In an efficient market callable securities will sell at a price and yield just sufficient to compensate buyers for call risk.

Question

Quizplus · Accepted Answer

In an efficient market, the prices of securities, including callable securities, adjust to reflect all available information, including the risk of the call feature. This means that the price and yield of callable securities will be set at levels that compensate investors for the additional risk of the issuer potentially calling the security before its maturity.

In an Efficient Market Callable Securities Will Sell at a Price