According to Tobin’s q theory of investment,
a) when the stock market undervalues a company, the company should invest in capital expansion
b) when a firm’s bond prices rise, the firm should sell off existing assets
c) borrowing funds by issuing bonds is always a less expensive way than issuing stock to raise funds for investment
d) a firm should buy capital when its stock market valuation exceeds the replacement cost of capital
e) firms should invest at a constant rate each month, a practice known as dollar-cost averaging
d) a firm should buy capital when its stock market valuation exceeds the replacement cost of capital
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Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue?
A) Sales revenue increased. B) Sales revenue decreased. C) Sales revenue remained unchanged. D) It cannot be determined without information on prices.
Firm governance must enhance
A) wages. B) control by stockholders. C) efficiency. D) government regulation.