Cases in institutional

CFA Level III Portfolio Management
#1

In Quinco case the text question for tactical asset allocation on page 317, vol 6, they calculate the funding cost on page where I am getting confused.

For ETF, we need to borrow the half of total so 30 million at 2.5%, comes out to be 75 BPS

For futures and swaps, we need to borrow full amount-60 M? comes out to be 150 BPS. for futures and swap, why do we need to borrow full amount?

Can anyone clarify?

Thanks in advance.

#2

is it the in-text question where leverage of 4 times is allowed?

In the CFAI ebook, I see the same borrowing additional amount for leverage = 60M$ for ETFs, futures, TRS.

ETFs. ($80 million x 0.75 x 2.5%) / $80 million = 1.875%.

Futures. ($80 million x 0.75 x 2%) / $80 million = 1.50%.

Swaps. ($80 million × 0.75 × 2%) / $80 million = 1.50%