODXV$XJXVW2WWR

 7KHIRUPXODIRUKRUVHSRZHULVBBBBBBB

$ 0LQXWHIWOE
% IWKRXU
& IWOEPLQXWH
' IWOEPLQXWH

 $LULQLWVFRPSUHVVHGVWDWHDQGFRQWDLQHGLQDUHVHUYRLUKDVWKHSRWHQWLDOIRU
FUHDWLQJPRWLRQ:KDWW\SHRIHQHUJ\LVWKLV"

$ .LQHWLF
% 3RWHQWLDO
& +HDW
' ,PSHQGLQJ

 ,QDGLHVHOHQJLQHIRUFHLVUHSUHVHQWHGE\ZKDWW\SHRISUHVVXUH"

$ 3QHXPDWLF
% 3LVWRQ
& &\OLQGHU
' 9DOYH


1$9('75$$ 
 7RUTXHYHU\VLPSO\LVBBBBBBBBHIIRUW

$ WZLVWLQJ
% WXUQLQJ
& WKUXVWLQJ
' FUDQNLQJ

 7UXHRU)DOVH7KHIRUPXODIRULQGLFDWHGKRUVHSRZHULV3[/[$[1[&


$ 7UXH
% )DOVH

 $IRXUVWURNHF\FOHHLJKWF\OLQGHUGLHVHOHQJLQHZLWKDERUHRI´DQGVWURNHRI
´LVUXQDWDVSHHGRIUSP7KHPHDQHIIHFWLYHSUHVVXUHREWDLQHGIURP
DQLQGLFDWRUGLDJUDPLVVSHFLILHGDVSVL&DOFXODWHWKHLQGLFDWHGKRUVHSRZHU
RIWKHHQJLQH

$ 
% 
& 
' 

 %UDNHKRUVHSRZHULVPHDVXUHVDWZKDWFRPSRQHQW"

$ 'ULYHVKDIW
% &UDQNVKDIW
& 'LIIHUHQWLDO
' )O\ZKHHO

 7UXHRU)DOVH$G\QDPRPHWHULVXVHGWRDFFXUDWHO\PHDVXUHWRUTXH

$ 7UXH
% )DOVH

 :KDWSLHFHRIWHVWHTXLSPHQWHQDEOHVWKHPHFKDQLFWRIXOO\ORDGWHVWWKHHQJLQH
EHIRUHLWLVUHLQVWDOOHG"

$ (QJLQHRYHUKDXOHU
% &KDVVLVG\QDPRPHWHU
& (QJLQHG\QDPRPHWHU
' (QJLQHG\QDPLFVDQDO\]HU

 7KHFKDVVLVG\QDPRPHWHUDOORZVIRUDFRQWUROOHGYHKLFOHBBBBBBB

$ UXQLQ
% UXQRXW
& WLHLQ
' 1RQHRIWKHDERYH


1$9('75$$ 
 7KHGLIIHUHQFHEHWZHHQLQGLFDWHGKRUVHSRZHUDQGEUDNHKRUVHSRZHULVUHIHUUHG
WRDVBBBBBBBKRUVHSRZHU

$ IO\ZKHHO
% LQGLFDWHG
& EUDNH
' IULFWLRQ

 5HIHUWRWKHILJXUHEHORZZKHQDQVZHULQJTXHVWLRQ

 (QJLQHWRUTXHLQFUHDVHVVWHDGLO\LQZKLFKRIWKHIROORZLQJVSHHGUDQJHV"

$ WRUSP
% WRUSP
& WRUSP
' WRUSP

1$9('75$$ 
 5HIHUWRWKHILJXUHEHORZZKHQDQVZHULQJTXHVWLRQ



 ,QZKLFKRIWKHIROORZLQJVSHHGUDQJHVGRHVWRUTXH127IDOOZKLOHKRUVHSRZHU
ULVHV""

