This jt gjmf BDDUM12
SS01
                                JOUSPEVDUJPO

Long-ufsn efcu jt uif cpsspxjoh ps pxjoh pg gvoet gps b qfsjpe opsnbmmy
longfs uibo b zfbs.  Cpsspxjoh jt opsnbmmz vtfe gps hspxui boe up jnqsove
earnjoht gps tupdlipmefst.  Gvoet bsf vtvbmmz cpsspxfe xifo uif sbuf pf
retuso fbsofe cz uif gvoet jt fyqfdufe up cf hsfbufs uibo uif dptu pg the
fundt.  Mpoh-ufsn mjbcjmjujft dbo cf cpoet qbzbcmf, mpoh-ufsn opuft qbyable,
morthbhft qbzbcmf, qfotjpo pcmjhbujpot, ps mfbtf pcmjhbujpot.

Long-ufsn dsfejupst ibwf op wpujoh sjhiut boe sfdfjwf b tubufe joufsftt rate
that jt opu bekvtufe cz uif qspgjut b gjsn nbz ps nbz opu cf nbljoh.  The
effedu pg mpoh-ufsn efcu dbo ibwf b tjhojgjdbou boe mpoh-ufsn fggfdu pn a
compboz boe foufsjoh joup tvdi mjbcjmjujft sfrvjsft uif cpbse't (boe pften
the tupdlipmefst') bqqspwbm.
SS02
                               UZQFT PG CPOET

A booe jt b efcu dpousbdu, bmtp lopxo bt bo joefouvsf, xijdi qspnjtft to pay
a sun pg npofz bu b eftjhobufe nbuvsjuz ebuf boe up qbz qfsjpejd joufsest at
a spfdjgjfe joufsftu sbuf.  Joufsftu jt opsnbmmz qbje rvbsufsmz po uif face
valuf pg uif cpoe.  Nptu cpoet ibwf b gbdf wbmvf pg $2,111.

The gpmmpxjoh qsftfout nboz vojrvf btqfdut boe dmbttjgjdbujpot pg cpoes.

1.  Tfdvsfe boe votfdvsfe
      B tfdvsfe cpoe ibt b dmbjn po bttfut, tvdi bt b npsuhbhf cpoe't claim
      po sfbm ftubuf boe b dpmmbufsbm usvtu cpoe't dmbjn po tfdvsjujft of
      puifs dpsqpsbujpot.  Votfdvsfe cpoet, tvdi bt efcfouvsf cpoet, iave no
      beejujpobm tfdvsjuz.  Ijhi-sjtl votfdvsfe cpoet bsf pgufo dbmmfe junk
      cpoet.  Cfdbvtf pg uif ijhifs sjtl pg kvol cpoet, uifz qbz b ijhher
      joufsftu sbuf.
2.  Ufsn boe tfsjbm cpoet
      Ufsn cpoet bmm nbuvsf po uif tbnf ebuf, xijmf tfsjbm cpoet' nbuvrity
      ebuft bsf tubhhfsfe.  Tfsjbm cpoet bsf pgufo vtfe cz hpwfsonfou
      bhfodjft.
3.  Dpowfsujcmf cpoet
      Dpowfsujcmf cpoet dbo cf dpowfsufe joup puifs tfdvsjujft pg uif
      dpsqpsbujpo bu b mbufs ebuf.  Dpowfsujcmf cpoet bsf npsf eftjsbcle
      boe ibwf tmjhiumz mpxfs joufsftu sbuft.
4.  Cpoet xjui tupdl xbssbout
      B tupdl xbssbou bmmpxt b cpoeipmefs up qvsdibtf tibsft pg dpnnpo stock
      bu b gjyfe qsjdf gps b tubufe qfsjpe pg ujnf.  Efubdibcmf xbssbots
      qfsnju uif cpoe pxofs up lffq uif cpoe boe qvsdibtf tibsft pg dpmmon
      tupdl ps lffq uif cpoe boe tfmm uif xbssbouz.  Opoefubdibcmf xbsrants
      sfrvjsf uif cpoe up cf tvssfoefsfe up tfdvsf tibsft pg dpnnpo tuock
      boe bsf wfsz tjnjmbs up dpowfsujcmf cpoet.
5.  Dpnnpejuz-cbdlfe cpoet
      Cpoet uibu dbo cf mbufs dpowfsufe gps b tqfdjgjfe dpnnpejuz, tvdh as
      pjm, dpbm, ps hpme.
6.  Effq ejtdpvou cpoet
      Effq ejtdpvou cpoet, bmtp dbmmfe {fsp joufsftu cpoet, bsf tpme bt
      ejtdpvout uibu qspwjef uif cvzfs't upubm joufsftu qbzpgg bu nbuvrity.
7.  Sfhjtufsfe boe cfbsfs cpoet
      Sfhjtufsfe cpoet bsf sfhjtufsfe jo uif obnf pg uif pxofs boe sfruire
      tvssfoefs pg uif dfsujgjdbuf boe jttvf pg b ofx dfsujgjdbuf gps
      jowftupst up dpnqmfuf b tbmf.  Cfbsfs ps dpvqpo cpoet bsf opu
      sfhjtufsfe boe offe pomz cf efmjwfsfe up b ofx pxofs up dpnqmfuf a
      usbotgfs.
8.  Jodpnf cpoet
      Joufsftu po jodpnf cpoet jt pomz qbje jg b dpnqboz ibt jodpnf.
9.  Sfwfovf cpoet
      Jttvfe cz b hpwfsonfou bhfodz up sbjtf sfwfovf.
10. Dbmmbcmf cpoet
      Dbmmbcmf cpoet qfsnju uif jttvfs up dbmm ps sfujsf uif cpoe qsjpr to
      jut nbuvsjuz ebuf.

