Supreme Roasters Inc. only pays dividends to its shareholders. The current share price is $200, the company has 15 million shares outstanding, $300 million in outstanding debt, and $150 million in excess cash. Assume that the company will use all of its excess cash to pay its shareholders a dividend. For simplicity, also assume that the ex-date is tomorrow and that the dividend will be paid on the ex-date. Assume that market are perfect (i.e. there are no taxes, no transaction costs, and no information problems).

What will happen to the share price on the ex-date? Select the best one.

I. The share price will decline to $195. II. The share price will increase to $205. III. The share price will decline to $190. IV. The share price will increase to $210. V. Nothing, the share price will remain at $200.