Detailed Answer
(c) The requirement is to identify the correct statement
about bond financing alternatives. Answer (c) is correct because
a call provision is detrimental to the investor because he or she
may be forced to redeem the bond. Answer (a) is incorrect because
a bond with a call provision typically has a higher yield than
a similar bond without a call provision. Answer (b) is incorrect
because a convertible bond is convertible at the option of the
holder. Answer (d) is incorrect because the relationship of the
stated rate on the bond to the market rate determines whether or
not the bond will sell for more than par value.