The "Q Theory of Investment," or "Tobin's Q," States That

Multiple Choice

The "q theory of investment," or "Tobin's q," states that

A) a rise in the stock market would lead firms to increase their rate of capital investment.
B) a fall in the stock market would lead firms to increase their rate of capital investment.
C) a rise in the stock market would lead firms to decrease their rate of capital investment.
D) there is no relationship between the stock price changes and the capital investment.