Concentrated position - Monetization

For monetization purpose, below 5 methods can get higher LTV right?

  • Short sale against the box

  • Equity Forward sale contract

  • Forward conversion with options

  • Total return equity swap

  • Prepaid variable forward

Only protective put is lower, 50% LTV (based on margin lending rules session in CFA curriculum).

If the question asks client wants to have LTV as high as possible, we should avoid using put option? Thanks.

Under a risk based system,if the stock is completely hedged by a long put,the bank or broker can lend 100%of the put strike price to the investoreven if the loan proceeds are used to buy additional shares…

hope this helps

Thanks, so we should look closely the exam is referring to rule-based or risk-based system. Thanks.

You are welcome…!!!