Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors

Question:

Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors by initiating a regular of $1 per quarter or $4 per year. The stock price jumps to $90 when the payout is announced.
a. Why does the stock price increase?
b. What happens to the stock price when the stock goes ex 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...