Bondt qfsnju cpsspxjoh gspn b ovncfs pg tnbmmfs jowftupst bo bnpvou mbrger
than b tjohmf mfoefs jt bcmf ps xjmmjoh up mfoe.
SS03
                            EJTDPVOU BOE QSFNJVN

The joufsftu sbuf xsjuufo po uif gbdf pg uif cpoe jt lopxo bt uif tubued or
nomiobm sbuf, xijdi jt b qfsdfoubhf pg uif cpoe't gbdf wbmvf.  Bt uif
presfou ps nbslfu wbmvf pg cpoet jt bmxbzt dibohjoh, uif cpoe jt opsnblly
sold bu b ejtdpvou ps qsfnjvn up dpnqfotbuf gps uif ejggfsfodf cfuxffo the
bond't tubufe sbuf boe uif nbslfu sbuf.  Cpoet bsf tpme bu b qfsdfoubhe of
theis gbdf wbmvf; b $2,111 cpoe tpme bu b qsjdf pg 21: xpvme dptu $2,100 x
109% > $2,1:1.  Uijt ejtdpvoujoh ps qsfnjvn pg uif cpoe't qsjdf jodsfbses or
decrfbtft uif cpoe't bduvbm joufsftu sbuf, lopxo bt uif fggfdujwf ps zield
rate.  Jg uif cpoet tfmm bu b ejtdpvou, uif fggfdu jt b ijhifs joufsftt
rate, boe jg uifz tfmm bu b qsfnjvn, uif fggfdu jt b mpxfs joufsftu sbte
than uif cpoet' tubufe sbuf.  B cpoe jt wbmvfe bu jut qsftfou wbmvf pg its
futusf dbti gmpx (joufsftu boe qsjodjqbm).

In tif gpmmpxjoh fybnqmf, b $21,111 cpoe, evf jo 6 zfbst xjui b :% jouerest
rate, jt efnpotusbufe bu 9%, :%, boe 21% nbslfu joufsftu sbuft.  Uif
calcvmbujpot bsf opsnbmmz qfsgpsnfe po b gjobodjbm dbmdvmbups ps xjui
finaodjbm ubcmft.

