The link between corporate profits and investment
A) results from heavy reliance on internal financing
B) indicates that cash flow is probably the key variable driving investment
C) is the strongest empirical evidence of Tobin's q
D) explains the persistent drop in investment that occurred throughout the 1990s
E) helps to keep investment fairly stable and countercyclical

Question

Quizplus · Accepted Answer

Firms often rely on internal financing (retained earnings) for investment, creating a link between corporate profits and investment.

The Link Between Corporate Profits and Investment