<table><tr><th>From:</th><th>jeffrey E. &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent:</td><td>Monday, April 25, 2016 2:12 PM</td></tr><tr><td>To:</td><td>Joichi Ito</td></tr><tr><td>Subject:</td><td>Re: $1M rain contract</td></tr></table>

more complicated, value for book purpose= value to a buyer. value to a buyer if cloudy weather da= before. etc

On Mon, Apr 25, 2016 at 10:09 AM, wrote:

Is the last sentence correct?

When you take, for instance= a contract that pays out $1million if it rains tomorrow, and put it into=your accounts, you will be required to guess the chance of rain-ma=be 50%— and value that asset at something like $500,000. The contr=ct will actually never pay out $500,000; it will either be worth zero or $= million in the end. But if you were forced to trade it today, you =99d probably sell it for something close to $500,000; so for tax and manag=ment purposes, you "value" the contract at 5500,000. On th= other hand, if you unable to sell it because there were no buyers, it mig=t actually be valued at zero today by regulators, but then suddenly valued=at $1million tomorrow if it rains.

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