LQGLFDWLRQV RI QHXURORJLFDO DQG KHUHGLWDU\ IDFWRUV ,QVWHDG LW LV VXJJHVWHG WKDW SHUVLVWHQW VWXWWHULQJ LV UHODWHG WR D QHXURORJLFDO FRQVWLWXWLRQ LQYROYLQJ D ORZHUHG WKUHVKROGIRUVSHHFKGLVUXSWLRQVLQVLWXDWLRQVZLWKFRQIOLFWLQJLPSXOVHV$Q\SHUVRQ PD\H[SHULHQFHVWXWWHULQJOLNHVSHHFKGLVUXSWLRQVLQH[WUHPHVLWXDWLRQVZKHUHDVWKH WKUHVKROGRIVWXWWHULQJSHUVRQVPD\EHH[FHHGHGDOVRLQQHXWUDODQGQRQHPRWLRQDO VLWXDWLRQV
&RQFOXVLRQV EDVHG RQ IOXFWXDWLRQV RI VWXWWHULQJ" 7KRXJK PDQ\ FDVHV RI
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
%DFNJURXQGIDFWRUV
6WXWWHULQJLQDGXOWVFDQEHUHODWHGWRJHQHWLFIDFWRUVWRQHXURORJLFDOOHVLRQVRUWR
FRPELQDWLRQVRIWKHVHWZRIDFWRUV
7KH QHXURORJLFDO OHVLRQV FDQ EH RI YDULRXV RULJLQV 7KH GRPLQDWLQJ FDXVHV RI OHVLRQV DUH VXJJHVWHG WR EH LQWHUPLWWHQW SUH RU SHULQDWDO K\SR[LD DIIHFWLQJ WKH SXWDPHQ RU VHYHUH FRQFXVVLRQ UHVXOWLQJ LQ URWDWLRQDO LQMXULHV RI EDVDO JDQJOLD SDWKZD\VLQWKHEUDLQVWHPDWWKHOHYHORIWKHPLGEUDLQDQGWKHVXEWKDODPLFQXFOHXV ,W VKRXOG EH HPSKDVL]HG WKDW LW LV OLNHO\ WKDW VHYHUDO RWKHU PHFKDQLVPV DOVR PD\ UHVXOWLQQHXURORJLFDOOHVLRQVOHDGLQJWRVWXWWHULQJ+RZHYHUDGLVFXVVLRQRIWKHVH SRVVLEOHIDFWRUVOLHVRXWVLGHWKHVFRSHRIWKLVWKHVLV
1HXURORJLFDOOHVLRQVUHVXOWLQJLQVWXWWHULQJPD\ZHOOEHPDLQO\QHXURFKHPLFDOLQ QDWXUH ERWK LQ FDVHV RI K\SR[LD DQG FRQFXVVLRQ +\SR[LD PD\ UHVXOW LQ QHXUR FKHPLFDO FKDQJHV LQ WKH SXWDPHQ DQG FRQFXVVLRQ PLJKW DIIHFW WKH GRSDPLQHUJLF SDWKZD\VRUWKHUHJXODWLRQRIGRSDPLQHUHOHDVH
,W VKRXOG EH QRWLFHG WKDW JHQHWLF IDFWRUV PD\ UHVXOW LQ VWXWWHULQJ HYHQ LQ WKH DEVHQFHRIVWXWWHULQJUHODWLYHV7KLVLVEHFDXVHWKHKHUHGLWDU\IDFWRUVDUHOLNHO\WREH SRO\JHQHWLFVRWKDWDQDFFXPXODWLRQRIFHUWDLQJHQHVLQRQHLQGLYLGXDOPD\FDXVH VWXWWHULQJ )XUWKHUPRUH LW LV FRQFHLYDEOHWKDWPRVWRIWKHVHJHQHVDUHQRWVSHFLILF VWXWWHULQJ JHQHV EXW LQVWHDG YDULDQWV ZLWKLQ WKH QRUPDO UDQJH RI JHQH YDULDWLRQ )RU H[DPSOH JHQHWLF YDULDQWV UHVXOWLQJ LQ D KLJK OHYHO RI ' H[SUHVVLRQ PLJKW LQFUHDVHWKHULVNRIVWXWWHULQJEXWDWWKHVDPHKDYHDGYDQWDJHRXVHIIHFWVRQOHDUQLQJ DELOLW\
