Based on the two articles assigned for Module 4: (JEFF TO COVER) 1. Capital Structure Instability by Harry DeAngelo and Richard Roll (Journal of Applied Coporate Finance, 2016).

2. Proactive leverage increase and the value of financial flexibility by David Denis and Stephen McKeon (Journal of Applied Corporate Finance, 2016). Please concisely answer the following:

Required 1)

1)Briefly explain WHY financial flexibility is critical for businesses, as mentioned in the above articles. (3 Marks)

2) Following from the above, briefly discuss whether firms that proactively issue equity (and hold excess cash) are MORE or LESS risky. Please make sure you clearly explain why.