Question: Question 1 - Payout Policy / Dividend payments (20 points) Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share

Question 1 - Payout Policy / Dividend payments (20 points) Seashore

Question 1 - Payout Policy / Dividend payments (20 points) Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors by initiating a regular dividend of $1 per quarter or $4 per year. The stock price jumps to $90 when the payout is announced. Q1.3 Assume instead that the CFO announces a stock repurchase of $4 per share instead of a cash dividend. What happens to the stock price when the purchase is announced? Would you expect the price to increase to $90? Explain briefly. Q1.4 Suppose the stock is repurchased immediately after the announcement. Would the repurchase result in an additional stock-price increase

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