$ WRUSP
% WRUSP
& WRUSP
' WRUSP

1$9('75$$ 
 5HIHUWRWKHILJXUHEHORZZKHQDQVZHULQJTXHVWLRQVDQG


 7KHLQWDNHYDOYHRIDIRXUVWURNHF\FOHGLHVHOHQJLQHRSHQVGXULQJZKLFKHYHQW"

$ $IHZGHJUHHVEHIRUH7'&DVWKHSLVWRQQHDUVWKHHQGRILWVH[KDXVW
VWURNH
% $IHZGHJUHHVDIWHU7'&DVWKHSLVWRQQHDUVWKHHQGRILWVH[KDXVWVWURNH
& -XVWDVWKHSLVWRQUHDFKHV7'&RQLWVH[KDXVWVWURNH
' $WƒEHIRUH7'&DVWKHSLVWRQQHDUVWKHHQGRILWVFRPSUHVVLRQVWURNH

 :KDWVWURNHRIDIRXUVWURNHF\FOHGLHVHOHQJLQHEHJLQVVOLJKWO\EHIRUH7'&
FRQWLQXHVWKURXJK%'&DQGHQGVGXULQJWKHQH[WXSVWRNHRIWKHSLVWRQ"

$ 3RZHU
% ([KDXVW
& ,QWDNH
' &RPSUHVVLRQ

1$9('75$$ 
 5HIHUWRWKHILJXUHEHORZZKHQDQVZHULQJTXHVWLRQ


 :KDWLVWKHUHODWLRQVKLSEHWZHHQIXHOLQMHFWLRQWLPLQJDQGSLVWRQSRVLWLRQ"

$ :KHQWKHSLVWRQLVDW7'&IXHOLVDERXWWREHLQMHFWHG
% :KHQWKHSLVWRQLVDW7'&IXHOKDVDOUHDG\EHHQLQMHFWHG
& :KHQWKHSLVWRQLVDW7'&IXHOLVEHLQJLQMHFWHG
' :KHQWKHSLVWRQLVDW%'&IXHOLVEHLQJLQMHFWHG

 :KLFKPDOIXQFWLRQFDQFDXVHDQHQJLQHWRORVHSRZHU"

$ ,QFRUUHFWLJQLWLRQWLPLQJ
% 'HIHFWLYHVSDUNDGYDQFH
& :RUQGLVWULEXWRUFDP
' $OORIWKHDERYH

 7UXHRU)DOVH<RXGRQRWKDYHWRFRQVLGHUWKHHIIHFWVRIDOWLWXGHZKHQ
DQDO\]LQJHQJLQHSRZHU

$ 7UXH
% )DOVH

1$9('75$$ 
 :KDWDUHWZRPDLQFDXVHVRIH[FHVVLYHRLOFRQVXPSWLRQ"

$ ([FHVVLYHGULYLQJDQGFORJJHGDLUILOWHUV
% ([WHUQDOOHDNDJHDQGEXUQLQJLQWKHFRPEXVWLRQFKDPEHU
& 'LOXWHGIXHODQGKLJKRLOSUHVVXUH
' 2LOVOXGJHDQGFORJJHGRLOILOWHU

 9DOYHDQGWDSSHWQRLVHWKDWLVLQWHUPLWWHQWUDSSLQJQRLVHWKDWDSSHDUVDQG
GLVDSSHDUVHYHU\IHZVHFRQGVLQGLFDWHVZKDWFRQGLWLRQ"

$ /HDNDJHDWFKHFNEDOOVHDWGXHWRIRUHLJQSDUWLFOHVYDUQLVKRUGHIHFWLYH
VXUIDFHRIFKHFNEDOORUVHDW
% ([FHVVLYHOHDNRUIDXOW\FKHFNEDOOVHDW
& )O\ZKHHOUHVWULFWLRQ
' 2YHUKHDWLQJ

