Suppose that capital markets are perfect, meaning that they are complete, efficient and there are no frictions such as taxes. AH Belo Corp currently is 100% equity financed, with a market capitalization of $1 billion but has decided to add some debt to its capital structure. It will do so by raising $100 million in debt and using the proceeds to repurchase shares. Which of the following accurately describes the effect of this policy change on the company's stock price?

Group of answer choices

It will decline when the financing plan is announced, but will not change any further when it is implemented.

It will increase when the financing plan is announced, but will not change any further when it is implemented.

It will not change.

It will decline both when the policy is announced and when it is implemented.

It will increase both when the policy is announced and when it is implemented.