Answered You can hire a professional tutor to get the answer.
QUESTION
A 5-year bond with a 4.45% coupon sells for $107. A 7-year bond with a 5.75% coupon sells for 116. The conversion factor for the 5-year bond is...
. A 5-year bond with a 4.45% coupon sells for $107.48. A 7-year bond with a 5.75% coupon sells for 116.564. The conversion factor for the 5-year bond is 0.933891 while the 7-year bond is 0.98588. Assume that the yields for both bonds are 6% and that coupon payments are semiannual. Which of the two bonds is cheaper to deliver given a T-note futures price of 117.92?
Answer:5 Yr BondBond ValueConversion FactorBond deliveryMarket PriceCost to deliver bonds 7 Yr Bond 1000.93107.08107.48115.09 Tha above calculation suggests that 5 year bond is cheaper...