 &RQQHFWLQJURGVPDNHWZRGLVWLQFWNQRFNV2QHLVDPHWDOOLFFODFNE\WKH
JXGJHRQSLQHQGDQGWKHRWKHULVDORXGGHHSWRQHGNQRFNRIWKHBBBBBBBBB

$ FDPVKDIW
% GLVWULEXWRU
& FRQQHFWLQJURGEHDULQJ
' FUDQNVKDIW

 7KHVRXQG\RXPD\KHDUGXULQJDFFHOHUDWLRQDVKLJKSLWFKHGUDWWOLQJRUFOLFNLQJLQ
WKHXSSHUSDUWRIWKHF\OLQGHULVBBBBBBB

$ SLVWRQULQJQRLVH
% SLVWRQSLQNQRFN
& SLVWRQVODS
' SLVWRQZKLQH

 :KDWLVDF\OLQGHUFRPSUHVVLRQWHVWHUXVHGWRPHDVXUH"

$ 9DOYHFRPSUHVVLRQDVLWPRYHVZKHQWKHSLVWRQPRYHVWR7'&RQWKH
FRPSUHVVLRQVWURNH
% &\OLQGHUSUHVVXUHLQSVLDVWKHSLVWRQPRYHVWR%'&RQWKHSRZHUVWURNH
& &\OLQGHUSUHVVXUHLQSVLDVWKHSLVWRQPRYHVWR7'&GXULQJLJQLWLRQ
' &\OLQGHUSUHVVXUHLQSVLDVWKHSLVWRQPRYHVWR7'&RQWKHFRPSUHVVLRQ
VWURNH

 7UXHRU)DOVH7KHFRPSUHVVLRQUDWLRLVGHWHUPLQHGE\FRPSDULQJWKHDPRXQW
RIVSDFHLQWKHF\OLQGHUZKHQWKHSLVWRQLVDWWRSRILWVWUDYHOWRWKHVSDFH
DYDLODEOHZKHQWKHSLVWRQLVDWLWVORZHVWSRLQWRIWUDYHO

$ 7UXH
% )DOVH

1$9('75$$ 
 7KHYDFXXPJDXJHSURYLGHVDPHDQVRIWHVWLQJDOOWKHVHH[FHSWZKLFKRQH"

$ ,QWDNHPDQLIROGYDFXXP
% &UDQNLQJYDFXXP
& )XHOSXPSYDFXXP
' $LUFRPSUHVVRUYDFXXP

 7KHYDFXXPJDXJHLVFRQVLGHUHGRQHRIWKHPRVWXVHIXODQGYHUVDWLOHWRROVRU
WHVWGHYLFHVLQWKHPHFKDQLF¶V72$,IWKHJDXJHLVUHDGLQJLQFKHVZLWKWKH
QHHGOHKROGLQJVWHDG\ZKDWGRHVWKLVLQGLFDWH"

$ (QJLQHKDVZRUQULQJVRUGLOXWHVRLO
% 7KHHQJLQH¶VFRPSUHVVLRQLVILQHDQGWKHUHDUHQRYDFXXPOHDNV
& 9DOYHJXLGHVDUHZRUQ
' 9DOYHVSULQJVDUHZHDN

 8VLQJWKHYDFXXPJDXJHZKHQ\RXREVHUYHWKHQHHGOHVZLQJEDFNDQGIRUWK
RYHULQFKHVZKDWGRHVWKLVLQGLFDWH"

$ 6WLFNLQJYDOYHV
% 1RUPDORSHUDWLRQ
& :RUQYDOYHJXLGHV
' :HDNYDOYHVSULQJV

 7UXHRU)DOVH$GHYLFHIRULQWURGXFLQJFRPSUHVVHGDLULQWRWKHF\OLQGHURIDQ
HQJLQHFDQEHPDGHE\UHPRYLQJWKHLQVXODWRUIURPDQROGVSDUNSOXJDQG
ZHOGLQJDSQHXPDWLFYDOYHVWHPWRWKHWKUHDGHGHQGRIWKHSOXJ

