- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 28. Valuation and Analysis of Bonds with Embedded Options
- Subject 4. Option-Adjusted Spread
CFA Practice Question
At 15% interest rate volatility the OAS for a callable bond is 20 bps. Which one is the MOST LIKELY OAS at 10% interest rate volatility?
B. 20 bps
C. 25 bps
A. 15 bps
B. 20 bps
C. 25 bps
Correct Answer: C
As interest rate volatility decreases, the OAS for a callable bond increase.
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