Final answer:
A bond selling at a premium is probably going to be called because it means that the bond has a higher coupon rate than current market interest rates, and the issuer may want to refinance at a lower rate.
Step-by-step explanation:
A bond selling at a premium means that its market price is higher than its face value. This situation typically occurs when the coupon rate of the bond (interest rate) is higher than the current market interest rates. Considering this, bond issuers may find it advantageous to call, or redeem, the bonds before the maturity if they have the option to do so, especially when they can reissue new bonds at a lower interest rate.
Therefore, a premium bond is likely to be called by the issuer to save on interest costs. This scenario does not necessarily mean the bond is of high quality or that it lacks a yield to maturity. Every bond has a yield to maturity, which is the total return anticipated on a bond if it is held until it matures.