Concentrated position - Monetization

[FrankCFA]

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.

 

[PSRs900]

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

 

[FrankCFA]

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

 

[PSRs900]

You are welcome..!!!!