Assume perfect capital markets. Kay Industries currently has $100 million invested in short-term Treasury securities paying 7%,

Question:

Assume perfect capital markets. Kay Industries currently has $100 million invested in short-term Treasury securities paying 7%, and it pays out the interest payments on these securities as a The board is considering selling the Treasury securities and paying out the proceeds as a one-time payment.
a. If the board went ahead with this plan, what would happen to the value of Kay stock upon the announcement of a change in policy?
b. What would happen to the value of Kay stock on the ex-dividend date of the onetime Given these price reactions, will this decision benefit investors?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...