What Is the Book Value Per Share for a Firm

question 107

Multiple Choice

What is the book value per share for a firm with 2 million shares outstanding at a price of $50, a market-to-book ratio of .75, and a dividend payout ratio of 50 percent?

• A)$33.33
• B)$37.50
• C)$62.50
• D)$66.67 market-to-book ratio = stock price/book value per share
• )75 = $50/book value per share

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Definitions:

Changes

Variations, adjustments, or transformations in conditions, situations, or states over time.

Perfectly Elastic

Describes a situation in economics where the quantity demanded or supplied responds infinitely to changes in price.

Down-sloping

A characteristic of certain economic graphs, like demand curves, which indicates that as the price of an item goes down, demand for it increases.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various price levels, holding all other factors constant.