Professors Fama and French Maintain That the Ratio of Book

question 43

True/False

Professors Fama and French maintain that the ratio of book value to market value is more important than either the size effect or the P/E effect in explaining superior stock performance.

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Definitions:

Contributed Property

Property or assets given to a partnership or corporation by an owner or shareholder, often impacting the basis of the investment.

Shareholder

An individual or entity that owns shares in a corporation and therefore has ownership interest in the company.

Book Income

The income of a business reported in its financial statements, different from taxable income reported to the IRS.

Taxable Income

The amount of income used to determine how much tax an individual or a corporation owes to the government, after all deductions and exemptions have been accounted for.