A Bank Has Book Value of Assets Equal to $800

question 38

Multiple Choice

A bank has book value of assets equal to $800 million and market value of assets equal to $1,100 million. The bank has book value of liabilities of $700 million and market value of liabilities equal to $850 million. The bank's market-to-book ratio is

• A)2.5.
• B)2.0.
• C)1.5.
• D)1.0.
• E)0.67.

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Definitions:

Current Ratio

The Current Ratio is a liquidity metric that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Notes Payable

Financial obligations represented by formal written agreements to pay a specific sum of money at a future date.

Pro Forma Statement

Financial statements prepared under hypothetical scenarios or assumptions to forecast future financial performance.

Fixed Assets

are long-term tangible assets used in the operation of a business, such as buildings, machinery, and equipment, not expected to be converted into cash within a year.