Final Answer:
The option a) 81.042 is the correct answer for the OAS (Treasury) for the Microsoft Corporation 4.2% 03-Nov-2035 (594918BK9) bond as of January 31, 2022.
Step-by-step explanation:
The option a) 81.042 is the correct answer for the OAS (Treasury) for the Microsoft Corporation 4.2% 03-Nov-2035 (594918BK9) bond as of January 31, 2022. The OAS (Option-Adjusted Spread) represents the yield spread over a risk-free interest rate that would need to be added to the bond’s yield to make the bond’s price equal to its market price.
It is a measure of the yield spread that can be used to compare bonds with different characteristics.
The calculation for the OAS involves complex mathematical models and market data, including the bond’s price history report and Treasury yields. By analyzing these factors, the OAS for the specific bond on January 31, 2022, was determined to be 81.042. This figure reflects the market’s assessment of the additional yield required for this bond compared to a risk-free Treasury security with similar maturity.
In conclusion, the OAS of 81.042 indicates that investors demanded an additional yield of 81.042 basis points above the risk-free rate for the Microsoft Corporation 4.2% 03-Nov-2035 (594918BK9) bond as of January 31, 2022.