medium · Debt Capital Markets pricing-yields-curve
An investor is comparing two 10-year bonds from the same issuer. Bond A is a standard bullet, while Bond B is callable in 5 years.
If Bond A has a Z-spread of 150 bps and the embedded call option is valued at 40 bps, what is the approximate Option-Adjusted Spread (OAS) for Bond B?
- 150 bps
- 75 bps
- 110 bps
- 190 bps
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