# Question

A 6-year bond with a 4% coupon sells for $102.46 with a 3.5384% yield. The conversion factor for the bond is 0.90046. An 8-year bond with 5.5% coupons sells for $113.564 with a conversion factor of 0.9686. (All coupon payments are semiannual.) Which bond is cheaper to deliver given a T-note futures price of 113.81?

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