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There have been many questions about how we're handling dividends and other corporate actions such as mergers and spinoffs, so I will attempt to explain them all here. This post will not be math-heavy, but I can easily see that the thread might become so. :)

Keep in mind that CAPS is not a portfolio game and players don't own shares, so many of our policies may confuse or possibly upset people because they want CAPS to act like the real world when it does not.

With all these actions, we have two golden rules:

1) A player can never have more than one active pick of the same stock.

2) We cannot weight one pick more/less than another.

CAPS will very soon be supporting regular dividend payments (I thought we were getting them with the last release, but I was incorrect). As long as you hold a stock by the Ex-Dividend date, then you should receive the dividend. CAPS handles this by adjusting the cost basis of your pick.

Stock Splits
CAPS handles most stock splits automatically, however occasionally one slips by the goalie, and we have to do a manual adjustment. As with dividends, we simply adjust the cost basis to reflect stock splits. Note: please inform us when a stock splits and it appears we haven't caught it.

Assume: AAA acquires BBB.

Case 1: You have picked AAA, but not BBB.
In this case, nothing happens. You still own AAA.

Case 2: You have picked BBB, but not AAA.
We will cash you out of BBB at the last trade price.

Case 3: You have picked both BBB and AAA.
We cash you out of BBB and do nothing with AAA.

You might be thinking, "Why not convert me to the new stock?" Here's our thinking. Because of Case 3, we cannot automatically convert BBB to AAA. This would give a player two picks of the same company. One could envision a scenario where this happens multiple times, causing a person to have four or more picks of the same stock.

We also cannot combine both picks into one because the relative share values and ratios get everything out of whack. So, we will currently close people out of BBB.

The biggest downside of this method is that if you owned BBB, you lose all compounding returns of this stock. We realize this might upset some players, so we are open to possible solutions. However, to do so will require additional programming (what happens with score leaders for stocks, community intelligence, does this count for our 7 pick min rule?, etc.) so it won't happen overnight. Also, when we allow players to have TWO picks of the same company, the problem gets even messier.

So, that's the deal with mergers.

AAA now becomes AAA and BBB.

In this case, we keep players in AAA and will award a dividend payment equal to the open price of BBB. We will not automatically open a position in BBB. The reason is because all of sudden we've added picks for that player and because our scoring is additive, we're essentially adding too much weight and significance to that one company.

Example: You own AAA and are sitting at a cushy 10/10 accuracy for 100%. All of a sudden AAA spins into AAA, BBB, CCC, and DDD. Now you have 13 picks and the relative weight of AAA factors much higher in your overall scorecard because every pick has the same weight. You might get nailed on your accuracy too, because each of these extra picks could potentially harm your score. And that doesn't seem fair.

So, in the case of spinoffs, we decided to adjust the cost basis of AAA to reflect its lower share price and allow the player to pick BBB on his own.

In the case of a ticker being removed from a CAPS-supported exchange, we will close all players out of that ticker at the last trade price.

In Closing...
We've spent a lot of time discussing these various scenarios and figuring out the best solutions to fit within our CAPS framework. We hope they are fair and make sense. And as always, comments are welcome and encouraged.

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