A Firm Has a Market to Book Value Ratio That

question 28

Multiple Choice

A firm has a market to book value ratio that is equivalent to the industry average and an ROE that is less than the industry average, which implies

• A) the firm has a higher P/E ratio than other firms in the industry.
• B) the firm is more likely to avoid insolvency in the short run than other firms in the industry.
• C) the firm is more profitable than other firms in the industry.
• D) the firm is utilizing its assets more efficiently than other firms in the industry.

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