futures and duration formulas

Two clarification questions related to Reading 41 formulas. Thanks in advance. 1. In the key formulas in this reading (i.e. adjusting beta or duration, creating synthetic cash or equity), we use the futures price in the denominator. What exactly does this represent? I thought that the whole idea of futures was that you didn’t have to put up any money up front and then at maturity you would just pay/receive the difference. I know this may seem like a very dumb question, but in very simple terms what does the futures price intuitively represent? 2. There are two (seemingly) different formulas in two different books on how many contracts needed to buy/sell to achieve target duration. Schweser Book 3, Page 78: (DDt - DDp) / DDf Schweser Book 4, Page 153: (yield beta) [(MDt - MDp)(Vp/Pf] It seems that the two formulas are the same, as the first one accounts for the value of the position by using dollar duration, and it assumes that the yield beta is one. Is this correct?

1. It’s used to determine the # of contracts you need, not how much money you need to put up. 2. Yield beta is assumed to be 1 unless otherwise stated.
1. So that futures price is just an input needed to help you determine the # of contracts to buy? 2. So the formulas are indeed the same?

the show NY Wrote: ------------------------------------------------------- > 1. So that futures price is just an input needed > to help you determine the # of contracts to buy? > > 2. So the formulas are indeed the same? Yes