Which Statement Is True in Relation to the Book-To-Market Ratio

question 34

Multiple Choice

Which statement is true in relation to the book-to-market ratio:

• A) value shares have a low book to market ratio
• B) a book-to-market ratio of (1) would mean that the book value in the balance sheet equals the current market value
• C) the calculation is the number of shares multiplied by the market value of equity divided by 100
• D) if the book value in the balance sheet equals the current market value then this would be known as a company of growth shares.

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Definitions:

Equity Method Investments

Investments in which the investor has significant influence over, but not full control or ownership of, another company, requiring recognition of its share of the investee's profits or losses.

Marketable Stock Securities

Financial instruments that represent ownership in companies or rights to ownership, easily bought and sold in public markets.

Short-Term Investment

A short-term investment is an asset that is expected to be converted into cash or sold within a short period, typically one year, to generate income.

Unrealized Gains and Losses

Profits or losses that arise from changes in the value of investments or assets that have not yet been sold or realized.