A High Price-To-Book Value Ratio Would Tend to Indicate That

question 165

True/False

A high price-to-book value ratio would tend to indicate that investors are more optimistic about the market value of firm's asset, and its managers' abilities.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, thus having a financial interest in the company's performance.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost of producing each additional unit decreases with the increase in total output.

Raise Capital

The process of acquiring funds for business purposes, which can be achieved through various means such as issuing stocks or obtaining loans.

Model Business Corporation Act

A set of model laws prepared by the Committee on Corporate Laws of the American Bar Association to provide a standard for state corporation statutes.