Option Fractions
Each investment option is assigned a set of fractions that determine how profits are distributed and how guaranteed payouts are handled.
Profit Distribution Fractions
Every investment option divides profits among three destinations:
- Give for Good (
G4gFraction) - Charities (
CharityFraction) - Reinvestment in the investment fund
(
ReinvestmentFraction)
These fractions are collectively known as the option fractions. They must always sum to 1:
fG4g + fCharity + fReinvestment = 1
Fractions are set when the investment option is created using the META_NEW_OPTION event,
and can be updated later with the META_UPDATE_FRACTIONS.
Validation is performed by the ValidationErrors
model to ensure correctness.
Bad Year Fraction
The bad year fraction represents the minimum annual payout to charities, even if the stock market performs poorly. It guarantees that a certain percentage of an investment option’s funds will be paid out to charities each year. The exact payout percentage is calculated based on the time elapsed since the last exit.
This mechanism ensures that charities receive a stable income, regardless of market fluctuations.
By J.W. Morsink
