allworld12

I aggree with #3. As the call date is closer to the non-call bond materity, the price of the option is worth less,  so the yield spread is more closer to the non-call bond and it should be less than the early callable bond. Or, as the the reinvestment risk (reinvest in the current low yield enviorment) is higher for the early callable bond than later one, so the yield should be higher for the 1 year deferred than the 3 year deferred.