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

Question

Quizplus · Accepted Answer

According to Tobin's q theory, if q is high, it means that the market value of firms is high relative to the replacement cost of their capital. Therefore, companies can buy a lot of new investment goods with only a small issue of stock, because each share of stock is worth more.

According to Tobin's Q Theory,if Q Is ________,New Plant and Equipment