Q Corp Has Decided to Pay Out an Extra $1

Q Corp has decided to pay out an extra $1 million to shareholder,while keeping investment policy and capital structure constant.Which statement is false?

A) Q Corp must issue $1 million of stock to replace the lost cash.
B) the new shareholders will demand to receive shares worth $1 million.
C) the old shareholders will have reduced their stake in the firm by $1 million.
D) the reduced stake that old shareholders have in the firm will more than offset the benefit of the higher dividend.

Correct Answer:

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