Which of the following statements regarding Tobin’s q is (are) correct? I. Ceteris paribus, if the...

Which of the following statements regarding Tobin’s q is (are) correct?
I. Ceteris paribus, if the interest rate decreases, Tobin’s q increases.
II. Ceteris paribus, if the replacement cost of capital increases, Tobin’s q decreases. Answer: _________
a) None of the above.
b) I only.
c) II only.
d) I and II.

Expert Solution

Ceteris paribus, if the interest rate decrease, Tobin's q increases and if the replacement cost of capital increases, Tobin's q decreases.

So the answer is d) I and II

jeff jeffy answered 2 years ago

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