OAS of callable bond - Level 3
The price of the callable bond needs to be lower than option free bond as the investor has a disadvantage. So, he gets “compensated”.
I know OAS = Z-spread - option cost, and for callable OAS < z-spread
But, shouldn´t the investor also be compensated by receiving a higher OAS than an option-free bond? This IS however an advantage of the issuer, as previously said…
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