Equity RD 27 Eoc # 7

CFA Level III Equities
#1

Q # 7 does not make any sense. First of all, where did they get USD 862,500 from? 147 million CAD is 113,689,095 USD at 1.2930 rate right? Second, the S&P futures contract has a price of 2,464.29. Here I assumed it is for S&P 500 not the mini. So multiplied by 250. So confused with what they have presented and are asking ??

#2

  1. $862500 is 15% of the portfolio of $5.750M, His bonus is 5.75M and the equity portion of the portfolio is 15%.

  2. The question’s answers all are in S&P eminis, so you should be calculating the # of contracts based on e-mini which has a multiplier of 50… Why would you calculate it on regular S&P future when thats not in the answer choices? Both emini and regular S&P are based on the same S&P price, but they have different multipliers.

#3

Thanks.

I understand point 1 but for 2nd, how would you guess its’ not regular but mini?

#4

Beacuse the choiceA, B and C all say emini.

A: XXX emini contracts B: XXX emini contracts C: XXX emini contracts.

In preparation for receipt of the performance bonus, Tong should immediately:

  1. buy two US E-mini equity futures contracts.
  2. sell nine US E-mini equity futures contracts.
  3. buy seven US E-mini equity futures contracts.

if you choose to use regular S&P futures, you have no answer that matches A, B or C.

#5

Thanks for the explanation. Thanks