$ 7UXH
% )DOVH

 :KHQXVLQJFRPSUHVVHGDLUWRWHVWDQHQJLQHF\OLQGHUIRUOHDNDJH\RXQRWLFHDLU
EXEEOHVLQWKHUDGLDWRUFRRODQW7KHEXEEOHVLQGLFDWHWKDWDLULVSUREDEO\EHLQJ
UHOHDVHGE\ZKDWPHDQV"

$ /HDNLQJKHDGJDVNHW
% /HDNLQJLQWDNHYDOYH
& 'HIHFWLYHH[KDXVWYDOYH
' 3LVWRQULQJ

 8QXVXDOQRLVHDWWKHFDPIROORZHUVSXVKURGVDQGURFNHUDUPVLVDQLQGLFDWLRQRI
BBBBBBYDOYHV

$ EHQW
% EXUQHG
& FUDFNHG
' VWLFNLQJ


1$9('75$$ 
 9DOYHEUHDNDJHFDQKDSSHQWRHLWKHUWKHLQWDNHRUH[KDXVWYDOYHVDUHGHVWUXFWLYH
FDXVLQJGDPDJHWRWKHBBBBBBBBB

$ SLVWRQDQGRLOSXPS
% SLVWRQDQGKHDG
& FDPVDQGKHDG
' RLOUHWXUQDQGIXHOSXPS

 :KHQYDOYHVDUHDGMXVWHGZLWKWRROLWWOHFOHDUDQFHWKH\ZLOOBBBBBBB

$ RYHUKHDWDQGZDUS
% DGPLWDIXOOFKDUJHRIDLURUIXHOPL[WXUH
& SUHYHQWWKHHVFDSHRIH[KDXVWJDVHV
' RSHQODWH

 ,QRUGHUWRUHPRYHWKHYDOYHVIURPWKHF\OLQGHUKHDG\RXPXVWILUVWUHPRYHZKDW
SDUWV"

$ 9DOYHLQVHUWVDQGUHWDLQHUV
% 9DOYHVSULQJVRQO\
& 5RFNHUDUPVDQGOLIWHUV
' 9DOYHVSULQJUHWDLQHUVDQGYDOYHVSULQJV

 *ULQGLQJE\UHPRYLQJPHWDOIURPWKHYDOYHIDFHZLOOLQFUHDVHVWHPKHLJKW7KLV
DIIHFWVWKHVSULQJWHQVLRQDQGBBBBBBB

$ YDOYHWUDLQJHRPHWU\
% YDOYHVHDWJHRPHWU\
& YDOYHVSDFLQJ
' YDOYHVHDW

 7KHFOHDUDQFHEHWZHHQWKHYDOYHVWHPDQGJXLGHLVLPSRUWDQWIRUDQXPEHURI
UHDVRQV:KLFKRIWKHVHLV127RQHRIWKHP"

$ .HHSVWKHYDOYHIDFHLQSHUIHFWDOLJQPHQWZLWKWKHYDOYHVHDW
% $OORZVWKHYDOYHWRKHDWXS
& 3UHYHQWVWKHOXEULFDWLQJRLOIURPEHLQJGUDZQSDVWWKHVWHP
' 3UHYHQWVEXUQWJDVHVIURPHQWHULQJWKHFUDQNFDVH

 :KDWLVWKHIDVWHVWPHWKRGWRUHVWRUHWKHLQVLGHRIDZRUQLQWHJUDOYDOYHJXLGH"

$ /LQLQJ
% %RULQJ
& 5HDPLQJ
' .QXUOLQJ


1$9('75$$ 
 :KDWPHWKRGRIYDOYHJXLGHUHVWRUDWLRQLVFRQVLGHUHGVXSHULRUWRNQXUOLQJE\
DOORZLQJRYHUVL]HGYDOYHVWREHLQVWDOOHG"

$ 5HDPLQJ
% %RULQJ
& 7KLQZDOOLQVHUWV
' 7KUHDGHGEURQ]HLQVHUWV

 7UXHRU)DOVH7KUHDGHGEURQ]HLQVHUWVSURYLGHEHWWHUOXEULFDWLRQH[FHOOHQW
ZHDUTXDOLWLHVDQGWLJKWFOHDUDQFHDQGWKH\DUHIDLUO\LQH[SHQVLYHDQGHDVLO\
LQVWDOOHG

