To add a drop cap in Quark use the format box under the style menu (Apple key and F). Tick the drop cap box so the options become available. The character count option specifies how many characters you wish to drop. In this example I have chosen to set the first two characters as drop caps, so I would put a 2 in the this box. The second option specifies how many lines of text the drop cap will take up. You can set this from 2 lines to 16 lines. In my example I have set this to 3 so the drop cap will take up 3 lines of normal text. Once you have set the options click apply to make the changes.
