OAS of non callable bond

Hi,

At page 212 of the reading 24 in the book 4 they say that a callable debt often has a larger option adjusted spread than otherwise non-callable debt.

Let’s say that the z-spread if 5% and the option cost is 0.5%

OAS of a callable bond = z-spread - option cost = 5% - 0.5% = 4.5%

OAS of a non callable bond = z-spread-option cost = 5% - 0% = 5%.

I don’t get it.

Please help !

Following. Surely this is a mistake.

https://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91364225

I emailed them regarding this exact thing. Good eye!

Your logic is correct, BearFlag

Also, The vintage year is another one that confused me. Should be the year the fund started, not closed as is written in the CFA curriculum.