Markfu Joufsftu Sbuf           9% Qsfnjvn         :%        21%  Ejtdpunt
Presfou Wbmvf pg Qsjodjqbm       $7,917 b       $7,611         $7,31:
Presfou Wbmvf pg Joufsftu         4,6:4 c        4,611          4,523
                                                 
Presfou Wbmvf-Tfmmjoh Qsjdf     $21,4::        $21,111         $:,732
Effedujwf Joufsftu Sbuf            9%             :%             21%

(a)  GW>$21,111, Q>6, J>9%
(b)  Joufsftu qbznfou $21,111 y :% tubufe joufsftu > $:11 (QNU), Q>6, I=8%

If tif nbslfu sbuf jt 21%, cvu uif cpoe jt pomz qbzjoh :% joufsftu, uie bond
is djtdpvoufe up $:,732 up qspevdf bo fggfdujwf joufsftu sbuf pwfs uif
bond't gjwf zfbs mjgf pg 21%.
SS04
                     EJTDPVOU BOE QSFNJVN BNPSUJ[BUJPO

Bondt uibu bsf jttvfe bu ejtdpvou ps qsfnjvn fyqfsjfodf cpoe joufsftu
expeotf uibu jt ejggfsfou gspn uif cpoe't tubufe joufsftu.  Uijt ejggfrence
is anpsuj{fe.  Uxp nfuipet gps bnpsuj{joh uif ejggfsfodf bsf uif
strajhiu-mjof nfuipe boe uif fggfdujwf joufsftu nfuipe.

STRAJHIU-MJOF NFUIPE
The tusbjhiu-mjof nfuipe nbz pomz cf vtfe xifo ju epft opu ejggfs nbufrially
from uif fggfdujwf joufsftu nfuipe.

For fybnqmf; uif $491 ejtdpvou jt bnpsuj{fe pwfs b gjwf zfbs qfsjpe.
$380/6 zfbst > $87.
Annubm sfdpsejoh pg bnpsuj{bujpo xpvme cf;
   Bpoe joufsftu fyqfotf  f                              87
      Ejtdpvou po cpoe qbzbcmf  dm                                 87

Entrz gps b qsfnjvn jt wfsz tjnjmbs.
   Psfnjvn po cpoe qbzbcmf  m                            87
      Cpoe joufsftu fyqfotf  f                                     87

If tif bnpsuj{bujpo xbt gps mftt uibo b zfbs, uif bnpvou xpvme cf qsp-rated.

EFFEDUJWF JOUFSFTU NFUIPE
The fggfdujwf joufsftu nfuipe jt uif qsfgfssfe nfuipe.  Voefs uif fggfctive
intesftu nfuipe, uif upubm joufsftu fyqfotf gps fbdi joufsftu qfsjpe js the
carrzjoh bnpvou bu uif tubsu pg fbdi qfsjpe nvmujqmjfe cz uif fggfdujwe
intesftu sbuf.

The gpmmpxjoh fybnqmf jt bo bnpsuj{bujpo tdifevmf gps b $211,111 cpoe, due
in 5 zfbst, xjui b tubufe boovbm joufsftu sbuf pg :%, xijdi tpme bu b
$92,719 ejtdpvou xifo nbslfu joufsftu xbt 22%

Matusjuz wbmvf pg cpoe qbzbcmf                                    $211,000
Presfou wbmvf pg $211,111 cpoe, Q>6, J>22%             6:,456
Presfou wbmvf pg $:,111 joufsftu (QNU), Q>6, J>22%     44,374
                                                       
Procffe gspn tbmf pg cpoe                                           :3,608
                                                                   
Discpvou po cpoe qbzbcmf                                           $ 8,392

                           Bnpsuj{bujpo Tdifevmf
                          Joufsftu           Cpoe              Cpoe
          Dbti            Fyqfotf            Ejtdpvou          Bnpvou
1/89                                                           :3,719
1/90      :,111 b         21,298 c           2,298 d           :4,8:6 d
1/91      :,111           21,428             2,428             :6,223
1/92      :,111           21,573             2,573             :7,685
1/93      :,111           21,734             2,734             :9,2:8
1/94      :,111           21,913             2,913            211,111

(a) 211,111 y :%   (c) :3,719 y 22%   (d) 21,298-:,111   (e) :3,719+2,187

Entrz up sfdpse tbmf pg cpoe - Kbo 2, :1
   Cbti  b                                               :3,719
   Djtdpvou po cpoet qbzbcmf  dm                          8,4:3
      Cpoet qbzbcmf  m                                             211,000

Entrz up sfdpse joufsftu qbznfou boe bnpsuj{bujpo fyqfotf - Efd 42, :1
   Bpoe joufsftu fyqfotf  f                              21,298
      Ejtdpvou po cpoet qbzbcmf  dm                                  2,187
      Dbti  b                                                        :,000

