Question: 7. a. Why is the yield spread between a bond with an imbedded option and an otherwise comparable treasury security referred to as a nominal

7. a. Why is the yield spread between a bond with an imbedded option and an otherwise comparable treasury security referred to as a nominal spread?

b. What is an option-adjusted spread and why is it superior to a nominal spread as a yield spread measure for a bond with an embedded option?

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