2) BONDS AND EQUITIES: The Board of Directors of Luxottica, an Italian eyewear company that also owns brands such as Sunglasshut and Ray Ban, has decided to make a secondary offering of preference shares rather than ordinary shares or bonds. Discuss what considerations may have led to this decision. 3): BONDS AND EQUITIES: In these difficult times, bond and equity markets have been particularly volatile, with higher quality sovereign bonds faring far better than either equities or corporate bonds. Discuss these trends. Refer where possible to the DCF model when discussing how these asset classes are behaving. Feel free to look up market data-points online if they can help your discussion Valuing Equities - Coritinued DCF APPROACH - Continued Estimates the value of a security as the present value of all future cash flows that the investor expects to receive from the security VALUE = CF,/(1+r) +CF /(1+r)2+CF,/(1+r) +CF /(1+r)" CF = Earnings of the company in yearn The value of the share is equal to future earnings that the issuing company is expected to generate, discounted appropriately to present value (when the valuation is performed)