Hi David, Can you help me with this question. When is the option-adjusted duration of a callable bond closer to the duration of a similar non-callable bond? 1) When bond has a high volatility or 2) when bond trades much lower than the call price I think, effective duration of both callable and non-callable bonds will be close to each other only when the volatility is very low. In case of high volatility the effective duration of non-callable bond will always be higher than that of a callable bond. Considering this, I think option (2) is a definite true but what about (1)? Am I right about high volatility effect? I am looking at this question considering the yield curves for callable bond and non-callable bond in addition to the formula for effective duration. Am I missing something? How does it actually work? please suggest.. Thanks in advance..