 # T equitized

Schweser p.130 question 7 they used as formula for T equitized= T held * (rounded countracts/unrounded contracts). is the following formula similar :{ (rounded contracts)* Pf* Multiplier }/ (1+rf) because when i used it i don’t get the same answer.

Schweser volume/book number?

sorry. book 4

Glancing over your formulas: First one is essentially giving you the exact amount of treasuries you equitized using a ratio of rounded to unrounded. This is because you can’t buy 1.4728 contracts (or some other non-integer). The formula will adjust your treasuries held position. The second formula is essentially the amount of Treasuries you need at T=0 in order to reach a certain amount of equities at some other time (usually the futures expiration date). So if I wanted to invest \$1mm in equities in 1 year using futures contracts and the RFR is 5%. I would need \$1mm/(1.05) = ~\$952K in Treasuries now to be able to pay for the \$1mm in equities at expiration. The two formulas are related and actually should complement each other. If this is a bad explanation, I can further elaborate w/ an example.

when you say complement each other, do you mean i can use one or the other?

Two formulas are exactly the same. Pls check and transform the first two formulas in notes vol 4 Pg. 127.