A preferential issue dilutes (reduces) the proportionate rights of existing shareholders and thus requires approval of existing shareholders.
The debt holders enjoy preference over equity-holders in receiving back payments in case of winding up of the company.
The term 'yield', rather than 'coupon rate', is used to denote the returns to the investor.
Using the principle of finance to value the bond, the price at which the series of future cash flows should sell is the sum of the discounted value of these cash flows. The rate which equates the discounted value of the cash flows with the price of the bond is the yield to maturity of the bond.
The convertible debt securities are more suitable for low credit rating companies and companies with high growth potentials.
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