Use of Convertible securities o In many cases, convertible securities are employed as referred?common stock financing Does not immediately dilute earnings Securities are converted at a higher price than if they would have been directly issued. This has the mpact of reducing the dilution effect. o The interest or dividend rate is likely to be less than that of straight debt or preferred stock. The greater the growth prospects of the firm's common stock, the lower the stated rate the firm will need to pay. 22-1122-11 Use of Convertible Securities In many cases, convertible securities are employed as referred?common stock financing. Does not immediately dilute earnings. Securities are converted at a higher price than if they would have been directly issued. This has the impact of reducing the dilution effect. The interest or dividend rate is likely to be less than that of straight debt or preferred stock. The greater the growth prospects of the firm’s common stock, the lower the stated rate the firm will need to pay