“callable debt has larger OAS vs comparable non-callable bond”
This statement appears to be incorrect, as OAS on a callable would be less than a non-callable.
Anyone care to confirm whether this is correct or wether i’m wrong on this matter?
“callable debt has larger OAS vs comparable non-callable bond”
This statement appears to be incorrect, as OAS on a callable would be less than a non-callable.
Anyone care to confirm whether this is correct or wether i’m wrong on this matter?
If they’re otherwise identical, the OAS on the callable bond and the OAS on the non-callable bond should be the same, so you’re incorrect.
(You were also incorrect in the title of the thread: “errata” is a plural, whose singular is “erratum”. I corrected it.)
The point that the text is trying to make is that in practice this doesn’t always hold; i.e., markets are not rational, and callable bonds sell at prices that are lower than they should be.
S2000 Magician,
You posted about this a year earlier.
https://www.analystforum.com/comment/reply/91310184/91668381
Alex