Question 1 (20 points) Today is March 9, 2022. The treasury bond futures price is 96. The party with the short position is trying to choose between the following two bonds. Bond Quoted bond price 1 108-16 2 118-16 Conversion factor 1.1122 1.2122 Coupon payment Coupon rate date January 15, July 15 6% February 7. August 78% a. What is the cost of purchasing to the party with short position if bond 1 to be delivered? (7 marks) b. What is the cash price received by party with short position if bond 2 to be delivered? (7 marks) c. Which bond is cheapest to deliver? (6 marks) Question 1 (20 points) Today is March 9, 2022. The treasury bond futures price is 96. The party with the short position is trying to choose between the following two bonds. Bond Quoted bond price 1 108-16 2 118-16 Conversion factor 1.1122 1.2122 Coupon payment Coupon rate date January 15, July 15 6% February 7. August 78% a. What is the cost of purchasing to the party with short position if bond 1 to be delivered? (7 marks) b. What is the cash price received by party with short position if bond 2 to be delivered? (7 marks) c. Which bond is cheapest to deliver? (6 marks)