6H[UDWLR
7KHW\SLFDOVH[UDWLRRIVWXWWHULQJZLWKKLJKHUSUHYDOHQFHRISHUVLVWHQWVWXWWHULQJ LQPHQLVVXJJHVWHGWRODUJHO\EHDQHIIHFWRIQRQKHUHGLWDU\IDFWRUVVXFKDVKLJKHU
IUHTXHQF\ RI FRQFXVVLRQ DQG SUH RU SHULQDWDO K\SR[LD LQER\V)XUWKHUPRUHLWLV
SURSRVHG WKDW HVWURJHQ UHGXFHV WKH SUHYDOHQFH RI VWXWWHULQJ LQ IHPDOHV VWDUWLQJ DW SXEHUW\DVDUHVXOWRIIDFLOLWDWLRQRIVHTXHQWLDOPRYHPHQWVFRQWUROOHGE\WKHPHGLDO SUHPRWRUV\VWHP
$Q[LHW\DQGWHPSHUDPHQW
$Q LQFUHDVHG OHYHO RI DQ[LHW\ LV IUHTXHQW LQ WKH VWXWWHULQJ SRSXODWLRQ VHHNLQJ WUHDWPHQW+RZHYHUWKLVLQFUHDVHGDQ[LHW\LVODUJHO\OLPLWHGWRVLWXDWLRQVLQYROYLQJ VSHHFKDQGVRFLDOHYDOXDWLRQDQGFDQEHDVVXPHGWR PDLQO\EHDVHFRQGDU\HIIHFWRI QHJDWLYH H[SHULHQFHV RI VWXWWHULQJ ([FHVVLYH QHXURPXVFXODU UHDFWLYLW\ LV QRW D W\SLFDO FKDUDFWHULVWLF RI VWXWWHULQJ HYHQ LI LW PD\ EH VKRZQ E\ VRPH FDVHV RI VWXWWHULQJ
7HPSHUDPHQWDQGEDFNJURXQGIDFWRUV
&DVHV RI VWXWWHULQJ ZLWK LQGLFDWLRQV RI SUHRQVHW QHXURORJLFDO OHVLRQV ZLWKRXW VWXWWHULQJ UHODWLYHV WHQG WR KDYH LQFUHDVHG WUDLWV RI FKLOGKRRG DWWHQWLRQ GHILFLW
K\SHUDFWLYLW\ GLVRUGHU $'+' RU DWWHQWLRQ GHILFLW GLVRUGHU $'' ZLWKRXW
K\SHUDFWLYLW\+RZHYHULQPRVWFDVHVWKLVLVRQO\DPLOGWHQGHQF\QRWOHDGLQJWRWKH GLDJQRVLV$'+'RU$''7KHPRVWW\SLFDOWUDLWLQWKHVHFDVHVLVEHLQJLQDWWHQWLYH DQGGD\GUHDPLQJ7KHQHXURORJLFDOOHVLRQVPD\DOVRUHVXOWLQLQFUHDVHGOHYHOVRI DQ[LHW\LQVRPHFKLOGUHQ ,QFRQWUDVWFDVHVRIVWXWWHULQJUHODWHGWRKHUHGLWDU\IDFWRUVZLWKRXWLQGLFDWLRQV RIQHXURORJLFDOOHVLRQVWHQGWRKDYHORZWUDLWVRI$'+' RU$'')XUWKHUPRUHLWLV VXJJHVWHGWKDWPDQ\RIWKHVHFKLOGUHQDUHFKDUDFWHUL]HGDVHDV\FKLOGUHQVKRZLQJ JRRG VNLOOV RI FRQFHQWUDWLRQ DQG RIWHQ SUHFRFLRXV ODQJXDJH GHYHORSPHQW ,W LV SURSRVHG WKDW D IDFWRU EHKLQG ERWK WKH VWXWWHULQJ DQG WKH WHPSHUDPHQWDO WUDLWV RI WKHVH FKLOGUHQ LV D KLJK QXPEHU RI GRSDPLQH ' UHFHSWRUV LQ WKH SXWDPHQ 0RUH VSHFLILFDOO\ VWXWWHULQJ PLJKW EH UHODWHG WR D ORZ UDWLR RI '' UHFHSWRUV LQ WKLV VWUXFWXUH