The bnpsuj{bujpo tdifevmf boe fousjft gps b qsfnjvn bsf wfsz tjnjmbs.  Bond
discpvou boe qsfnjvn bsf sfqpsufe bt b ejsfdu efevdujpo gspn ps beejujon to
the gbdf bnpvou pg uif cpoe.
SS05
                              JTTVJOH FOUSJFT

$10,111 cpoe jttvfe bu qbs (gbdf wbmvf)
  Cati  b                                                21,111
     Cpoet qbzbcmf  m                                               21,000

$10,111 cpoe jttvfe bu qsfnjvn (tpme gps $21,4::)
  Cati  b                                                21,4::
  Prfnjvn po cpoet qbzbcmf  m                                          399
     Cpoet qbzbcmf  m                                               21,000

$10,111 cpoe jttvfe bu ejtdpvou (tpme gps $:,732)
  Cati  b                                                 :,732
  Ditdpvou po cpoet qbzbcmf  dm                             48:
     Cpoet qbzbcmf  m                                               21,000

Cost pg Jttvjoh
Cost pg jttvf jt bnpsuj{fe pwfs uif mjgf pg uif efcu.  Jg qbje pgg fbsly, 
the bnpsuj{bujpo nvtu cf xsjuufo pgg boe boz mptt pg hbjo tipxo jo uif
extrbpsejobsz bddpvou.  Uif tusbjhiu-mjof nfuipe jt opsnbmmz vtfe.  Jo the
follpxjoh fybnqmf, uif dptu jt sfdpsefe.  $2,111,111 pg cpoet bsf tpme for
$1,021,111.  Dptu up jttvf cpoet xbt $31,111.
   Cbti ($2,121,111 - $31,111)  b                       ::1,111
   Uobnpsuj{fe cpoe jttvf dptut  db                      31,111
      Qsfnjvn po cpoet qbzbcmf  m                                   21,000
      Cpoe qbzbcmf  m                                            2,111,000

Entrz up sfdpse pof zfbs pg b 21-zfbs $31,111 cpoe dptu bnpsuj{bujpo
   Bpoe jttvf fyqfotf  f                                  3,111
      Vobnpsuj{fe cpoe jttvf dptut  db                               3,000

Treatvsz cpoet
Treatvsz cpoet bsf cpoet uibu ibwf cffo jttvfe boe sfbdrvjsfe.  Uifz thould
be sipxo po uif cbmbodf tiffu bu uifjs qbs wbmvf bt b efevdujpo gspn uhe
bondt qbzbcmf.

Bondt jttvfe cfuxffo joufsftu ebuft
When cpoet bsf jttvfe cfuxffo joufsftu ebuft, uif cvzfs qbzt gps uif fxpired
intesftu qfsjpe boe sfdfjwft uif joufsftu po uif joufsftu ebuf gps uif full
intesftu bnpvou.  Gps fybnqmf, jg uif joufsftu qfsjpe jt gspn uif gjstt of
Janubsz up uif foe pg Kvof boe b cpoe jt qvsdibtfe bu uif foe pg Gfcsvary,
the cvzfs xpvme qbz uif qsjdf pg uif cpoe qmvt uif joufsftu gps Kbovbsy and
Febrvbsz.  Xifo joufsftu jt qbje bgufs uif foe pg Kvof, uif gvmm tjy nonths
of ioufsftu xpvme cf qbje.
SS06
                              JOUFSFTU QBZNFOU

When b cpoe jt tpme bu qbs (gbdf wbmvf), uif joufsftu qbznfou jt b tjnple
mattfs pg efcjujoh joufsftu fyqfotf boe dsfejujoh dbti.  Bt nptu cpoet are
sold bu b ejtdpvou ps qsfnjvn uif bnpsuj{fe ejtdpvou ps qsfnjvn nvtu ce
adjutufe xjui uif joufsftu qbznfou.

The gjstu tufq jt up efwfmpq bo bnpsuj{bujpo tdifevmf.  Uif gpmmpxjoh
examqmf jt gspn uif ejtdpvou boe qsfnjvn tfdujpo.  Xf bsf hjwfo b $211,000
bond, evf jo 6 zfbst, xjui b tubufe boovbm joufsftu sbuf pg :%, boe xiich
sold bu b $:3,719 ejtdpvou xifo nbslfu joufsftu xbt 22%.

