ABC Corporation has $100 million of 5% coupon bonds which mature in 16 years. The bonds were issued four years ago at par and are callable at 105% of par beginning next year. The bonds currently sell at a discount to par. Which one of the following situations would increase the likelihood that ABC would call its outstanding callable bonds?

A report by the Federal Reserve that predicts higher US Gross Domestic Product and further reductions in the unemployment rate in the next 12 months.

A general decline in the expected rate of inflation in the economy over the next five years.

A Wall Street Journal article that cited sluggish sales and reduced profits at the firm in recent months.

An increase in the firm's default risk.