MSFT (MICROSOFT) PRICE LEVEL MARKET

1. MSFT (MICROSOFT) PRICE LEVEL MARKET Iowa Electronic Markets

2. Contracts • Winner-Takes-All Contracts • Based on the price level of Microsoft Common Stock (MSFT) • Liquidation values determined by MSFT price levels • Closing price on 3rd Friday used to determine liquidation • “H” contract pays $1 if PMSFT > Cutoff • “L” contract pays $1 if PMSFT<=Cutoff

3. Contract Designations • Four components: • Partial ticker symbol denoting Microsoft • Cutoff price • Letter denoting month • “H” denoting higher or “L” denoting lower Underlying Liquidation Contract Fundamental Value MSxxxmH Microsoft $1 if MSFT closing Price > $xxx MSxxxmL Microsoft $1 if MSFT closing Price <= $xxx

4. Month Codes Month Code Month Code Month Code January a May e September i February b June f October j March c July g November k April d August h December l

5. Unit Portfolios • 1 Share of each contract • May be purchased from or sold to the exchange at any time for $1 using 1$m • May be purchased form or sold to other traders at any time using MKTm

6. Contract Liquidation • Monday after 3rd Friday of month • Official prices • The Midwest Edition of the Wall Street Journal • Effects of events • Delisting: • Use last trade price • Stock Split/Stock Dividend • Multiply last price to reflect pre-split/dividend value

7. Other Information • Listing new contracts • Monday after 3rd Friday of each month • Access • Academic traders