- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 31. Pricing and Valuation of Forward Commitments
- Subject 5. Pricing Fixed-Income Forward and Futures Contracts
CFA Practice Question
The conversion factor used in a bond forward contract can be ______.
II. = 1
III. > 1
I. < 1
II. = 1
III. > 1
Correct Answer: II only
There is no conversion if there is only one bond. The conversion factor is often used in bond futures contracts.
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