2014 AM Q2.D

CFA Level III
#1

I don’t understand how the forward conversion generates liquidity…

If you buy a put and sell a call on the same strike price doesn’t that create no liquiditiy? unless you buy less puts right?

I don’t understand why you would even but puts if you wanted to generate liquidity as the question asked. unless that’s part of the conversion requirement?

#2

A prepaid forward produces a loan against the value of the concentrated position.

#3

ah i see… is that the case all the time? For some reason I thought it was paid for through some other means like cash which i guess would have been a wrong assumption.

man not sure how i got through level 2 if i was wrong all this time bahaha