In comparison to similar non-callable securities, callable securities have:

Callable securities typically offer higher required and expected yields compared to non-callable securities. This is primarily due to the additional risk that investors take on when they purchase callable securities. A callable security can be redeemed by the issuer before its maturity date, often when interest rates fall. If this happens, investors may not receive the expected interest payments over the full life of the security, and they might be forced to reinvest the returned principal at lower prevailing rates.

To compensate for this risk, issuers are generally required to offer higher yields on callable securities, making them attractive to investors who demand a premium for taking on the additional uncertainty associated with the call feature. This is reflected in the expected yield, as investors factor in the potential of the security being called away before maturity, which can impact overall returns.

In summary, the higher yields on callable securities arise from the inherent risks present due to the call option, making the statement regarding higher required and expected yields accurate.