According to Tobin's Q Theory,when Q Is ________,Firms Will Not

question 44

Multiple Choice

According to Tobin's q theory,when q is ________,firms will not purchase new investment goods because the market value of firms is ________ relative to the cost of capital.

• A)low;low
• B)low;high
• C)high;low
• D)high;high

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Definitions:

External Review

An evaluation or assessment conducted by individuals or entities outside of an organization to ensure objectivity and impartiality, often focusing on processes, products, or financial health.

Framing Bias

A cognitive bias where people react differently to a particular choice depending on how it is presented, such as a loss or gain.

Risk-Averse

A tendency to avoid taking risks, preferring safer or more predictable outcomes over uncertainty.

Risk-Seeking

characterizes the tendency of an individual or entity to take decisions that have a significant level of uncertainty or potential for negative outcomes in the hope of achieving higher gains.