The Book Value Is Generally Less Than the Market Value

question 18

Multiple Choice

The book value is generally less than the market value of a firm because:

• A) Capital markets are not strong-form efficient
• B) Certain intangibles may not meet the asset recognition criteria
• C) Assets may be overvalued by unethical managers
• D) The market values of assets are difficult to measure

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Definitions:

Budget Line

A graphical representation showing the combination of goods a consumer can purchase with a given income.

Money Income

The total amount of monetary earnings received by an individual or household in a specific period, including wages, salaries, and other forms of income.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, helping to illustrate preferences and the concept of utility.

Budget Line

A visual depiction of every combination of two items that can be bought within a specified budget at constant prices.