The OAS valuation procedure involves making an initial estimate of the OAS, followed by conducting a Monte Carlo simulation using the yield on US Treasury bills as the discount rate.

When an MBS pool with a high OAS is identified, it should be purchased immediately to take advantage of this relatively attractive investment compared to other MBS.

Mortgage rates are perfectly correlated with US Treasury bond rates, and therefore OAS is calculated as the expected MBS return plus the return on US Treasury bonds.