APPENDIX 
The option agreement, given in full below, may be 
more briefly described as follows: 
According to its terms I would, for instance, sell 
John Smith one thousand shares at $20 per share, 
which is much below the market price of, say, $30 
a share. I would have the right to re-buy at $21 
within six months, at $22 within twelve months, at 
$23 within eighteen months, and so on, at an advance 
in price of $1 every six months during five years, at 
the expiration of which the contract would automati- 
cally terminate and the repurchase price at that time 
would be $30. 
In addition I would guarantee Smith a dividend 
return of 7 per cent on the $20,000 received from 
him. 
The advance in the repurchase price means that, if 
the option is exercised, Smith would receive not only 
his 7 per cent, but $2 per share per annum above the 
original purchase price of $20; that is, 10 per cent 
per annum in addition to the 7 per cent, or 17 per 
cent per annum altogether. 
The chance that Smith would not get the full 17 
per cent is simply the chance that within five years 
the stock would be below $30, when Smith received 
the stock. The only chance that Smith would not get 
back his principal is the chance that the market price 
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