synthetic cash

Just wondering why we are using risk free rate to calculate Fv of equity position? Shouln’t we use dividend yield to calculatue future value of equity in this formula ? :

NF = -V ( 1+r) T / qf

Cash -> Risk free rate

We convert to cash immediately, then that cash grows at the risk-free rate.

We have an equity portfolio which will grow at didvidend yield.We are creating synthetic cash position. We still are going to hold equity???!!!

Yes; we still hold equity. And a bunch of futures contracts that are supposed to cancel out that equity.

Maybe this article that I wrote will help: