Equity Forward
Lock a future equity purchase price after funding and dividends.
Read the contractual cash flows first.
Carry spot forward: financing raises the forward; dividends lower it.
Lock a future equity purchase price after funding and dividends.
Express payoff and present value precisely.
Notation and units
Decimal rates and volatilities, year-fraction time and continuous compounding unless stated otherwise.
Make conventions part of the contract.
Contract dates, calendars, settlement, notionals and payoff currency are part of the valuation input.
Discounting and projection conventions must match the collateral and quotation framework.
The displayed payoff omits legal terms and lifecycle events unless stated otherwise.
“An unstated convention is a future reconciliation break.”— THEQUANTBATEMAN
Locate the quote and replication instruments.
Forward valuation, futures basis, option parity and dividend-implied analysis.
Map cash-flow changes into hedge risk.
Reconcile the contractual payoff before reading the EQ risk. Small date or convention changes can move cash flows before any model parameter moves.
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