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| OAS can be used to derive option cost rather than using an option pricing model. The OAS can be interpreted as the MBS spread after the affect of the embedded option on cash flows is considered. Which of the following summaries is most accurate? A. option cost = nominal spread − option-adjusted spread. B. option cost = option-adjusted spread − zero-volatility spread. C. option cost = zero-volatility spread − option-adjusted spread. |