Why Did the Book to Market Ratio Become Obsolete During

question 34

Multiple Choice

Why did the book to market ratio become obsolete during the 1980-1990 period?

• A)Change in accounting rules
• B)The high performance of the stock market
• C)Inflation distorted the equity book value
• D)Managers use more sophisticated methods of valuation

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Definitions:

Social Cognitive Theory

A cognitively oriented learning theory that emphasizes observational learning.

Dependent Variables

In an experimental setting, these are outcomes or variables that are expected to change due to the manipulation of independent variables.

Extinction

The cessation of a response that is performed in the absence of reinforcement.

Operant Behavior

A behavior that is influenced by the consequences that follow it, often associated with the principles of reinforcement and punishment in behavioral psychology.