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Incentive Coupon

Trading Term

An incentive coupon is a payment made to holders of event contract positions derived from the earnings on the collateral backing those positions. Because a fully collateralized market holds cash against every open contract, that cash can be invested, and ForecastEx passes the resulting earnings back to members, accrued daily against the dynamic market price of the contract and paid monthly. The rate moves with short-term interest rates, and it can form a meaningful part of the total expected return on a position held for an extended period, particularly for low-probability contracts held on the NO side.

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