Which of the Following Is More Likely to Be Correct

question 108

Multiple Choice

Which of the following is more likely to be correct if market value of equity is less than book value of equity?

• A)investors anticipate excellent earning potential.
• B)investors anticipate low earning potential relative to the level of risk.
• C)assets have been fully depreciated.
• D)the company is bankrupt.

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Definitions:

Qualified Small Business Stock

A special designation for shares in certain small businesses that can offer investors tax advantages under specific conditions.

Long Term Capital Gain

Profit earned from the sale of an asset held for more than a year, subjected to preferential tax rates.

Tax Bracket

A range of income subject to a particular tax rate under a progressive tax system, where higher income levels are taxed at higher rates.

Inheritance

Assets received from someone who has died, possibly subject to taxes depending on the value and the beneficiary's relationship to the deceased.