According to Tobin's Q Theory, When Equity Prices Are High

question 39

Multiple Choice

According to Tobin's q theory, when equity prices are high the market price of existing capital is ________ relative to new capital, so expenditure on fixed investment is ________.

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

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Definitions:

Zone of Indifference

A concept in organizational behavior referring to the range of requests or directives that an individual is willing to accept or follow without resistance.

Tangible Symbols

Objects or things that can be perceived by touch and have a specific meaning or represent particular ideas or qualities.

Michael Korda

An author and editor, known for his works on historical biographies as well as his leadership and management insights.

Utilitarian Outcome

A result or consequence of an action that is judged solely based on its ability to provide the greatest good for the greatest number of people.