Tobin’s q-theory of investment indicates that firms add to their stock of capital when
A. the replacement value of their real assets exceeds the market value of their financial assets.
B. the market value of their financial assets exceeds the replacement value of their real assets.
C. the market value of their real assets exceeds the book value of their financial assets.
D. the market value of their financial assets exceeds the book value of their real assets.
Answer:B
Tobin’s q-theory of investment indicates that firms add to their stock of capital when
A. the replacement value of their real assets exceeds the market value of their financial assets. B. the market value of their financial assets exceeds the replacement value of their real assets. C. the market value of their real assets exceeds the book value of their financial assets. D. the market value of their financial assets exceeds the book value of their real assets.