Exchange Rate Risk and Capitalization

“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  

700–800 words”