Choose the most appropriate statement regarding financing options for firms.

1. Convertible bonds and convertible shares are hybrids of stocks and bonds.
2. Money raised through share issues need not be repaid.
3. Debt is a form of liability that has a variable rate of return.
4. Cost of funds raised through a bond issue is higher than the cost of funds raised through a share issue.
5. Companies must always pay dividends to reward shareholders.

I'm confused

I think 1.2 are both right but answer should be only one.

which is more appropriate?? 1 or 2?