When Tobin's Q Is ________, the Market Is Signaling That

question 43

Multiple Choice

When Tobin's q is ________, the market is signaling that a firm should ________.

• A) greater than one; invest in more capital
• B) equal to zero; shut down
• C) infinity; sell its stock holdings
• D) less than one; raise dividend payments
• E) equal to one; try to take over a firm with a Tobin's q = 0

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Definitions:

Aggressively

In a manner that involves forceful action or determined pursuit, often without regard for others.

Modeling

A method of learning that involves observing and imitating the behavior of others.

Immediate Reinforcement

The delivery of a reward or punishment immediately after a behavior, which strengthens or weakens that behavior's likelihood of recurring.

Baseball Cap

A soft hat with a rounded crown and a stiff bill projecting in front, often worn for casual occasions or sports.