derivatives replication

[yasser almansoor]

hi every one
hope that you do well
can anyone have a logic explanation for the derivatives replication specially exhibit 6 page 68 book 6, with number please ?
how i can when i go long position in Asset and short RFR Asset i get a short postion in derivatives?? i tried to do it with numbers and failed

 

[S2000magician]

I hate it when they’re so ambiguous; they should simply say exactly what they mean.
By the “derivative” they mean a position in a forward/futures contract that offsets your position in the underlying:
Long asset + Short forward = Long risk-free bond
You can rearrange this to solve for any position, and negate each of those:
Long risk-free bond = Long asset + Short forward
Short risk-free bond = Short asset + Long forward
Long asset = Long risk-free bond – Short forward = Long risk-free bond + Long forward
Short asset = Short risk-free bond + Short forward
Short forward = Long risk-free bond – Long asset = Long risk-free bond + Short asset
Long forward = Short risk-free bond + Long asset

 

[yasser almansoor]

i’m really thankful for your efforts for all of us sir
but i have a note and i hope that you correct it for me
when they came to explained the call-put forward parity, they remove the underlying price by assumed that we go a long contract and long RF bond.
then they proved that the results are identical under any condtion, after that they mentioned the value of portfolio (protective put with forward) = forward price/ (1+RF)+ P0
my questions are
1- if we are long the Bond so, we are a lender so the position is (negative) forward/ (1=RF), why they ignor the sign?
2- why they not write the forward contrac position?