Question: OAS on a callable bond is 75 basis points using on-the-run treasuries as benchmark rates. Which is correct ? -Cost of the embedded option is

OAS on a callable bond is 75 basis points using on-the-run treasuries as benchmark rates. Which is correct?

-Cost of the embedded option is 75 bps

-Cost of the embedded option is 75 bps over the treasuries benchmark

-OAS reflects the credit risk and liquidity risk of the bond over the treasury benchmark rates

-Nominal spread is 75 bps over the treasury benchmark rates ??

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

OAS on a callable bond is 75 basis points using on-the-run treasuries as benchmark rates. Which is correct? A. Cost of the embedded option is 75 bps B. Cost of the embedded option is 75bps over the...

Q:

MULTIPLE CHOICE OAS on a callable bond is 75 basis points using on-the-run treasuries as benchmark rates. Which is correct ? -Cost of the embedded option is 75 bps -Cost of the embedded option is 75...

Q:

Need help with a finance project. Thanks in advance. Chapter 5 - Term Structure of Interest Rates Interest rates vary by maturity of the instrument and by risk characteristics 3 mo T-bill 3 mo...

Q:

Need help with a finance question urgently... See the attachment and send the solution in attachment with clear details. Chapter 5 - Term Structure of Interest Rates Interest rates vary by maturity...

Q:

UIN is 56 Please answer #2. You will implement the Black-Derman-Toy (1990) interest rate model to value a callable bond and to derive risk measures such as effective duration and effective convexity....

Q:

UIN is 56 You will implement the Black-Derman-Toy (1990) interest rate model to value a callable bond and to derive risk measures such as effective duration and effective convexity. It is recommended...

Q:

UIN is 56 Please answer #4 You will implement the Black-Derman-Toy (1990) interest rate model to value a callable bond and to derive risk measures such as effective duration and effective convexity....

Q:

UIN is 56 Please answer #5 You will implement the Black-Derman-Toy (1990) interest rate model to value a callable bond and to derive risk measures such as effective duration and effective convexity....

Q:

UIN is 56 Please answer #3. You will implement the Black-Derman-Toy (1990) interest rate model to value a callable bond and to derive risk measures such as effective duration and effective convexity....

Q:

Can you please solve these questions and provide the excel sheet and explanations to see the formulas used? Use 40 as the UIN or ID. Thank you You will implement the BlackDermanToy (1990) interest...

Q:

A recording tape passes over the 1-in.-radius drive drum B and under the idler drum C. Knowing that the coefficients of friction between the tape and the drums are s = 0.40 and k = 0.30 and that drum...

Q:

(a) Give an example of an expense that would be included in each of the David Jones Ltd expense category. (b) Calculate EBITDA for David Jones Ltd. (c) Explain the purpose of EBIT and EBITDA. (d)...

Q:

Question 1 2 ( 4 points ) Which of the following correctly matches the minimal down payment of a FHA loan? 2 . 0 % 2 . 5 % 3 . 0 % 3 . 5 % 4 . 0 %

Q:

Management of Mittel Rhein AG of Kln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations...