A High Price-To-Book Ratio May Indicate Which One of the Following

question 40

Multiple Choice

A high price-to-book ratio may indicate which one of the following?

• A)The firm expanded its plant and equipment in the past few years.
• B)The firm is doing a better job controlling its inventory expense than other related firms.
• C)Investors may believe that this firm has opportunities of earnings a rate of return in excess of the market capitalisation rate.
• D)The firm's P/E ratio is too high.

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Definitions:

Psychosocial Theory

A framework that explores the interaction between psychological developments and social environments across an individual's lifespan.

Emergent Norm Theory

A theory in sociology suggesting that norms and behaviors in crowds and social groups emerge spontaneously and are negotiated among members, rather than being inherent or fixed.

Convergence Theory

A concept in sociology that suggests differences among societies will decrease over time due to globalization, leading to similar social, political, and technological practices.

Contagion Theory

A sociological theory that suggests ideas and emotions can spread through populations like infectious diseases.