Today is July 1. You hold a November Treasury bond futures contract with a price of 92:15 (i.e., 92 plus [15/32]), with a delivery date of November 15 in the same year. You have identified the two bonds below that could be used for delivery against the futures contract:

	Bond A	Bond B
Maturity	26.5 years	31 years
Coupon rate	5%	8.5%
Asking price	93:2	144:13
Coupon dates	April 15, October 15	June 15, December 15
Callable?	No	No

Assume that the next year is not a leap year, and that the market repo rate is 5.50%.

a. Find the conversion factors for Bond A and Bond B. Use the downloadable Excel spreadsheet on the Chicago Mercantile Exchange (CME) website: http://www.cmegroup.com/trading/interest-rates/us-treasury-futures-conversion-factor-lookup-tables.html.

b. Identify the cheapest-to-deliver bond.