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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Definitions:

Trichomes

Small hair-like outgrowths on plants that serve various functions including protection against herbivores and minimizing water loss.

Parenchyma

A type of plant tissue composed of living cells that are often spacious and used for functions such as photosynthesis, storage, and tissue repair.

Ground Tissue

A type of plant tissue that fills the interior of a plant, consisting of parenchyma, collenchyma, and sclerenchyma cells, and is responsible for photosynthesis, storage, and support.

Phloem

The vascular tissue in plants responsible for the transport of organic nutrients, particularly sugar, from the leaves to other parts of the plant.