Company a and Company B Operate in the Same Industry

question 73

Multiple Choice

Company A and Company B operate in the same industry. Company B has a price to book value that is much higher than A's. Both companies have price to book value ratios greater than one. Which of the following could explain this difference, all else equal?

• A) A uses less conservative accounting methods
• B) A has lower expected future dividend payout ratio
• C) A has higher expected growth
• D) A has many more shares outstanding

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Definitions:

Seconds

Seconds are units of time, the base unit in the International System of Units (SI), used to measure duration and intervals of time.

Forgetting Curve

A graphical representation describing the rate at which information is lost over time if there is no attempt to retain it.

Hermann Ebbinghaus

A German psychologist known for his pioneering work in the study of memory, including the forgetting curve and the spacing effect.

Minutes

The written record of what was discussed and decided in a meeting.