There are three possible issues that are acceptable for delivery and the short has the choice of which to deliver based on UST-Bond, with detailsshown in the table below. Each of the issues that may be delivered has no accrued interest and the nextcoupon payment is six months from now. The futures price is worth 99.75 for the government bond contract that settles in six months.

Issue

Market Price

Coupon Rate

Conversion Factor

1

$80.60

4.0%

0.9185

2

72.00

5.7%

0.7316

3

103.25

9.0%

1.0544

Determine thevalueof the cheapest-to-deliver issue assuming that there is no accrued interest?