Question:
Which of the following statements is correct when comparing bond-financing alternatives?
1. A bond with a call provision typically has a lower yield to maturity than a similar bond without a call provision.
2. A convertible bond must be converted to common stock prior to its maturity.
3. A call provision is generally considered detrimental to the investor.
4. A call premium requires the investor to pay an amount greater than par at the time of purchase.