Assume capital markets are perfect. Kay Industries currently has $100 million invested in short-term Treasury securities paying 7%, and it pays out the interest payments on these securities each year as a dividend. The board is considering selling the Treasury securities and paying out the proceeds as a one-time dividend payment.

a. If the board went ahead with this plan, what would happen to the value of Kay Industries upon the announcement of a change in policy? (Select the best choice below.)

A. The value of Kay would rise by $100 million.

B. The value of Kay would fall by $100 million.

C. The value of Kay would remain the same.

D. It's difficult to tell because the price reaction depends on investor preferences.