All of the Following Are Accounting Factors That Will Cause

question 49

Multiple Choice

All of the following are accounting factors that will cause a firm's value-to-book ratio to decrease over time except:

• A) recognizing unrealized gains on assets
• B) a loss of competitive advantage through changes in technology or other factors
• C) earning a high ROCE (above the equity cost of capital) on off-balance-sheet R&D assets
• D) earning a high ROCE (above the equity cost of capital) on off-balance-sheet intangible assets (such as brand equity) over time

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Definitions:

Perfect Competition

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit from the market.

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, allowing for product differentiation.

Perfect Competitors

Firms in a market structure characterized by many sellers offering identical products, where no single seller can influence market prices.

Monopolistic Competitors

Firms operating in a market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power.