Assume the M&M assumptions without taxes hold (i.e., tax rate = 0). An all-equity firm issues $10 in bonds to buy back stock. If the firm's stock price before the buyback is equal to $2, what can you say about the rational buyback price P*?

P* must be greater than 2.

P* must be less than 2.

P* is equal to 2.

There is not enough information to make a prediction about