Calculate Tobin's Q for a Firm

question 77

Multiple Choice

Calculate Tobin's q for a firm.You have the following information: MPK = 2%,R = 3%,the stock market value is $1,368,the capital stock is 15 units,and the price of stock is $100.What is Tobin's q? Given your answer,the market believes the firm should __________.

• A)1.5;invest in capital.
• B)0.7;invest in capital.
• C)1.1;disinvest in capital.
• D)0.9;disinvest in capital.
• E)0.8;hold capital constant.

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Definitions:

Following Distance

The space between two vehicles, often referenced in driving to ensure safety.

Classical Conditioning

An educational process that happens by linking an external stimulus with a naturally occurring one.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Social Learning Theory

A theory that proposes people learn new behaviors through observation and imitation of others, reinforced by external rewards or punishments.