Interest rate risk.

Exchange Rate Risk and Capitalization IP

 700–800 words Use APA format and referecnes.

Companies seek the lowest average rate of financing costs to capitalize the business. Common sources of financing are as follows:

  • Common stock equity
  • Preferred stock equity
  • Bond debt

Explain how the following risks may affect these 3 sources of financing in international capital markets. In addition, explain how these risks may influence a company’s international weighted average cost of capital (WACC):

  • Default risk
  • Inflation
  • Interest rate risk
  • Stock and market volatility
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