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

question 14

Multiple Choice

According to Tobin's q theory, when equity prices are low 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:

Risk Of Loss

Refers to the legal responsibility regarding who bears the cost of damage, destruction, or theft of goods during a transaction or after it, until delivery.

F.O.B. Seattle

A commercial term indicating that the seller of goods is responsible for them until they are loaded on board a shipping vessel in Seattle, at which point the buyer assumes risk and responsibility.

Shipment Contract

A type of agreement in sales law where the seller is responsible for delivering goods to a carrier, after which the risk of loss passes to the buyer.

Entrusted

Given over to another's care or protection, often relating to property or duties.