Company a and Company B Operate in the Same Industry

question 30

Multiple Choice

Company A and Company B operate in the same industry. Company B has a price-to-book ratio that is much higher than A's. Both companies have price-to-book ratios greater than one. Which of the following could explain this difference, all else equal?

• A)A uses less conservative accounting methods.
• B)A has lower expected future dividend payout ratio.
• C)A has higher expected growth.
• D)A has many more shares outstanding.

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Definitions:

Sex Chromosomes

The chromosomes (X and Y) responsible for determining the biological sex of an organism.

Spermarche

The beginning of development of sperm in boys’ testicles at puberty, marking the onset of adolescent fertility.

Testes

The male reproductive glands that produce sperm and the hormone testosterone.

XY

A chromosomal designation for male sex in many organisms, including humans, where males typically have one X and one Y chromosome.