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:

Retirement Portfolio

A collection of financial assets specifically designed and managed to support an individual's financial needs in retirement.

Sheltered Investment Income

Investment income that is protected from taxes by being placed in certain types of accounts or investments, like an IRA or a municipal bond.

Nominal Value

The face value of a financial instrument, such as a bond or stock, as stated by the issuer, without accounting for inflation or market value changes.

Unsheltered Investment Income

Income from investments that is not protected from taxes, meaning it is fully exposed to taxation.