Which One of the Following Is True Concerning the Market-To-Book

question 413

Multiple Choice

Which one of the following is true concerning the market-to-book ratio?

• A) Extending the depreciation life of a firm's assets will increase the market-to-book ratio.
• B) A decrease in the price of the stock on the stock exchange will increase the market-to- book ratio.
• C) An increase in the market value of the common stock will increase the market-to-book ratio.
• D) The market-to-book ratio is of most interest to the creditors of a firm.
• E) The market-to-book ratio provides the selling price of a firm's inventory.

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Definitions:

Compound

A substance made up of two or more different elements chemically bonded together in a fixed ratio.

Mutually Exclusive

Two events that cannot happen at the same time in a given experiment or situation.

P(A|B)

The conditional probability of event A occurring given that event B has occurred.

P(A And B)

The probability that both event A and event B occur at the same time.