5HFRYHULQJFKLOGKRRGVWXWWHULQJ
7KH W\SLFDO SDWWHUQ RI HDUO\ FKLOGKRRG RQVHW RI VWXWWHULQJ DQG VXEVHTXHQW UHFRYHU\ LQ PDQ\ FDVHV LV SURSRVHG WR EH EDVHG RQ D SHDN LQ WKH QXPEHU RI '
UHFHSWRUVLQWKHSXWDPHQDERXWWKHDJHRIWRLQFRPELQDWLRQZLWKDORZ''
UDWLR$ORZ''UDWLRPD\EHPRUHFRPPRQLQER\VFRQWULEXWLQJWRWKHKLJKHU LQFLGHQFHRIVWXWWHULQJLQER\V
,WLVFRQFHLYDEOHWKDWORZOHYHOVRIFDOFLXPPLJKWFRQWULEXWHWRDQLQFUHDVHGULVN
RI VWXWWHULQJ DQG WR LQFUHDVHG OHYHOV RI DQ[LHW\ 5HGXFWLRQ RI WKH FDOFLXP OHYHO
LQFUHDVHV WKH H[FLWDELOLW\ RI WKH QHUYRXV V\VWHP ERWK LQ WKH EUDLQ DQG LQ WKH SHULSKHUDOQHXURPXVFXODUV\VWHP
7UHDWPHQWRIVWXWWHULQJDQGSURSRVDOVIRUUHVHDUFK
7KLV WKHVLV IRFXVHV RQ WKH FDXVDO PHFKDQLVPV RI VWXWWHULQJ EXW WKH SRVVLEOH LPSOLFDWLRQVIRUWUHDWPHQWZLOOEULHIO\EHGLVFXVVHG&DQWKHVXJJHVWHGPRGHOVRIWKH QDWXUH RI VWXWWHULQJ VKHG QHZ OLJKW RQ WKH PHFKDQLVPV EHKLQG WKH HIIHFW RI
LQGLFDWLRQV RI QHXURORJLFDO DQG KHUHGLWDU\ IDFWRUV ,QVWHDG LW LV VXJJHVWHG WKDW SHUVLVWHQW VWXWWHULQJ LV UHODWHG WR D QHXURORJLFDO FRQVWLWXWLRQ LQYROYLQJ D ORZHUHG WKUHVKROGIRUVSHHFKGLVUXSWLRQVLQVLWXDWLRQVZLWKFRQIOLFWLQJLPSXOVHV$Q\SHUVRQ PD\H[SHULHQFHVWXWWHULQJOLNHVSHHFKGLVUXSWLRQVLQH[WUHPHVLWXDWLRQVZKHUHDVWKH WKUHVKROGRIVWXWWHULQJSHUVRQVPD\EHH[FHHGHGDOVRLQQHXWUDODQGQRQHPRWLRQDO VLWXDWLRQV
&RQFOXVLRQV EDVHG RQ IOXFWXDWLRQV RI VWXWWHULQJ" 7KRXJK PDQ\ FDVHV RI
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
%DFNJURXQGIDFWRUV
6WXWWHULQJLQDGXOWVFDQEHUHODWHGWRJHQHWLFIDFWRUVWRQHXURORJLFDOOHVLRQVRUWR
FRPELQDWLRQVRIWKHVHWZRIDFWRUV
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
