callable bonds

Schweser Study Session 16, book 5, page 126, #4: shows several bonds, including one as follows: par value $4 million, mkt price: 103, coupon 8%, modified duration: 9, effective duration: 5, effective convexity: -70 question asks: which bond/s is/are likely callable? It says that this one is, because a it is trading at a premium b its effective duration is less than modified duration, and c it exhibits negative convexity I understand b and c, but what does whether it is trading at a premium or discount have to do with its being callable? thanks

I agree with you. “Bond trades at 103” and “Bond is callable” must be pretty close to independent. “Bond trades at 120” says to me that it’s probably NOT callable (since call prices are usually a lot lower than 120). Edit: That “probably” might be too strong - “more likely than not”