I'm trying to understand the OAS concept. Could you explain it to me in simple terms, please? I'm interested in knowing its definition, purpose, and how it's commonly used.
6 answers
Chiara
Fri Oct 25 2024
One such example of bonds without embedded options is corporate bonds.
JejuJoyfulHeartSoul
Fri Oct 25 2024
These spreads take into account various factors, including credit risk, liquidity risk, and prepayment modeling risk.
Carlo
Fri Oct 25 2024
These risks are borne by investors who hold mortgage-backed securities.
Valentina
Fri Oct 25 2024
The OAS, or option-adjusted spread, was created to provide investors with a tool for comparison.
Rosalia
Fri Oct 25 2024
It allows investors to compare mortgage-backed securities to bonds that do not have embedded options.