Question

"An option adjusted spread is analogous to the yield on a bond." Explain this statement. 

   "An option adjusted spread is analogous to the yield on a bond." Explain this statement.
Options, Futures, and Other Derivatives
Options, Futures, and Other Derivatives
John C. Hull 10th Edition
Chapter 33, Problem 10 ↓

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OAS is a measure used in fixed income analysis to compare the yield of a bond with the yield of a risk-free bond, typically a Treasury bond, of similar maturity. It takes into account the embedded options in a bond, such as call or put options, which can affect  Show more…

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"An option adjusted spread is analogous to the yield on a bond." Explain this statement.
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