1. You are looking at buying Spotify stock, which is currently priced at $135. Today Spotify announced that they would be issuing additional debt such that their debt-to-value ratio will increase significantly, yet their cash flows will remain unchanged. In a perfect Modigliani-Miller world, what would you expect to immediately happen to the stock price?
   1. Stock price should decrease because the required return on equity is decreasing
   2. Stock price should increase because the required return on equity is increasing
   3. Stock price would not change because the required return on equity should be indifferent to the capital structure of the firm
   4. Stock price should decrease because the required return on equity is increasing