When Tobin's q is __________,the market is signalling 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.

Question

Quizplus · Accepted Answer

When Tobin's q is greater than one, it means the market value of a firm is higher than the replacement cost of its assets, signalling that a company should invest more in capital to take advantage of the favorable market conditions.

When Tobin's Q Is __________,The Market Is Signalling a Firm