$ 7UXH
% )DOVH

 'XULQJWKHSURFHVVRIJULQGLQJYDOYHVHDWVDYDOYHVHDWJULQGHULVNHSWFRQFHQWULF
ZLWKWKHYDOYHJXLGHE\ZKDWPHDQV"

$ 8SSHUDQGORZHUJULQGLQJVWRQHV
% &HQWHUHGJULQGLQJVWRQHVLQWKHFKXFN
& 6HOIFHQWHULQJSLORWLQWKHYDOYHJXLGH
' &HQWULIXJDOIRUFH

 2QHPHWKRGRIFKHFNLQJWKHYDOYHVHDWLQJLVWRFRDWWKHYDOYHIDFHOLJKWO\ZLWK
3UXVVLDQEOXHDQGWZLVWWKHYDOYHRQHTXDUWHUWXUQLQLWVVHDW+RZFDQ\RXWHOO
ZKHWKHUWKHYDOYHVHDWLVFRQFHQWULFZLWKWKHYDOYHJXLGH"

$ 3UXVVLDQEOXHZLOOWUDQVIHUHYHQO\WRWKHYDOYHVHDW
% 7KHUHZLOOEHQRWUDFHRI3UXVVLDQEOXHRQHLWKHUWKHYDOYHRULWVVHDW
& 7KHVKDGHRI3UXVVLDQEOXHZLOOJURZEULJKWHU
' 3UXVVLDQEOXHZLOOFROOHFWLQDSLOHRQWKHYDOYHVHDW

 :KHQLQVHUWLQJDQHZYDOYHVHDW\RXVKRXOGXVHZKLFKWHFKQLTXH"

$ +HDWWKHHQJLQHEORFNRUF\OLQGHUKHDGWRH[SDQGWKHYDOYHRSHQLQJDQG
WKHQGURSWKHLQVHUWLQ
% 6KULQNWKHVHDWE\FKLOOLQJLWLQGU\LFHDQGXVHDGULYLQJWRROWRIRUFHWKH
VHDWLQWRWKHUHFHVVLQWKHKHDG
& +ROGWKHLQVHUWZLWKSOLHUVWKHQWDSVORZO\RQDOOVLGHVZLWKDUXEEHUPDOOHW
' 6TXHH]HWKHLQVHUWZLWKDVSHFLDOLQVHUWWRRODQGWKHQGURSLWLQSODFH

 :KLFKLVQRWDQRUPDOFKHFNGRQHRQYDOYHVSULQJV"

$ 6TXDUHQHVV
% )UHHKHLJKW
& +RUL]RQWDOGLPHQVLRQ
' 7HQVLRQ


1$9('75$$ 
 7UXHRU)DOVH:KHQ\RXLQVWDOODQHZFDPVKDIWLWLVJHQHUDOO\DFFHSWDEOHWR
UHLQVWDOOWKHROGOLIWHUVEHFDXVHWKHQHZFDPVZLOOFRQIRUPWRWKHROGOLIWHUV

$ 7UXH
% )DOVH

 7RLQGLFDWHWKHHQGRIDOHDNGRZQUDWHWHVWRQDK\GUDXOLFYDOYHOLIWHUZKDW
DFWLRQWDNHVSODFHDVWKHYDOYHVHDWV"

$ 7KHIHHOHUJDXJHORRVHQV
% 7KHIHHOHUJDXJHELQGV
& 7KHRLOOHDNVIDVW
' 7KHRLOOHDNVVORZ

 ,QWKHLQVWDOODWLRQRIQHZFDPVKDIWEHDULQJVLWLVLPSRUWDQWWKDW\RXWDNHZKLFK
VWHS"

