When Tobin's q is equal to zero, the market is signaling a firm should buy more capital.

Name: When Tobin's q is equal to zero, the market is signaling a firm should buy more capital.
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Quizplus · Accepted Answer

This is false. When Tobin's q is equal to zero, it means that the market value of the firm's assets is equal to the replacement cost of those assets. It does not necessarily indicate that the firm should buy more capital.

When Tobin's Q Is Equal to Zero, the Market Is