Cheapest to deliver (CTD) Treasury bond

In the last screencast, we noted the role of the conversion factor (CF) is to make the short (in a Treasury bond futures contract) almost indifferent in delivery among several different eligible government bonds. The "almost" indifferent refers to the idea that the short can maximize his/her profit by selecting the cheapest to deliver (CTD) bond. The cheapest to deliver (CTD) bond minimizes [cost to acquire -- proceeds received] or maximizes [proceeds received -- cost to acquire].

Channel: Education
Uploaded: December 31, 1969 at 6:59 pm
Author: bionicturtledotcom

Length: 05:55
Rating: N/A
Views: 526

Tags: bonds  Finance  treasury  

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