It was suggested that if a firm announces its intention to increase its dividends (paid from cash),
the price of common stock increases, presumably because the higher dividend payout
represents an unambiguous signal to shareholders that anticipated cash flows from investment
are permanently higher. A higher level of cash flows is also beneficial to bondholders because
it diminishes the profitability of default. If dividends are paid from cash, what does the OPM
suggest will happen to the market of debt?

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