If Market Values of Equity Exceed Book Values of Equity

question 68

Multiple Choice

If market values of equity exceed book values of equity, then:

• A)equity has been depreciated too rapidly.
• B)the firm uses accrual-based accounting.
• C)profit potential is expected to be attractive relative to the level of risk.
• D)the firm is holding too much cash.

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Definitions:

Deleterious Allele

A genetic variant that tends to have a negative effect on the fitness or survival of an organism.

Fixed Genetic Locus

A specific location on a chromosome where the genetic variation has become identical across all members of a population due to evolutionary processes.

Allele

A variant of a gene that occurs due to mutation and is located at an identical location on a chromosome, representing one of two or more possible versions.

Genetic Drift

A mechanism of evolution that results in the change of the frequency of alleles in a population due to random sampling of organisms.