In general, the issuer of high-coupon callable bonds must pay a greater call premium than the issuer of low-coupon callable bonds relative to non-callable securities.

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High-coupon callable bonds are more likely to be called before maturity, especially when interest rates fall, because they are more costly to the issuer. To compensate investors for this higher call risk, issuers typically have to offer a greater call premium than they would for low-coupon callable bonds.

In General, the Issuer of High-Coupon Callable Bonds Must Pay