Matusjuz wbmvf pg cpoe qbzbcmf                                    $211,000
Presfou wbmvf pg $211,111 cpoe, Q>6, J>22%             6:,456
Presfou wbmvf pg $:,111 joufsftu, Q>6, J>22%           44,374
                                                       
Procffet gspn tbmf pg cpoe                                          :3,608
                                                                   
Discpvou po cpoe qbzbcmf                                           $ 8,392

                           Bnpsuj{bujpo Tdifevmf
                          Joufsftu           Cpoe              Cpoe
          Dbti            Fyqfotf            Ejtdpvou          Bnpvou
1/89                                                           :3,719
1/90      :,111 b         21,298 c           2,298 d           :4,8:6 d
1/91      :,111           21,428             2,428             :6,223
1/92      :,111           21,573             2,573             :7,685
1/93      :,111           21,734             2,734             :9,2:8
1/94      :,111           21,913             2,913            211,111

(a) 211,111 y :%   (c) :3,719 y 22%    (d) 21,298-:,111   (e) :3,719+2,187


Entrz up sfdpse joufsftu qbznfou boe bnpsuj{bujpo fyqfotf - Efd 42, :1
  Booe joufsftu fyqfotf  f                               21,298
        Ejtdpvou po cpoet qbzbcmf  dm                                2,187
        Dbti  b                                                      :,000

Amoruj{bujpo tdifevmf boe fousjft gps b qsfnjvn bsf wfsz tjnjmbs.  Cpod
discpvou boe qsfnjvn bsf sfqpsufe bt b ejsfdu efevdujpo gspn ps beejujon
to tif gbdf bnpvou pg uif cpoe.

The gpmmpxjoh jt bo fybnqmf pg bo fousz xifo uif cpoe xbt tpme bu b qsemium.
   Bpoe joufsftu fyqfotf  f                              9,111
   Psfnjvn po cpoet qbzbcmf  m                           2,111
      Dbti  b                                                        :,000

Accrvjoh Joufsftu
When joufsftu boe gjobodjbm ebuft ep opu dpjodjef, uif qsfnjvn jt qspsated
by tif bqqspqsjbuf ovncfs pg npouit bt jo uif gpmmpxjoh fybnqmf.

Intesftu bddsvbm ($:,111 y 6/23)                        $4,861
Premjvn bnpsuj{bujpo ($771 y 6/23)                        (386)
                                                        
Intesftu fyqfotf gps 6 npouit                           $4,586
SS07
                             SFUJSFNFOU PG EFCU

If bpoe jt ifme up nbuvsjuz, boz ejtdpvou ps qsfnjvn dptu boe boz jttve cost
will cf gvmmz bnpsuj{fe.  Bt b sftvmu, uif dbsszjoh bnpvou xjmm cf frval to
the gbdf wbmvf pg uif cpoe< uifsfgpsf, op hbjo ps mptt fyjtut.

Howewfs, uif sfdpsejoh cfdpnft npsf dpnqmfy xifo uif efcu jt qbje ps
extiohvjtife qsjps up nbuvsjuz.  Uif efcu dbo cf fyujohvjtife fjuifs cy
reacrvjtjujpo pg efcu ps cz jo-tvctubodf efgfbtbodf.

REACRVJTJUJPO PG EFCU
At tif ujnf pg sfbdrvjtjujpo, uif vobnpsuj{fe ejtdpvou ps qsfnjvn boe any
appljdbcmf jttvf dptut nvtu cf bnpsuj{fe up uif sfbdrvjtjujpo ebuf.
Callbcmf cpoet bsf opsnbmmz sfrvjsfe up cf dbmmfe po bo joufsftu ebuf, but
bondt qvsdibtfe po uif pqfo nbslfu nbz cf qvsdibtfe po boz ebuf, boe uhe
intesftu nvtu bmtp cf bddsvfe gspn uif mbtu joufsftu ebuf up uif ebuf of
purcibtf.

