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when q is firms will not purchase new investment goods because the market value of firms is relative to the cost of capital

when q is ________, firms will not purchase new investment goods because the market value of firms is ________ relative to the cost of capital.

A) low; low

B) low; high

C) high; low

D) high; high

 

16) According to Tobin's q theory, if q is ________, new plant and equipment capital is ________ relative to the market value of business firms, so companies can buy a lot of new investment goods with only a ________ issue of stock.

A) high; dear; large

B) high; cheap; large

C) high; cheap; small

D) low; cheap; large

E) low; cheap; small

 

17) 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) dear ; low

C) cheap; high

D) dear; high

 

18) 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) dear ; low

C) cheap; high

D) dear; high

Mar 14 2020 View more View Less

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