drop caps

Guidelines for drop cap letters?

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What are opinions on how to set different letters in drop caps? I know it depends on the font, but setting aside unpredictable ornate initials, what are the accepted guidelines for, say, standard simple initials opening a book chapter or other long text document? I'm primarily interested in the guidelines for relatively formal straightforward documents (books, business reports, etc.); obviously people can do lots of whimsical things in informal or more ornate situations.

In particular, I'm wondering about two issues: