a custom paper for you Learn More
The Analyses in Investment-Q Theory
Most of the empirical analyses in Investment-Q theory use the concept of average Q as a measure of investment opportunities. Explain the differences between average and marginal Q.
Under what conditions are the two concepts identical? Which one is the preferred measure assuming one can easily compute either measure? What are the challenges in constructing a measure of marginal Q? Can you briefly describe a strategy for computing such a measure? Explain how bubble episodes in the stock market can impact individual firms’ investment behavior.