Enemy of the State Movie Box Office
On Monday, November 9, 1998, the Iowa Electronic Market (IEM) will open trading in contracts based on Fall box office receipts for the movie "Enemy of the State". This document describes those contracts and should be viewed as a supplement to the IEM 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.
All contracts in this market (Movie_EOS) are winner-takes-all contracts. Liquidation values for these contracts will be determined by box office receipts for the movie "Enemy of the State" during the period Nov. 20, 1998 to and including Dec. 17, 1998.
The set of contracts to be traded in the market Movie_EOS are:
Code Liquidation Value EOS25L $1.00 if "Enemy of the State" official box office receipts for the 11/20-12/17 period are lower than or equal to $25 million; zero otherwise EOS40L $1.00 if "Enemy of the State" official box office receipts for the 11/20-12/17 period are higher than $25 million and lower than or equal to $40 million; zero otherwise EOS55L $1.00 if "Enemy of the State" official box office receipts for the 11/20-12/17 period are higher than $40 million and lower than or equal to $55 million; zero otherwise EOS70L $1.00 if "Enemy of the State" official box office receipts for the 11/20-12/17 period are higher than $55 million and lower than or equal to $70 million; zero otherwise EOS70H $1.00 if "Enemy of the State" official box office receipts for the 11/20-12/17 period are higher than $70 million; zero otherwise
The IEM reserves the right to introduce new contracts. Once a contract is listed, it will remain listed until liquidation.
DETERMINATION OF LIQUIDATION VALUES
The liquidation values for these contracts will be determined by box office receipts for the period November 20, 1998 to December 17, 1998, inclusive, as published in Variety's Domestic Box Office Report under the heading "Cumulative Reported B.O." In the event that the movie is not listed in this report, we will use FILMSOURCE from AC Neilsen EDI, Inc. (www.entdata.com), the official source for the box office receipts reported in Variety, as our source. The judgment of the IEM Governors and Directors will be final in resolving questions of typographical or clerical errors in these reports.
The expected opening date for "Enemy of the State" is November 20, 1998. Liquidation values will depend, however, on total box office receipts during the 11/20/98-12/17/98 interval regardless of the actual opening date. For example, if the movie fails to open by 12/17/98, the lowest denominated contract (initially, EOS25L) will pay $1 and all others will pay $0.
Liquidation formulas can be viewed on the IEM trading screen by "clicking" on the name of the market, "Movie_EOS".
CONTRACT SPIN-OFFSIf the trading price of a particular contract becomes unusually high, the Directors of the IEM may authorize a contract spin-off. When a contract spin-off occurs, the original contract will be replaced by two new contracts which divide the payoff range of the original contract into two intervals. For instance, if a contract spin-off is authorized for EOS40L, each trader holding an EOS40L contract would receive two new contracts in its place: EOSxxL (that would pay off $1 if box office receipts were higher than $25 million, but lower than or equal to $xx million), and a new EOS40L (that would pay off $1 if box office receipts were higher than $xx million, but lower than or equal to $40 million). Note that these contracts split the original payoff range (higher than $25 million, and lower than or equal to $40 million) into two new intervals. Since the value of the two new contracts can differ from that of the old contract, all outstanding bids and asks for the original contract will be canceled at the time of the spin-off.
All decisions to spin-off a contract will be announced at least two days in advance of the spin-off, and the new contract names and the timing of the spin-off will be included in the announcement. This announcement will appear as a News Bulletin on your IEMWEB login screen.
The market will close at noon on Thursday, December 17, 1998. As soon after that time as the official results are known, liquidation values will be declared and funds will be credited to the cash accounts of the market participants.
Unit portfolios consisting of one share of each of the contracts listed in the Movie_EOS market 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 of the listed outcomes will occur, the total payoff from holding a unit portfolio until the market closes is $1.00.
Select the option "Movie_EOS (buy)" from the Market Orders list on the trading screen to buy unit portfolios. Select the "Movie_EOS (Sell)" option to sell unit portfolios. Purchases will be charged to your cash account and sales will be credited to your cash account.
Academic IEMWEB traders will automatically be given access rights to the Movie Box Office Markets. Access to the market is achieved via the "Market Selection" pull-down menu on either the Login-Welcome screen or at the bottom of the Trading Screen. Funds in a trader's cash account are fungible across all IEMWEB 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.