OPTION-ADJUSTED SPREAD (O.A.S.)

(1) The spread over an issuer's spot rate curve, developed as a measure of the yield spread that can be used to convert dollar differences between theoretical value and market prices . (2) The cost of the implied call embedded in a M.B.S. , defined as additional basis-yield spread. When added to the base yield spread of an M.B.S. without an operative call produces the option-adjusted spread.