1HXURORJLFDOOHVLRQVUHVXOWLQJLQVWXWWHULQJPD\ZHOOEHPDLQO\QHXURFKHPLFDOLQ QDWXUH ERWK LQ FDVHV RI K\SR[LD DQG FRQFXVVLRQ +\SR[LD PD\ UHVXOW LQ QHXUR FKHPLFDO FKDQJHV LQ WKH SXWDPHQ DQG FRQFXVVLRQ PLJKW DIIHFW WKH GRSDPLQHUJLF SDWKZD\VRUWKHUHJXODWLRQRIGRSDPLQHUHOHDVH
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
6H[UDWLR
7KHW\SLFDOVH[UDWLRRIVWXWWHULQJZLWKKLJKHUSUHYDOHQFHRISHUVLVWHQWVWXWWHULQJ LQPHQLVVXJJHVWHGWRODUJHO\EHDQHIIHFWRIQRQKHUHGLWDU\IDFWRUVVXFKDVKLJKHU
IUHTXHQF\ RI FRQFXVVLRQ DQG SUH RU SHULQDWDO K\SR[LD LQER\V)XUWKHUPRUHLWLV
SURSRVHG WKDW HVWURJHQ UHGXFHV WKH SUHYDOHQFH RI VWXWWHULQJ LQ IHPDOHV VWDUWLQJ DW SXEHUW\DVDUHVXOWRIIDFLOLWDWLRQRIVHTXHQWLDOPRYHPHQWVFRQWUROOHGE\WKHPHGLDO SUHPRWRUV\VWHP
$Q[LHW\DQGWHPSHUDPHQW
$Q LQFUHDVHG OHYHO RI DQ[LHW\ LV IUHTXHQW LQ WKH VWXWWHULQJ SRSXODWLRQ VHHNLQJ WUHDWPHQW+RZHYHUWKLVLQFUHDVHGDQ[LHW\LVODUJHO\OLPLWHGWRVLWXDWLRQVLQYROYLQJ VSHHFKDQGVRFLDOHYDOXDWLRQDQGFDQEHDVVXPHGWR PDLQO\EHDVHFRQGDU\HIIHFWRI QHJDWLYH H[SHULHQFHV RI VWXWWHULQJ ([FHVVLYH QHXURPXVFXODU UHDFWLYLW\ LV QRW D W\SLFDO FKDUDFWHULVWLF RI VWXWWHULQJ HYHQ LI LW PD\ EH VKRZQ E\ VRPH FDVHV RI VWXWWHULQJ
7HPSHUDPHQWDQGEDFNJURXQGIDFWRUV
&DVHV RI VWXWWHULQJ ZLWK LQGLFDWLRQV RI SUHRQVHW QHXURORJLFDO OHVLRQV ZLWKRXW VWXWWHULQJ UHODWLYHV WHQG WR KDYH LQFUHDVHG WUDLWV RI FKLOGKRRG DWWHQWLRQ GHILFLW
K\SHUDFWLYLW\ GLVRUGHU $'+' RU DWWHQWLRQ GHILFLW GLVRUGHU $'' ZLWKRXW
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
5HFRYHULQJFKLOGKRRGVWXWWHULQJ
7KH W\SLFDO SDWWHUQ RI HDUO\ FKLOGKRRG RQVHW RI VWXWWHULQJ DQG VXEVHTXHQW UHFRYHU\ LQ PDQ\ FDVHV LV SURSRVHG WR EH EDVHG RQ D SHDN LQ WKH QXPEHU RI '
UHFHSWRUVLQWKHSXWDPHQDERXWWKHDJHRIWRLQFRPELQDWLRQZLWKDORZ''
UDWLR$ORZ''UDWLRPD\EHPRUHFRPPRQLQER\VFRQWULEXWLQJWRWKHKLJKHU LQFLGHQFHRIVWXWWHULQJLQER\V
,WLVFRQFHLYDEOHWKDWORZOHYHOVRIFDOFLXPPLJKWFRQWULEXWHWRDQLQFUHDVHGULVN
RI VWXWWHULQJ DQG WR LQFUHDVHG OHYHOV RI DQ[LHW\ 5HGXFWLRQ RI WKH FDOFLXP OHYHO
