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IEM Traders Give Edge to Obama as Democratic National Convention Gets Underway

As the Democratic National Convention gets underway in Denver today, traders on the Iowa Electronic Markets' political prediction markets are still making presumptive nominee Barack Obama the favorite to win the popular vote in November.

As of 8 a.m. CT Monday, Obama's contract was selling for 60 cents on the IEM's presidential Winner Take All market, which means traders believe there is a 60.1 percent probability that he will win the popular vote.

A contract for John McCain, the presumptive Republican nominee, was trading for 40.1 cents, which means traders believe there is a 40.1 percent probability he will win the popular vote.

On the IEM's presidential Vote Share market, an Obama contract is selling for 52.8 cents, which means traders believe he will receive 52.8 percent of the popular vote between the two major party candidates. A McCain Vote Share contract is trading for 49.5 cents, which means traders believe he will receive 49.5 of the popular vote.

The IEM is a real-money futures market in which traders can invest up to $500 to buy and sell contracts based on which candidate they think will win. Opened in 1988, the IEM is a research and teaching tool operated by professors at the University of Iowa's Tippie College of Business that examines how markets operate and seeks to understand their value as a predictive tool.

The IEM has operated markets in every presidential election since 1988 and a study earlier this year showed it to be more successful at predicting winners than 74 percent of the public opinion polls conducted during that time.


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