Other things being equal,Tobin's stock market valuation ratio q will rise if:

Question

Quizplus · Accepted Answer

Tobin's q ratio is calculated by dividing the market value of a company by its replacement cost of capital. It reflects the premium investors are willing to pay for owning a company compared to the cost of duplicating its assets. If stock prices rise, the market value of the company rises while the replacement cost of capital remains the same, leading to an increase in Tobin's q ratio. Therefore, the correct answer is D.

Other Things Being Equal,Tobin's Stock Market Valuation Ratio Q Will