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I was reading a research article and I'm not really understanding why. Is it to do with the option premium being priced in at the beginning?

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  • $\begingroup$ Do you have a reference to the article for context? It would be helpful to know exactly what type of bond your asking about? $\endgroup$ Jul 21 at 15:42
  • $\begingroup$ Hi Thomas, sorry, this is an article written by a bank so it has restricted access. I'm talking about a standard callable fixed-coupon bond with fixed maturity. In this case, it's a municipal bond. $\endgroup$
    – junior_pm
    Jul 21 at 15:43

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