Question: 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

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 treasuries benchmark
C.

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

Nominal spread is 75 bps over the treasury benchmark rates.

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