Which of the Following Is True About the Book Value

question 47

Multiple Choice

Which of the following is true about the book value and market value of a firm's debt?

• A)The book value of a firm's debt generally is higher than the market value of the firm's debt.
• B)The book value of a firm's debt generally is either equal to or very close to the market value of the firm's debt.
• C)The book value of a firm's debt generally is either equal to or very close to the market value of firm's assets.
• D)The market value of a firm's debt generally is higher than the book value of firm's assets.
• E)The market value of a firm's debt must equal the market value of a firm's assets.

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Definitions:

Stand-Alone

Describes something that operates independently or can function without the need for external support.

Bottom-Up

An approach that starts at the most specific, detailed level and works up to a broader perspective, especially in planning and analysis.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and liquidity.

Pre-Tax Salvage

The estimated value of an asset before taxes that can be recovered at the end of its useful life through sale or disposal.