LQFUHDVHV WKH H[FLWDELOLW\ RI WKH QHUYRXV V\VWHP ERWK LQ WKH EUDLQ DQG LQ WKH SHULSKHUDOQHXURPXVFXODUV\VWHP
7UHDWPHQWRIVWXWWHULQJDQGSURSRVDOVIRUUHVHDUFK
7KLV WKHVLV IRFXVHV RQ WKH FDXVDO PHFKDQLVPV RI VWXWWHULQJ EXW WKH SRVVLEOH LPSOLFDWLRQVIRUWUHDWPHQWZLOOEULHIO\EHGLVFXVVHG&DQWKHVXJJHVWHGPRGHOVRIWKH QDWXUH RI VWXWWHULQJ VKHG QHZ OLJKW RQ WKH PHFKDQLVPV EHKLQG WKH HIIHFW RI
WUHDWPHQW"&DQSRVVLEOHQHZWUHDWPHQWPHWKRGVEHVXJJHVWHGSURSRVLQJSDWKZD\V IRUIXUWKHUUHVHDUFK" :KHQGLVFXVVLQJPHWKRGVRIWUHDWPHQWERWKWKHHIIHFWVDQGWKHFRVWVQHHGWREH HYDOXDWHG7KHFRVWVFDQEHRIYDULRXVNLQGVVXFKDVVLGHHIIHFWVRISKDUPDFRORJLFDO WUHDWPHQWQHHGIRUFRQVFLRXVPRQLWRULQJRIVSHHFKWHFKQLTXHVGLVWXUELQJVRXQGRI DOWHUHG DXGLWRU\ IHHGEDFN RU ILQDQFLDO FRVWV RI HOHFWURQLF GHYLFHV PHGLFDWLRQ RU WKHUDS\
6SHHFKSUDFWLFHDQGRSHUDQWFRQGLWLRQLQJ
6SHHFKSUDFWLFHLQDGXOWV,QPRVWFDVHVRIVWXWWHULQJDGXOWVWKHHIIHFWVRIVSHHFK
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
7KH/LGFRPEHSURJUDP2QHRIWKHPRVWLQWHUHVWLQJGHYHORSPHQWVLQVWXWWHULQJ
WKHUDS\IRUFKLOGUHQLQUHFHQW\HDUVLVWKH/LGFRPEHSURJUDP 2QVORZ0HQ]LHV 3DFNPDQ ,Q EULHI LW FDQ EH GHVFULEHG DV D VWUXFWXUHG SURJUDP IRU UHLQIRUFHPHQW RI IOXHQW VSHHFK LH RSHUDQW FRQGLWLRQLQJ LQ D VHWWLQJ ZKHUH WKH FKLOG VKRXOG DVVRFLDWH VSHHFK ZLWK SRVLWLYH H[SHULHQFHV )URP WKH YLHZSRLQW RI VWXWWHULQJ DV D EDVDO JDQJOLD PRWRU GLVRUGHU RSHUDQW FRQGLWLRQLQJ RI D IXQFWLRQDO VSHHFKPRWRUSDWWHUQLVWKHRUHWLFDOO\YHU\LQWHUHVWLQJ
1HJDWLYH GHYHORSPHQW RI VWXWWHULQJ" $QRWKHU TXHVWLRQ LV ZKHWKHU VWXWWHULQJ LQ
LWVHOI WHQGV WRJHQHUDWHPRUHVWXWWHULQJ7KHUHYLHZLQSDSHU,,LQGLFDWHVWKDWORQJ SHULRGV RI UHSHWLWLYH PRYHPHQWV PD\ UHVXOW LQ H[SDQVLRQ DQG GHGLIIHUHQWLDWLRQ RI FRUWLFDO VHQVRULPRWRU UHSUHVHQWDWLRQV HVSHFLDOO\ LI WKH EHKDYLRU LV FRQVFLRXVO\ DWWHQGHGWR7KLVPHFKDQLVPKDVEHHQSURSRVHGWREHLQYROYHGLQWKHGHYHORSPHQW RI G\VWRQLD ,W LV FRQFHLYDEOH WKDW VWXWWHULQJ LQ LWVHOI UHVXOWV LQ VLPLODU FKDQJHV SRVVLEO\DJJUDYDWLQJWKHVWXWWHULQJDQGLQFUHDVLQJVXSHUIOXRXVPXVFXODUWHQVLRQ,I WKLV LV FRUUHFW LW PD\ EH LPSRUWDQW WR WU\ WR EUHDN WKH VWXWWHULQJ SDWWHUQ EHIRUH LW UHVXOWVLQORQJWHUPFKDQJHVRIEUDLQFLUFXLWV
