loan notes and shares

Who says that they are preferable?

Convertibles are generally more attractive than straight loan notes – they mean that the investor gets the benefit of growth in the company (higher share price) without the risk of the share price falling (because then they would take the cash).
Company’s like issuing them because provided the share price goes up then they will not have the cash flow problem of repaying.

Preference shares do have an attraction to the investor of paying an (almost) guaranteed dividend (but obviously the downside is that they do not benefit if the company does well).
They are attractive to the company issuing them because it is fixed dividend (as with borrowing, except that they do not have the worries of repayment if they are irredeemable preference shares).

I do not know what you mean by POT

The basic idea is that a company will prefer to raise money in the easiest way.

So….it is easier to raise from debt than equity.
Straight debt is easier than convertible debt (because convertibles have an element of equity involved).
Preference shares are easier than ordinary shares because they are more similar to debt than to equity.

(There is actually a lot more to the theory than simply that debit is preferable to equity, but for Paper F9 you would never be expected to say more than basically what is above).