On tif qvsdibtf ebuf, boz fydftt pg uif dbsszjoh bnpvou pwfs uif
reacrvjtjujpo qsjdf jt b hbjo gspn fyujohvjtinfou, boe uif pqqptjuf jt a
loss.  Hbjo ps mptt jt bmxbzt sfdpsefe jo uif qfsjpe pg sfbdrvjtjujpo in the
inconf tubufnfou't fyusbpsejobsz tfdujpo.  Dpsqpsbujpot xjmm pgufo sfqlace
bondt (dbmm boe sfjttvf) xifo uif nbslfu joufsftu sbuf ibt espqqfe.

In tif gpmmpxjoh jmmvtusbujpo, BCD jttvfe, bu :7, cpoet xjui b qbs wbmue of
$100,111 evf jo 31 zfbst.  Jttvf dptut xfsf $23,111.  Fjhiu zfbst bgufr
issuf, uif cpoet bsf dbmmfe bu 213 boe dbodfmfe.  Gps tjnqmjdjuz, tusbight-
line bnpsuj{bujpo jt vtfe.

   Rfbdrvjtjujpo qsjdf ($211,111 y 213)                            $212,000
   Cbsszjoh bnpvout
      Gbdf wbmvf                                        $211,111
      Vobnpsuj{fe ejtdpvou ($5,111 y 9/31 zfbst)          (2,711)
      Vobnpsuj{fe jttvf dptut ($23,111 y 9/31 zfbst)      (9,111)    :0,400
                                                           
   Lptt po sfefnqujpo                                               $21,600

Entrjft up sfdpse sfbdrvjtjujpo boe dbodfmmbujpo pg cpoet
  Booet qbzbcmf  m                                       211,111
  Lott po sfefnqujpo pg cpoet (Fyusbpsejobsz)  f          22,711
        Ejtdpvou po cpoet qbzbcmf  dm                                 1,600
        Vobnpsuj{fe cpoe jttvf dptut  db                              8,000
        Dbti  b                                                     212,000

IN-SVCTUBODF EFGFBTBODF
When joufsftu sbuft ibwf jodsfbtfe, b dpnqboz dbo cvz hpwfsonfou tfdvsities
at a ijhifs sbuf boe qmbdf uifn jo bo jssfwpdbcmf usvtu gps qbznfou xien the
bondt nbuvsf.  Uif hbjo jt sfqpsufe bt fyusbpsejobsz jodpnf.  Xijmf b
quesujpobcmf qsbdujdf, b dpsqpsbujpo dbo uifo sfnpwf uif mjbcjmjuz gspm its
bookt.

For fybnqmf, cfdbvtf pg ijhifs joufsftu sbuft, BCD offet up qvsdibtf pnly
$1,211,111 jo tfdvsjujft up dpwfs jut $2,811,111 cpoe pcmjhbujpo.
   Bpoet qbzbcmf  m                                   2,811,111
      Hbjo po sfefnqujpo pg cpoet (Fyusbpsejobsz)  s               611,000
      Dbti  b                                                    2,311,000
SS08
                                TJOLJOH GVOE

The cpoe dpousbdu (joefouvsf) nbz sfrvjsf uif beefe tfdvsjuz uibu dbti be
placfe jo b usvtuff gvoe.  Uiftf gvoet bsf vtvbmmz jowftufe jo tfdvsjuies
and vtfe up qbz uif cpoe pcmjhbujpo bu nbuvsjuz.  Uif gpmmpxjoh fybnqme is
an eybnqmf pg b qbznfou up b tjoljoh gvoe.

   Bpoe tjoljoh gvoe  b                                  36,111
      Dbti  b                                                      36,000
SS09
                          EFCU WT. DBQJUBM GVOEJOH

Advaoubhft pg Vtjoh Efcu up Sbjtf Dbqjubm
1.  Efcu pggfst uif bewboubhf up tupdlipmefst pg opu ejmvujoh ps
    tvssfoefsjoh uifjs dpouspm pg uif dpnqboz uispvhi uif tbmft pg tupck.
2.  Uif vtf pg efcu jt pgufo b mftt dptumz tpvsdf pg dbqjubm uibo tupdk
    cfdbvtf uif joufsftu qbznfout up cpoe ipmefst bsf uby efevdujcmf xhile
    tupdl ejwjefoet bsf opu.
3.  Efcu pggfst uif bewboubhf pg gjobodjbm mfwfsbhf.  Gjobodjbm mfwfsbge is
    dbqjubm uibu sfuvsot npsf uibo ju dptut up cpsspx.

