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ABC Co. is financed 100% by common stock and has outstanding 20 million shares with a market price of $30 a share. It announces that

ABC Co. is financed 100% by common stock and has outstanding 20 million shares with a market price of $30 a share. It announces that it intends to issue $150 million of debt and to use the proceeds to buy back common stock. What does this signal to the market about the value of the stock price? A.No Signal. B. Management believe the stock is undervalued (cheap). C. Management believes the stock is overvalues (expensive). D. Not enough information.

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