$ /LQHUHDPWKHPEHIRUHWKH\DUHLQVWDOOHG
% /LQHXSWKHRLOKROHVZLWKWKRVHLQWKHEORFN
& 6WDNHWKHPZKHWKHURUQRWWKHROGEHDULQJVZHUHVWDNHG
' 6WDJJHUWKHRLOKROHVLQWKHEHDULQJVZLWKWKRVHLQWKHEORFN

 -RXUQDOVPXVWEHJURXQGLIWKH\DUHWDSHUHGRURXWRIURXQGLQH[FHVVRIZKDW
PHDVXUHPHQWLQLQFKHV"

$ 
% 
& 
' 

 $IWHUWKHFUDQNVKDIWLVLQVWDOOHGDQGWKHEHDULQJFDSVDUHSXWLQSODFHZKDWDFWLRQ
VKRXOG\RXWDNH"

$ 6QXJDQGWLJKWHQWKHPIURPIURQWWREDFN
% 3XWHYHU\RWKHUEROWLQILUVWWLJKWHQWKHPWKHQWKHRWKHUV
& 7RUTXHWKHEROWVGRZQDV\RXJR
' 6QXJWKHEROWVILUVWDQGWKHQIROORZWKHVSHFLILHGWLJKWHQLQJVHTXHQFH

 &UDQNVKDIWHQGSOD\ZLOOEHFRPHH[FHVVLYHLIWKHBBBBBBBBBBLVDUHZRUQ
SURGXFLQJDVKDUSLUUHJXODUNQRFN

$ UROOHUEHDULQJV
% WKUXVWEHDULQJV
& IO\ZKHHO
' WKURZEHDULQJV

 ,WLVEHVWWRVWRUHDFUDQNVKDIWE\ZKLFKPHWKRG"

$ 6WRULQJLWRIIWKHIORRURQWKHPHWDOVKHOI
% 3ODFLQJLWRQDZRRGVXUIDFH
& &OHDQLQJRIIDOORLODQGSODFLQJLWFDUHIXOO\RQWKHIORRU

1$9('75$$ 
 :KDWFDXVHVWKHF\OLQGHUWRWDSHU"

$ 0RUHOXEULFDWLQJRLODWWKHWRSDQGOHVVLQWKHORZHUSRUWLRQRIWKHF\OLQGHU
% /HVVOXEULFDWLQJRLODWWKHWRSDQGPRUHDWWKHORZHUDUHDRIWKHF\OLQGHU
& 2LOHQWHULQJWKHF\OLQGHUXQHYHQO\
' 3LVWRQXQHYHQO\GLVWULEXWLQJWKHOXEULFDWLQJRLODORQJWKHF\OLQGHUZDOOV

 ,QRUGHUWRWUXHZRUQF\OLQGHUVDQGEUHDNWKHJOD]HRQWKHF\OLQGHUV\RXZLOOXVH
ZKDWPHWKRG"

$ %RULQJ
% 5HDPLQJ
& +RQLQJ

 :KDWW\SHKRQLQJLVUHFRPPHQGHGZKHQWKHF\OLQGHULVLQJRRGFRQGLWLRQ"

$ )OH[
% 0DFKLQH
& %UXVK
' )OH[

 &\OLQGHUERULQJLVUHTXLUHGZKHQWKHF\OLQGHUKDVZKLFKFRQGLWLRQ"

$ 'HHSVFUDWFKHVVFRULQJH[FHVVZHDURQWKHZDOOV
% 'HHSVFUDWFKHVVFRULQJH[FHVVZHDURQWKHSLVWRQKHDGV
& ([FHVVLYHZHDURUFUDFNLQJRQWKHSLVWRQULQJV
' 0LQLPDOZHDURQWKHZDOOV

 ,IRQO\RQHRUWZRF\OLQGHUVQHHGWREHERUHGZKDWVKRXOG\RXGRWRLQVWDOOWKH
VDPHVL]HSLVWRQV"