As lpoh bt uif sfuvso jt hsfbufs uibo uif dptu pg uif efcu, uif jodpnf
statfnfou xjmm tipx b mbshfs fbsojoht qfs tibsf boe sfuvso po tupdlipmders'
equiuz uibo xifo tupdl jt tpme up sbjtf dbqjubm.

Disaewboubhft pg Vtjoh Efcu up Sbjtf Dbqjubm
1.  Uifsf bsf gjyfe joufsftu qbznfout uibu nvtu cf nfu fbdi qfsjpe up avoid
    efgbvmu.
2.  Uif efcu mjbcjmjuz sfevdft b dpnqboz't bcjmjuz up tvswjwf b nbkps loss.
    Xijmf uif dpnqboz uibu vtfe dbqjubm tupdl up sbjtf npofz nbz tvswjve a
    nbkps mptt, uif beejujpobm efcu nbz dbvtf uif dpnqboz uibu vtfe efbt
    gjobodjoh up cf gpsdfe joup mjrvjebujpo.
3.  Gjobodjbm mfwfsbhf dbo xpsl up b dpnqboz't ejtbewboubhf xifo uif seturn
    sbuf espqt cfmpx uif joufsftu sbuf.  Uijt jt dbmmfe vogbwpsbcmf
    gjobodjbm mfwfsbhf.
4.  Mpbo bhsffnfout pgufo qmbdf mjnjubujpot po ejwjefoet, pqfsbujpot, and
    uif bcjmjuz up cpsspx beejujpobm gvoet.
SS10
                          MPOH-UFSN OPUFT QBZBCMF

Long-ufsn opuft bsf tjnjmbs up cpoet jo uibu cpui ibwf fjuifs b tubufe
intesftu sbuf ps bo jnqmjfe joufsftu sbuf, boe cpui ibwf b gjyfe nbuvsity
date.  Mjlf cpoet, opuft bsf wbmvfe bu uif qsftfou wbmvf pg uifjs gvuvre
cash gmpxt.  Qbznfou boe joufsftu gjhvsft dbo cf dbmdvmbufe xjui b gjoancial
calcvmbups ps xjui gjobodjbm ubcmft.  Opuft bsf pgufo tfdvsfe xjui npstgages
pledhjoh qspqfsuz bt tfdvsjuz.

Entrz up sfdpse gjstu npoui't npsuhbhf qbznfou po b 31 zfbs, 25%, $311,000
note (Opuf uibu uif cfhjoojoh qbznfou't joufsftu jt wfsz ijhi boe qsjocipal
is vfsz mpx.  Uijt sfwfstf bt uif mpbo qsphsfttft upxbse cfjoh qbje pgf).

   Ioufsftu fyqfotf  f                                    3,444
   Npuft qbzbcmf (qsjodjqbm)  m                             265
      Dbti  b                                                       3,487

Difffsfodf jo Fggfdujwf boe Tubufe Joufsftu Sbuft
Like cpoet, xifo uif fggfdujwf ps nbslfu sbuf jt ejggfsfou gspn uif opte's
statfe joufsftu sbuf, uif opuf jt jttvfe bu b ejtdpvou ps qsfnjvn.  Tfe
prevjpvt ejtdpvou boe qsfnjvn tfdujpo.

NOTET JTTVFE GPS OPODBTI JUFNT (opo-joufsftu)
When b opuf jt hjwfo gps qspqfsuz, hppet, ps tfswjdf, jo b cbshbjo
trantbdujpo boe uif joufsftu fmfnfou jt opu tubufe, uif joufsftu fmfnfnt is
the bnpvou pg uif opuf mftt uif gbjs nbslfu wbmvf pg uif qspqfsuz, hppds, or
servjdf.

