Calculate Tobin's Q for a Firm

question 96

Multiple Choice

Calculate Tobin's q for a firm. You have the following information: MPK = 2 percent, R = 3 percent, the stock market value is $1,368, the capital stock is 15 units, and the price of stock is $100. Based on this information, Tobin's q is ________. 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:

Illegal Activities

Actions that are forbidden by law and subject to criminal penalties, including theft, fraud, and smuggling.

Environmental Groups

Organizations dedicated to advocating for and implementing actions aimed at protecting the natural environment and promoting sustainable practices.

International Environmental Treaties

are agreements between nations aiming to address global environmental issues such as climate change, biodiversity loss, and pollution prevention.

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Being observed, recorded, or checked continuously for a specific purpose, such as to ensure safety, to measure progress, or to comply with regulations.