Conversion Factor effectively 1 with 1 bond

CFA Level II Derivatives
#1

Can anyone explain why a Conversion factor is effectively 1 if there is only one bond to deliver?

It doesn’t seem to go with my understanding of why there is a Conversion Factor: To adjust the settlement amount paid to the short for the bond that is cheapest-to-deliver–which may have a different maturity and coupon.

Thanks

#2

I covered T-bond futures here: http://www.analystforum.com/forums/frm-forum/91329602.

When there’s only one bond to deliver, then you have to deliver that bond: the market value of the bond you deliver equals the market value of the theoretical underlying, so CF = 1.0.

#3

Awsome. Thank you.

#4

My pleasure.