How do they impact on which bond is cheapest to deliver

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1. What are conversion factors? Why were conversion factors developed? How do they impact on which bond is cheapest to deliver? Under what conditions would there be no cheapest to deliver? Explain in detail.

2. What information do we discover when we look at the June17 S&P 500 futures price and the Sept17 S&P 500 futures price? Explain in detail.

3. Why does a full carry model apply so well to the US treasury bond and S&P 500 contracts? Explain in detail.

Reference no: EM131572085

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