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Basic Question 2 of 13
The zero-volatility spread is a better measure than the nominal yield because:
B. the nominal yield is only a one-point estimate whereas the Z-spread considers the whole yield curve.
C. the Z-spreads adjust for inflation while nominal spreads do not.
A. the nominal yield is not an effective yield measure.
B. the nominal yield is only a one-point estimate whereas the Z-spread considers the whole yield curve.
C. the Z-spreads adjust for inflation while nominal spreads do not.
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Learning Outcome Statements
explain the calculation and use of option-adjusted spreads;
explain how interest rate volatility affects option-adjusted spreads;
CFA® 2025 Level II Curriculum, Volume 4, Module 28.