Which one of the following statements about convertible bonds is true?

1. The smaller the spread between the dividend yield on the stock and the yield-to-maturity on the bond, the more the convertible bond is worth.
2. The longer the call protection on a convertible, the less the security is worth
3. The collateral that is used to secure a convertible bond is one of the reasons convertible bonds are more attractive than the underlying stock
4. The more volatile the underlying stock, the greater the value of the conversion feature