According to Tobin's Q Theory of Investment

Multiple Choice

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