Anyone who has this, look at the morning session question 26. Is that the most retarded explanation for an answer or is it just me? Please. Cheers.
haha yea it’s rather brief. I got tricked on option-added part. I guess you can just see the chapter for more info.
Okay, for people that don’t have the book or can’t get to it right away, tell me whether this statement is correct or not: Callable corporate bonds and MBS should be measured using the option-added spread.
YES…you are correct about the spreads… remember - Corp with Binomial - MBS with Montecarlo
Okay, I see my mistake. The statement is incorrect because OAS stands for OPTION ADJUSTED SPREAD and not OPTION ADDED SPREAD. f*ck me.
callable corporate OAS from binomial MBS OAS from MC
"Okay, I see my mistake. The statement is incorrect because OAS stands for OPTION ADJUSTED SPREAD and not OPTION ADDED SPREAD. " Lol, I almost didn’t catch that, either…fugging Schweser scumbags.
Read the question again guys lol.