Five portfolio managers are discussing the meaning of OAS. Here is what each has said:

Manager 1: The OAS is a measure of the value of the option embedded in a bond. That is, it is the compensation for accepting option risk.

Manager 2: The OAS is a measure of the spread relative to the Treasury yield curve and reflects the compensation for credit risk.

Manager 3: The OAS is the same as the static spread.

Manager 4: The OAS is a measure of the spread relative to the Treasury yield curve and reflects the compensation for both credit risk and liquidity risk.Manager 5: The OAS should be higher as the call price of a callable bond gets larger, all else equal, since a larger call price lowers the likelihood that the bond may be called by the issuer.Please comment on each managers interpretation of the OAS. (7 marks)