1. Bond A has an embedded option, a nominal yield spread to Treasuries of 1.6%, a zero-volatility spread of 1.4%, and an option-adjusted spread of 1.2%. Bond B is identical to Bond A except that it does not have the embedded option, has a nominal yield spread to Treasuries of 1.4%, a zero-volatility spread of 1.3%, and an option-adjusted spread of 1.3%. The most likely option embedded in Bond A, and the bond that is the better value, are:
　　Embedded option　　　Better value