The Book Value to Market Value Ratio Is Not as Important

question 45

True/False

The book value to market value ratio is not as important as the P/E and size effect,according to Professors Fama and French.

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Definitions:

Disposable Income

Money freed up for households to allocate towards savings and spending after income tax removal.

Induced Consumption

The portion of consumer spending that rises when disposable income rises and falls when disposable income decreases.

Autonomous Consumption

The minimum level of spending that must occur, even if a household has no income.

Disposable Income

The sum households have for expenditures and savings after taxes on income are deducted.