Companies often find that basic financing (debt and equity) do not provide adequate sources of financing and desire to access alternative sources of financing or additional pools of investors. In order to attack these investors they will often offer Hybrid financial instruments such as preferred stock, warrants, and convertible debt to potential investors. Please explain the basic characteristics of preferred stock, warrants, and convertible debt, how these can be viewed as providing both a comparable basic investment and an option, and how these additions or benefits impact the cost of capital for the issuing company.