Iowa Electronic Markets
Tippie College of Business
University of Iowa
iem@uiowa.edu

1990 Iowa and Illinois Senate Races

What is the Iowa Political Stock Market?
	In this market, you can earn money by trading shares in 
senatorial candidates.  You will have the opportunity to 
participate in two markets -- the Iowa Senate Race (Harkin vs. 
Tauke) and the Illinois Senate Race (Simon vs. Martin).  By 
making an initial investment, you will be able to purchase shares 
in the current candidates and then trade those shares with other 
IPSM participants on a computerized market.  After the election, 
final owners of shares will be paid dividends which depend on the 
fraction of the popular vote won by each candidate.  Thus, you 
can make money by earning dividends on each share that you hold 
on the day the market closes as well as from the capital gains 
you accumulate through  the buying and selling of shares.

What is the initial investment I need to make?
	New traders must deposit a minimum of $6 with the market 
administrator.  This amount will be posted to your cash account.  
$2.00 from your cash account can then be used to buy a portfolio 
consisting of one share in each of the candidates for the Iowa 
Senate Race; likewise, a portfolio consisting of one share in 
each of the candidates in the Illinois Senate Race can be 
purchased for $2.00.  Additional portfolios consisting of 1 
share of each candidate in either race can be purchased for $2.00 
each.  There is no limit on the number of portfolios you can buy.

Why do I need a cash account?
	When you try to buy a share of stock, you must have the 
cash to pay for that purchase.  This account provides you with 
the necessary liquidity -- purchases of shares are charged to 
it, and sales of shares are credited to it.  You will receive 
the balance in this cash account in addition to your dividends 
when the market closes.

May I buy additional portfolios or deposit additional cash?
	New $2.00 portfolios, each consisting of 1 share in each 
candidate in a race, may be purchased at any time.  You may also 
make additions to your cash account whenever you wish.  And 
portfolio blocks, consisting of 1 share in each candidate in a 
race, may be redeemed for $2.00 at any time, with the payment 
deposited to your cash account.

What candidates are in each portfolio?
	As of June 12, the candidates are: 
		Iowa Senate Race	Illinois Senate Race
Democrats:	   Tom Harkin		     Paul Simon
Republicans:   Tom Tauke		     Lynn Martin

How are payoffs determined?
	The market will close at 9:00 a.m., November 7, 1990 
(the morning after election day).  As soon thereafter as 
official election results are available, the popular vote 
totals will be used to determine payoffs.  One share of each 
candidate will be paid a dividend determined as the candidate's 
fraction of the popular vote times $2.00.  You will receive a 
check for your total dividends plus the balance in your cash 
account.

How can I make money by participating?
	You make money by "buying low and selling high."  
Specifically, you will earn profits on any sale of a share at 
a price higher than the dividend it will earn in November and 
on any purchase of a share at a price lower than its November 
dividend.

How do I make trades?
	The market operates on a College of Business computer 
network and can be accessed from any PC or terminal connected 
to virtually any computer network on the UI campus.  Remote 
access using telephone modems is also available.  Registered 
traders will be given an individual computer account from which 
they can make transactions.  Traders will be able to trade 
shares in the candidates continuously from the day they 
register until the close of the market.  The computerized 
market provides facilities for obtaining information about the 
trader's account or the market, for buying or selling 
portfolio blocks, and for issuing offers to buy and sell 
individual shares.

Can I find the current market quotes without enrolling?
	Yes, selecting the IPSM option from a PHBA network or 
using telnet to login to the IPSM from other campus networks 
will initiate the market access program and allow you to see 
current prices on shares of each of the candidates.  Complete 
logins which allow trading on the IPSM are denied to all but 
enrolled traders, but there is a "practice" market with 
unrestricted access which you can use to learn how the market 
operates.  If you would like further information on how to 
access the IPSM or trade on the practice market, please 
contact the market administrator at 335-0885.

Who is eligible to participate?
	All participants must be members of the University of 
Iowa community -- students, staff, or faculty.  

Where can I get additional information?
	Copies of a Trading Manual can be obtained upon 
request from the market administrator in 550 Phillips Hall, 
335-0885.

How can I sign up?
	You can sign up with the market administrator in 550 
Phillips Hall, 335-0885.  The market office will be open from 
10 a.m. until noon daily and by appointment.

June, 1990