Q Corp has decided to pay out an extra $1 million to shareholder, while keeping investment policy and capital structure constant. Which statement is false?

Multiple Choice

• Q Corp must issue $1 million of stock to replace the lost cash.
• the old shareholders will have reduced their stake in the firm by $1 million.
• the reduced stake that old shareholders have in the firm will more than offset the benefit of the higher dividend.
• the new shareholders will demand to receive shares worth $1 million.