Tobin's q is:
A) the ratio of stock market value of a stock to the value of its capital.
B) the ratio of user cost to the corporate tax rate.
C) equal to a stock's capital gains plus any dividends paid.
D) the difference between the marginal product of capital and the real interest rate.
E) an index of the economic environment.

Question

Quizplus · Accepted Answer

Tobin's q is defined as the ratio of the market value of a firm's assets (or equity) to the replacement cost of the firm's assets. It essentially compares the market's valuation of a company to the cost of its capital. None of the other options accurately describe Tobin's q.

Tobin's Q Is