$ %RUHDOOWKHRWKHUF\OLQGHUV
% 3UHVVLQDF\OLQGHUOLQHU
& <RXFDQQRWLQVWDOOWKHVDPHVL]HSLVWRQ

 $IWHUERULQJWKHF\OLQGHU\RXFDQILWLWZLWKDGU\OLQHU+RZVKRXOG\RXLQVWDOOWKH
OLQHU"

$ 3UHVVLQWKHOLQHUZLWKDF\OLQGHUSUHVVWKHQKHDWWKHEORFNDWUHVLVWDQFH
% )UHH]HWKHEORFNZLWKGU\LFHDQGKHDWWKHOLQHU
& +HDWWKHEORFNDQGSDFNWKHVOHHYHZLWKGU\LFHWKHQSUHVVRUGULYHLWLQWR
WKHF\OLQGHU
' /LQHLWXSFDUHIXOO\WKHQGULYHZLWKDUXEEHUKDPPHUZRUNDURXQGWKHHGJH
DVLWJRHVLQ

 $OLQHUWKDWLVORRVHZLOOQRWPDNHSURSHUFRQWDFWZLWKWKHF\OLQGHUEORFNDQGZLOO
UHVXOWLQBBBBBBB

$ SRRUKHDWGLVVLSDWLRQ
% OHDNLQJRLO
& OHDNLQJJDVHV
' OHDNLQJRLODQGJDVHV
1$9('75$$ 

 2QZHWF\OLQGHUOLQHUVZKDWLVXVHGWRUHHVWDEOLVKWKHFRUUHFWIODQJHKHLJKW"

$ 6SDFHUV
% *DVNHWV
& /LQHUULVHUV
' 6KLPV

 )RUZKDWUHDVRQVKRXOGDF\OLQGHUULGJHEHUHPRYHGRQDQHQJLQHEHLQJ
RYHUKDXOHG"

$ 7RSUHYHQWGDPDJLQJWKHF\OLQGHUV
% 7RSUHYHQWGDPDJLQJWKHSLVWRQDQGULQJVDVWKH\DUHUHPRYHG
& 7RSUHYHQWGDPDJLQJWKHF\OLQGHUVZKHQWKHSLVWRQVDUHLQVWDOOHG
' 7RSUHYHQWGDPDJHWRWKHSLVWRQVDQGULQJVZKHQWKH\DUHLQVWDOOHG

 7UXHRU)DOVH6FUDSLQJWKHVLGHVRIWKHSLVWRQGXULQJFOHDQLQJPD\OHDYH
VFUDWFKHVWKDWFDQFDXVHH[FHVVLYHF\OLQGHUZDOOZHDU

$ 7UXH
% )DOVH

 $FDPJURXQGSLVWRQLVVOLJKWO\HOOLSWLFDOLQRUGHUWRFRPSHQVDWHIRUBBBBBBB

$ F\OLQGHUZDOOH[SDQVLRQ
% ULQJH[SDQVLRQ
& RLOSUHVVXUH
' WKHUPDOH[SDQVLRQRIWKHSLVWRQ

 7UXHRU)DOVH7RVWDUWDSUHVVHGLQSLVWRQSLQWDSLWLQWRWKHSLVWRQERUHZLWKD
OEKDPPHUWRHQVXUHSURSHUSUHVVXUH

$ 7UXH
% )DOVH

 $OWKRXJKLQVWDOOLQJSLVWRQULQJVLVDIDLUO\VLPSOHSURFHVVPDNHFHUWDLQWKDWWKH
ULQJHQGVGRQRWBBBBBBB

$ FRQQHFW
% VWDJJHU
& RYHUODS

 3LVWRQULQJFOHDUDQFHLVPHDVXUHGDWZKDWSRVLWLRQRQWKHSLVWRQ"

$ %HWZHHQWKHULQJDQGWKHWRSRIWKHJURRYH
% %HWZHHQWKHULQJDQGERWWRPRIWKHJURRYH
& $WWKHHQGVRIWKHSLVWRQULQJ


1$9('75$$ 
 %HIRUHVWDUWLQJDQHZO\RYHUKDXOHGHQJLQH\RXVKRXOGLQVSHFWZKLFKV\VWHP"

