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I've never worked bonds, so I am not sure about the context there. However, in the general Basel construct, the CCF is the fraction of off-balance sheet exposures which should be treated as on-balance sheet for regulatory capital purposes.
For example, if I have USD100B in contingent exposures to retail customers (based on credit lines that have not yet been tapped) and statistical analysis shows that 30% of those contingent exposures move to the balance sheet prior to default, then the CCF is 30% and the firm should allocate additional capital equal to having an extra USD30B on their balance sheets.
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What conversion factors is a measured number?
An empirical conversion factor.
Why does a conversion factor always have a value of 1 when the fraction does not equal 1?
The question cannot be answered because it is based on an incorrect understanding of a conversion factor. For example, the conversion factor for inches to millimetres is 25.4 mm = 1 inch. It never, ever has the value 1.
What are conversion factors?
In mathematics, specifically algebra, a conversion factor is used to convert a measured quantity to a different unit of measure without changing the relative amount. There are 24 hours in a day, so hours = days x 24. The conversion factor for days to hours is 24.
What is the ratio of equivalent measurements?
It is the conversion factor between the measurement units.
What does conversion factor mean?
It's an arithmetical multiplier for converting a quantity expressed in one set of units into an equivalent expressed in another.