+RZHYHU UHSRUWV WKDW DOVR VHYHUH VWXWWHULQJ LQ FKLOGUHQ PD\ UHFRYHU VSRQWDQHRXVO\VSHDNDJDLQVWWKLVPRGHO,WLVFOHDUO\QRWJHQHUDOO\WKHFDVHWKDWWKH VHYHULW\ RI VWXWWHULQJ LV FRUUHODWHG ZLWK WKH WLPH VLQFH RQVHW RI VWXWWHULQJ 0D\EH VXFKSODVWLFLW\LVQRWDNH\IDFWRULQVWXWWHULQJWKRXJKWKLVKDVRIWHQEHHQDVVXPHG 0LJKWWKHV\PSWRPVRIVWXWWHULQJLQVWHDGEHPRUHGLUHFWO\UHODWHGIRUH[DPSOHWRWKH QHXURFKHPLFDOVWDWH"7KHVHTXHVWLRQVLQGLFDWHLPSRUWDQWWDVNVIRUIXWXUHUHVHDUFK
7UHDWPHQW RI FDVHV ZLWK DWWHQWLRQ GHILFLWV $V GLVFXVVHG LQ SDSHU 9 HDUO\
QHXURORJLFDOOHVLRQVUHVXOWLQJLQVWXWWHULQJVHHPWRKDYHDWHQGHQF\WRDOVRUHVXOWLQ GHILFLWVRIDWWHQWLRQ,WVHHPVOLNHO\WKDWVWXWWHULQJSHUVRQVZLWKDWWHQWLRQDOSUREOHPV
ZLOOKDYHGLIILFXOWLHVLQXWLOL]LQJWUHDWPHQWPHWKRGVUHTXLULQJPRQLWRULQJRIVSHHFK ,W ZRXOG EH LPSRUWDQW WR LQYHVWLJDWH WKLV K\SRWKHVLV E\ FRPSDULQJ WKH UHVXOW RI IOXHQF\VKDSLQJSURJUDPVWRPHDVXUHVLQGLFDWLQJWKHDELOLW\WRPDLQWDLQDWWHQWLRQ,I WKH K\SRWKHVLV LV FRUUHFW WHVWV RI DWWHQWLRQDO IXQFWLRQV PD\ EH XVHG DV VFUHHQLQJ LQVWUXPHQWVEHIRUHVWDUWLQJWKLVW\SHRIWKHUDS\
6SHHFKUHODWHGDQ[LHW\
,I WKH VWXWWHULQJ LV DJJUDYDWHG E\ FRQGLWLRQHG IHDU RI FHUWDLQ VSHHFK VLWXDWLRQV UHGXFWLRQ RI WKLV IHDU PD\ UHGXFH WKH VHYHULW\ RI VWXWWHULQJ ,Q VXFK FDVHV WKH UHGXFWLRQ RI DQ[LHW\ PLJKW EH UHJDUGHG DV LPSURYLQJ WKH IXQFWLRQ RI WKH PHGLDO V\VWHPVSHHFKFRQWURO
$OWHUHGDXGLWRU\IHHGEDFN
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