$ /XEULFDWLRQ
% &RROLQJ
& (OHFWULFDO
' $OORIWKHDERYH

 8SRQVWDUWLQJDQHZO\RYHUKDXOHGHQJLQH\RXPXVWVKXWGRZQWKHHQJLQHLIQRRLO
SUHVVXUHLVREVHUYHGLQZKDWPD[LPXPQXPEHURIVHFRQGV"

$ 
% 
& 
' 

 $QHZO\UHEXLOWHQJLQHVKRXOGEHUXQZLWKOLJKWORDGLQJIRUDWOHDVWDKRZPDQ\
KRXUVDQGEZKDWQXPEHURIPLOHV"

$ DE
% DE
& DE
' DE

1$9('75$$ 
$GGLWLRQDO5HVRXUFHVDQG5HIHUHQFHV
7KLVFKDSWHULVLQWHQGHGWRSUHVHQWWKRURXJKUHVRXUFHVIRUWDVNWUDLQLQJ7KHIROORZLQJ
UHIHUHQFHZRUNVDUHVXJJHVWHGIRUIXUWKHUVWXG\7KLVLVRSWLRQDOPDWHULDOIRUFRQWLQXHG
HGXFDWLRQUDWKHUWKDQIRUWDVNWUDLQLQJ
0RGHUQ$XWRPRWLYH7HFKQRORJ\WK(GLWLRQ-DPHV'XII\7KH*RRGKHDUW:LOFR[
&RPSDQ\,QF,6%1
'LHVHO7HFKQRORJ\WK(GLWLRQ$QGUHZ1RUPDQDQG-RKQ&RULQFKRFN7KH*RRGKHDUW
:LOFR[&RPSDQ\,QF,6%1
+HDY\'XW\7UXFN6\VWHPVWK(GLWLRQ6HDQ%HQQHW'HOPDU&HQJDJH/HDUQLQJ
,6%1
0HGLXP+HDY\'XW\7UXFN(QJLQHV)XHO &RPSXWHUL]HG0DQDJHPHQW6\VWHPVQG
(GLWLRQ6HDQ%HQQHWW7KRPVRQ'HOPDU/HDUQLQJ,6%1

1$9('75$$ 
&6)(1RQUHVLGHQW7UDLQLQJ&RXUVH±8VHU8SGDWH
&6)(PDNHVHYHU\HIIRUWWRNHHSWKHLUPDQXDOVXSWRGDWHDQGIUHHRIWHFKQLFDOHUURUV
:HDSSUHFLDWH\RXUKHOSLQWKLVSURFHVV,I\RXKDYHDQLGHDIRULPSURYLQJWKLVPDQXDO
RULI\RXILQGDQHUURUDW\SRJUDSKLFDOPLVWDNHRUDQLQDFFXUDF\LQ&6)(PDQXDOV
SOHDVHZULWHRUHPDLOXVXVLQJWKLVIRUPRUDSKRWRFRS\%HVXUHWRLQFOXGHWKHH[DFW
FKDSWHUQXPEHUWRSLFGHWDLOHGGHVFULSWLRQDQGFRUUHFWLRQLIDSSOLFDEOH<RXULQSXWZLOO
EHEURXJKWWRWKHDWWHQWLRQRIWKH7HFKQLFDO5HYLHZ&RPPLWWHH7KDQN\RXIRU\RXU
DVVLVWDQFH
:ULWH &6)(1$
*RRGVSHHG6W
3RUW+XHQHPH&$
)$; 
(PDLO &6)(B157&#QDY\PLO

5DWHBBBB&RXUVH1DPHBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

5HYLVLRQ'DWHBBBBBBBBBB &KDSWHU1XPEHUBBBB3DJH1XPEHUVBBBBBBBBBBBB
 
'HVFULSWLRQ
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

2SWLRQDO&RUUHFWLRQ
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

2SWLRQDO<RXU1DPHDQG$GGUHVV
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB


1$9('75$$