University of Iowa - College of Business Administration
IEM PROSPECTUS
COLIN POWELL NOMINATION MARKET
WINNER-TAKES-ALL MARKET
On Friday, June 30, 1995, the Iowa Electronic Market (IEM)
will open trading in a winner-takes-all market based on
whether Colin Powell's name is placed in nomination as
a Republican presidential candidate at the 1996 Republican
National Convention. This document describes that market and
should be viewed as a supplement to the Trader's Manual.
Except as specified in this prospectus, trading rules for this
market are the same as those specified in the Trader's Manual
for the Iowa Electronic Market.
CONTRACTS
The financial contracts traded in this market are:
Code Contract Name
P.YES Powell's name is placed in nomination
P.NO Powell's name is not placed in nomination
DETERMINATION OF LIQUIDATION VALUES
This is a winner-takes-all market. If Powell's name is placed in
nomination as a Republican presidential candidate at the
Republican National Convention, the P.YES contract will pay off
$1.00 and the P.NO contract will expire worthless. If Powell's
name is not placed in nomination, then the P.NO contract will pay
off $1 and the P.YES contract will expire worthless. These
liquidation formulas can be viewed by first selecting Display
Options and then choosing Liquidation Formulas.
MARKET CLOSING
This market will close at noon, two days
following the close of the 1996 Republican National
Convention. As soon as feasible thereafter, liquidation
values will be declared and funds credited to the cash
accounts of the market participants.
UNIT PORTFOLIOS
Unit portfolios consisting of one share of
P.YES and one share of P.NO can be purchased from or sold to
the IEM system at any time. The price of each unit portfolio
is $1.00. Since exactly one contract will pay off $1.00, the
total payoff from holding a unit portfolio until the market
closes is $1.00.
To buy unit portfolios from the system, use the "Purchase"
option from the TRADING MENU and enter 1$ as the contract
name. To sell unit portfolios to the system, use the "Sell"
option from the TRADING MENU and enter 1$ as the contract
name. Purchases will be charged to your cash account and
sales will be credited to your cash account.
Unit portfolios may also be purchased from and sold to other
traders at current market prices. Use the Purchase and Sell
options as above but enter MKT as the contract name. The
price charged for market portfolio purchases will be
determined as the sum of current ask prices, and the price
received for market portfolio sales will be the sum of current
bid prices. Should no corresponding bid or ask be present for
one of the contracts, that contract will be excluded from the
portfolio; otherwise the number of contracts purchased or sold
will be the same in each contract.
MARKET ACCESS
Current and newly enrolled IEM traders will
automatically be given access rights to the Colin Powell
Nomination Market. Access to this market is achieved via the
"Market Selection" option on the Login, Market, and other
Menus. Funds in a trader's cash account are fungible across
all markets so new investment deposits are not required.
Additional investments up to the maximum of $500 can be made
at any time. With five days' advance notice, funds may be
withdrawn on the 15th of any month.
Colin Powell Nomination Market Home Page
IEM Home Page
College Home Page
Last Revised: June 29, 1995
University of Iowa /
College of Business /
business-webmaster@uiowa.edu