High Tech Corp. cut its research and development budget in 2008 by $4,000,000 in order to improve its cash flow for the year. Which of the following statements is most correct?
a. The change will have no impact on stock price because the company’s profits will not change in 2008.
b. The stock price will increase only if reported profits in 2009 are also higher than profits reported in 2007.
c. The stock price will likely increase because the value of stock is based on reported cash flow.
d. The stock price may decrease because investors may predict that future cash flows will decrease due to the lack of innovation and new products.