Answer: product of the quoted futures price and the conversion factor.

## Explanation For fixed-income futures contracts (like Treasury bond futures), the **adjusted price** or **invoice price** that the long position pays to the short position is calculated as: \[ \text{Adjusted Price} = \text{Quoted Futures Price} \times \text{Conversion Factor} + \text{Accrued Interest} \] However, the question specifically asks for the adjusted price **at Time 0**, which typically refers to the futures price component before adding accrued interest. Looking at the options: **A: sum of the quoted bond price and accrued interest** - INCORRECT - This describes the cash price of a bond, not the futures contract adjusted price **B: ratio of the quoted futures price to the conversion factor** - INCORRECT - This would be the implied bond price, not the adjusted futures price **C: product of the quoted futures price and the conversion factor** - CORRECT - This gives the futures price adjusted for the specific bond's characteristics - The conversion factor adjusts for the bond's coupon and maturity relative to the notional bond In practice: - Quoted futures price × Conversion factor = Adjusted futures price - This adjusted price represents what the long pays for the bond (excluding accrued interest) Therefore, the correct answer is **C**.

Author: LeetQuiz Editorial Team