Quoted Futures price assuming no arbitrage


Why do we divide Futures price F0(T) with conversion factor and what has conversion factor got to do with the Quoted Futures price?

There is cheapest-to-deliver option also in the quoted futures price. When do we use that?

Update your status… it says you’re “CFA Passed level 1”

You do that to adjust F price for basis risk. Quoted future price may not perfectly match an underlying price.