%RWKRIWKHVHVWXGLHVVXJJHVWDVRPHZKDWOHVVVWDEOHHIIHFWIRUFRQYHUVDWLRQRU PRQRORJXH WKDQ IRU UHDGLQJ DORXG ,W PLJKW EH VSHFXODWHG ZKHWKHU WKLV UHGXFHG HIIHFW GXULQJ VHOIIRUPXODWHG VSHHFK PD\ EH UHODWHG WR DQ LQFUHDVHG WHQGHQF\ WR LJQRUH WKH VRXQG :KHQ UHDGLQJ DORXG LW PD\ EH HDVLHU WR DWWHQG WR WKH DXGLWRU\ IHHGEDFNZKLFKWKHUHIRUHPD\UHVXOWLQDPRUHVWDEOHHIIHFW
7ZRVXUYH\VRIWKHHIIHFWVRI6SHHFK(DV\KDYHDOVREHHQUHSRUWHG,QWKHVWXG\ E\ .DOLQRZVNL HW DO D VXUYH\ ZDV VHQW WR FXVWRPHUV UHVXOWLQJ LQ UHSOLHV $ PDUNHW UHVHDUFK FRPSDQ\ 5DLQPDNHU 6XQ VHQW D FXVWRPHUVDWLVIDFWLRQVXUYH\WRFXVWRPHUV\LHOGLQJ UHVSRQVHV 7KH DYHUDJHWLPHRIXVHZDVDQG\HDUVIRUWKHWZRVWXGLHVUHVSHFWLYHO\,QERWK VWXGLHV WKH SDUWLFLSDQWV SURYLGHG VXEMHFWLYH VHOIUDWLQJV RI WKHLU OHYHO RI IOXHQF\
WUHDWPHQW"&DQSRVVLEOHQHZWUHDWPHQWPHWKRGVEHVXJJHVWHGSURSRVLQJSDWKZD\V IRUIXUWKHUUHVHDUFK" :KHQGLVFXVVLQJPHWKRGVRIWUHDWPHQWERWKWKHHIIHFWVDQGWKHFRVWVQHHGWREH HYDOXDWHG7KHFRVWVFDQEHRIYDULRXVNLQGVVXFKDVVLGHHIIHFWVRISKDUPDFRORJLFDO WUHDWPHQWQHHGIRUFRQVFLRXVPRQLWRULQJRIVSHHFKWHFKQLTXHVGLVWXUELQJVRXQGRI DOWHUHG DXGLWRU\ IHHGEDFN RU ILQDQFLDO FRVWV RI HOHFWURQLF GHYLFHV PHGLFDWLRQ RU WKHUDS\
6SHHFKSUDFWLFHDQGRSHUDQWFRQGLWLRQLQJ
6SHHFKSUDFWLFHLQDGXOWV,QPRVWFDVHVRIVWXWWHULQJDGXOWVWKHHIIHFWVRIVSHHFK
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
7KH/LGFRPEHSURJUDP2QHRIWKHPRVWLQWHUHVWLQJGHYHORSPHQWVLQVWXWWHULQJ
WKHUDS\IRUFKLOGUHQLQUHFHQW\HDUVLVWKH/LGFRPEHSURJUDP 2QVORZ0HQ]LHV 3DFNPDQ ,Q EULHI LW FDQ EH GHVFULEHG DV D VWUXFWXUHG SURJUDP IRU UHLQIRUFHPHQW RI IOXHQW VSHHFK LH RSHUDQW FRQGLWLRQLQJ LQ D VHWWLQJ ZKHUH WKH FKLOG VKRXOG DVVRFLDWH VSHHFK ZLWK SRVLWLYH H[SHULHQFHV )URP WKH YLHZSRLQW RI VWXWWHULQJ DV D EDVDO JDQJOLD PRWRU GLVRUGHU RSHUDQW FRQGLWLRQLQJ RI D IXQFWLRQDO VSHHFKPRWRUSDWWHUQLVWKHRUHWLFDOO\YHU\LQWHUHVWLQJ
1HJDWLYH GHYHORSPHQW RI VWXWWHULQJ" $QRWKHU TXHVWLRQ LV ZKHWKHU VWXWWHULQJ LQ
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
+RZHYHU UHSRUWV WKDW DOVR VHYHUH VWXWWHULQJ LQ FKLOGUHQ PD\ UHFRYHU