In an american callable bond there is an expectation for the issuer to prepay its debt prior to maturity. I understand that this reduces it's value and therefore, higher yield.
But another way to think about it is that investing in a callable bond should yield the same as a non-callable bond with lower duration (due to the lower expected duration in a callable) bond. This second approach will have a lower yield in a positive slope curve envirement. What is wrong with this approach?