Bond Emberdded option Amt Outstanding A call 20m B call $80m C put 20 D put 80 the bond with the largest spread is compared to a comparable treasury security is: A B C D

has to be a call option. A ??

yeap, A.

i could not tell why A and not B. please explain.

less liquidity = higher spread…A

I think b/c it is less liquid.

80MM is a large issue, and low bid-ask spread and high liquidity compared to 20MM issue.

and call because the callable bond’s price is lower than a put, thus higher yield?

why is 80M more liquid than 20M?

the larger the issue the more potential that it will be traded more frequently.

hmm makes sense, thanks

Thank you all