synthetic EQ

CFA Level III Derivatives
#1

If creating synthetic equity out of T-bills held today, do we grow the value of the T-bills by the rfr in the calculation of # of contracts to create the position…and if so, why?

Similarly, if we have say $5M coming to us in 3 months, do we use the PV of that $3M in the calculation of how to create synthetic eq?

I’m confused about what value exactly to use in the formula: beta-beta/beta * value/quoted price * multiplier

#2

Yes this tripped me too. Anybody care to explain?

The explanation is given on page 240, but still dont understand exactly what they mean.

It has to do whether we want to replicate the payoff or track the index, but still do not get the intuition

P.S. The way you phrased your question will probably get no views! You need to pose them in a way that generates more interest. Hope you wont have to market a fund anyday soon