Brimfield Corp

Multiple Choice

Brimfield Corp. has total cash available of $1 million, but decides to match last year's dividend payout of $1.5 million. If the company raises the extra $500,000 by selling stock, the decision to pay out more than its available cash in dividends should

A) cause the stock price to increase.
B) have no effect on the value of the stock.
C) cause the stock price to decrease.
D) a company cannot use money raised by selling to stock to pay a dividend to existing stockholders.