Jarvis continues, “uses the option-adjusted spread (OAS), a measure of relative value. In this instance, if the bond’s OAS is greater than the OAS of bonds with similar characteristics and credit quality, then it is most likely underpriced. One factor to consider is that if interest rate volatility declines, then the OAS and thus relative cheapness of callable Bond will increase.”
Are the comments made by Jarvis regarding OAS most likely correct?
- No, she is incorrect about the impact of interest rate volatility.
- Yes.
- No, she is incorrect about determining under/overvaluation.
该题如何理解relative cheapness？
