Callable bonds generally yield which compared to bonds without the option?

Callable bonds typically yield higher yields compared to bonds without the callable option. This is largely due to the additional risk that investors take on when purchasing a callable bond.

A callable bond allows the issuer to redeem the bond before its maturity date, usually when interest rates fall. This means that bondholders face the risk of having their bonds called away from them when they could still be earning higher interest on them. To compensate for this risk, investors demand a higher yield on callable bonds compared to non-callable bonds, which provides a more attractive return for the added uncertainty associated with the callable feature.

Thus, the yield on callable bonds is generally higher, making them appealing to investors who are willing to accept the potential for early redemption in exchange for greater interest earnings.