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. a. If the board went ahead with this plan, what would happen to the value of Kay stock upon the announcement of a change in policy?

Question 5 options:

	The value of Kay will rise by $35 million.
	The value of Kay will remain the same
	The value of Kay will fall by $100 million.