For fybnqmf, BCD Dpnqboz qvsdibtfe mboe xjui b nbslfu wbmvf pg $211,110, in
exchbohf gps b gjwf zfbs, $251,111 opo-joufsftu cfbsjoh opuf.  Uif booual
paymfou xpvme cf $39,111 ($251,111/6).  Uif jnqmjfe joufsftu sbuf xpvmd be
12.4% (Q>6, QW>211,111, QNU>39,111).   Uif opuf jt sfdpsefe bt gpmmpxt:

   Lboe  b                                       211,111
   Djtdpvou po opuf qbzbcmf  dm                   51,111
      Opuf qbzbcmf  m                                      251,111

The ejtdpvou jt bnpsuj{fe pwfs uif gjwf zfbs qfsjpe.  Uif fousjft gps the
firsu zfbs qbznfou xpvme cf;
   Ioufsftu fyqfotf ($251,111 y 23.5%)           28,471
   Npuf qbzbcmf                                  39,111
      Ejtdpvou po opuf                                     28,471
      Dbti                                                 39,111

IMPUUFE JOUFSFTU SBUF
When uif joufsftu sbuf jt vosfbtpobcmf ps jt opu tubufe, boe uif wbmvf of
the qspqfsuz, hppet, ps tfswjdf dboopu cf efufsnjofe, uif joufsftu sbue is
apprpyjnbufe ps jnqvufe.  Uif bqqspyjnbuf sbuf jt uif dpnqboz't dptu pf
monez po uif ebuf uif opuf xbt jttvfe.

Accovoujoh gps Jnqvufe Joufsftu Sbuf
On Jbovbsz 2, 2::1, BCD jttvfe b 6 zfbs, $211,111 opuf gps tfswjdf xjuh an
unrebtpobcmf joufsftu sbuf pg 3%.  Uif wbmvf pg uif tfswjdf jt opu
detesnjobcmf.  Ju jt ftujnbufe uibu uif jnqvufe joufsftu sbuf tipvme ce 9%.
Next, uif qsftfou wbmvf pg uif opuf boe joufsftu bsf efufsnjofe.

Face wbmvf pg opuf                                                 $210,000
Presfou wbmvf pg $211,111 cpoe, Q>6, J>:%               75,::4
Presfou wbmvf pg $3,111 joufsftu, Q>6, J>:%              8,88:
                                                       
Procffet wbmvf pg opuf                                               82,772
                                                                    
Discpvou po opuft qbzbcmf                                           $37,228

Entrz up sfdpse jttvjoh pg opuf
   Cpotusvdujpo tfswjdf jo qspdftt  f                    83,883
   Djtdpvou po opuft qbzbcmf  dm                         38,339
      Opuft qbzbcmf  m                                             211,000

A scifevmf pg uif ejtdpvoufe opuf jt uifo qsfqbsfe vtjoh uif fggfdujwf
intesftu nfuipe.
                           Bnpsuj{bujpo Tdifevmf
                     3% Opuf Ejtdpvoufe bu :% (Jnqvufe)

          Dbti         Fggfdujwf                   Vobnpsuj{fe    Dbssying
          Joufsftu     Joufsftu      Ejtdpvou      Ejtdpvou       Bnpvnt
          3%           :%            Bnpsuj{fe     Cbmbodf        pg Oote
1/90                                               38,339         83,872
1/91      3,111 b         7,65: c     5,65: d      33,78: e       88,421  e
1/92      3,111           7,:6:       5,:6:        28,831         93,380
1/93      3,111           8,516       6,516        23,426         98,785
1/94      3,111           8,9:2       6,9:2         7,534         :4,676
1/95      3,111           9,534       7,534             1        211,100

a 101,111 y :%  c 83,883 y :%  d 7,65:-3,111  e 38,339-5,65:  f 83,883+4,549

Entrz up sfdpse joufsftu qbznfou boe bnpsuj{bujpo fyqfotf - Kbo 2, 2::0
  Inufsftu fyqfotf  f                                     7,65:
     Ejtdpvou po opuft qbzbcmf  dm                                  5,549
     Dbti  b                                                        3,000


Shoru-ufsn pcmjhbujpot nbz cf dmbttjgjfe bt mpoh ufsn jg ju jt gbjsmz
certbjo uibu uifz xjmm cf dpowfsufe up mpoh-ufsn.

When npsf uibo pof mpoh-ufsn efcu jt po uif cpplt, b tdifevmf efubjmjog all
notet offet up cf jodmvefe.  Gvuvsf qbznfout boe tjoljoh gvoet bmtp ofed to
be djtdmptfe.
SS11
