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01-03-2013, 06:29 PM
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Mirtle explains variance in detail here, and it does look like they're leaning toward the definition we talked about first. Basically, the only thing that matters is the first year of the contract. If it's $10 million for Year 1, the contract can't go up or down more than $2 million from one year to the next.

Since most people don't have a big problem with back loaded contracts, he spoke about front loaded mostly. Here's a table he created to show the difference between 10% and 20%.

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