Executive Cheese has issued debt with a market value of $100 million and has outstanding 15 million shares with a market price of $10 a share.

5. Executive Cheese has issued debt with a market value of $100 million and hasoutstanding 15 million shares with a market price of $10 a share. It now announcesthat it intends to issue a further $60 million of debt and to use the proceeds to buyback common stock. Debtholders, seeing the extra risk, mark the value of the existingdebt down to $70 million. How is the market price of the stock affected by the announcement?