Prospectus: Beowulf Movie Box Office Market
At noon, Central Time, Friday, November 2, 2007, the Iowa Electronic Market (IEM) will open trading in contracts based on box office receipts for the movie, "Beowulf." 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_BEOW) are winner-takes-all contracts. Liquidation values for these contracts will be determined by box office receipts for the movie "Beowulf" during the period November 16, 2007 to and including December 13, 2007.
Contracts
The set of contracts initially traded in the market Movie_BEOW are:
| Code | |
| BEOW060L | $1.00 if "Beowulf" official box office receipts for the 11/16-12/13 period are lower than or equal to $60 million; zero otherwise |
| BEOW070L | $1.00 if "Beowulf" official box office receipts for the 11/16-12/13 period are greater than $60 million and lower than or equal to $70 million; zero otherwise |
| BEOW080L | $1.00 if "Beowulf" official box office receipts for the 11/16-12/13 period are greater than $70 million and lower than or equal to $80 million; zero otherwise |
| BEOW090L | $1.00 if "Beowulf" official box office receipts for the 11/16-12/13 period are greater than $80 million and lower than or equal to $90 million; zero otherwise |
| BEOW090H | $1.00 if "Beowulf" official box office receipts for the 11/16-12/13 period are greater than $90 million; zero otherwise |
The IEM reserves the right to introduce new contracts as described in the "Contract Spin-offs" section below. 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 16, 2007 to December 13, 2007, inclusive, as published in Variety's Domestic Box Office Report under the heading "Cumulative Reported B.O." Note that the box office receipts for the period 12/14/07-12/16/2007 are NOT included in the figure used for the liquidation values. In the event that the movie is not listed in this report, we will use AC Neilsen EDI, Inc. (www.entdata.com), the official source for the box office receipts reported in Variety, as our source.
The expected opening date for "Beowulf" is November 16, 2007. Liquidation values will depend, however, on total box office receipts during the 11/16/2007 - 12/13/2007 interval regardless of the actual opening date. For example, if the movie fails to open by 12/13/2007, the lowest denominated contract (initially, BEOW060L) 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_BEOW".
The judgment of the IEM Governors and Directors will be final in resolving questions of typographical or clerical errors and ambiguities.
Contract Spin-Offs
The Directors of the IEM reserve the right to introduce new contracts to the market as spin-offs of existing contracts. No holder of the pre-spinoff contracts will be adversely affected. Traders will receive the same number of each of the new contracts as they held in the original, and the sum of the liquidation values of the new contracts will equal the liquidation value which would be paid to the original in the absence of a spinoff.
If 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 BEOW070L, each trader holding an BEOW070L contract would receive two new contracts in its place: BEOWxxL (that would pay off $1 if box office receipts were higher than $60 million, but lower than or equal to $xx million), and a new BEOW070L (that would pay off $1 if box office receipts were higher than $xx million, but lower than or equal to $70 million). Note that these contracts split the original payoff range (higher than $60 million, and lower than or equal to $70 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 IEM login screen.
Contract Bundles
Fixed-price bundles consisting of one share of each of the contracts in this market can be purchased from or sold to the IEM system at any time. The price of each bundle is $1.00. Because exactly one of the listed outcomes will occur, the total payoff from holding a bundle consisting of one of each contract until the market closes is $1.00.
To buy or sell fixed-price bundles from the IEM exchange, use the "Market Orders" option from the trading Console. Select the option "Movie_BEOW (buy at fixed price)" from the Market Orders list buy bundles. Select the "Movie_BEOW (sell at fixed price)" option to sell bundles.
Bundles consisting of one share of each of the contracts in this market may also be purchased and sold at current aggregate market prices rather than the fixed price of $1.00. To buy a market bundle at current ASK prices, use the "Market Order" option as above but select the option "Movie_BEOW (buy at market prices)". To sell a bundle at current BID prices, select the option "Movie_BEOW (sell at market prices)".
Bundle purchases will be charged to your cash account and bundle sales will be credited to your cash account.
Market Closing
The market will close at noon on Friday, December 14, 2007. 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.
Market Access
Only IEM traders enrolled in the 6N:211 course (Gruca) will be given access rights to the Beowulf Movie Box Office Market. 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 the IEM Movie Box Office Market (associated with the "Beowulf" movie market) trading accounts are not fungible across markets until after the contracts associated with both markets are liquidated. Additional investments up to the maximum of $500 can be made at any time.
Requests to withdraw funds may be submitted at any time by completing the IEM's Online Withdrawal Request form (www.biz.uiowa.edu/IEM/accounts/withdrawalrequestform.html) or by completing and mailing the paper version of the request form. Additional information about requesting withdrawals is available at the IEM website at http://www.biz.uiowa.edu/iem/accounts/withdrawals.html.
