Which One of the Following Statements About Book Value Per

question 262

Multiple Choice

Which one of the following statements about book value per share is most correct?

• A) Market price per common share usually approximates book value per common share.
• B) Book value per common share is based on past transactions whereas the market price of a share of stock mainly reflects what investors expect to happen in the future.
• C) A market price per common share that is greater than book value per common share is an indication of an overvalued stock.
• D) Book value per common share is the amount that would be paid to stockholders if the company were sold to another company.

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Definitions:

Reaction Formation

A defense mechanism where an individual unconsciously replaces unacceptable impulses with their opposites.

Forbidden Impulse

A desire or thought that is repressed or deemed unacceptable by societal standards or personal conscience, often explored in psychoanalytic theories.

Displacement

A redirection of an impulse from a channel that is blocked into another, more available outlet.

Psychosexual Stages

A theory proposed by Freud describing how personality develops through five stages (oral, anal, phallic, latency, genital) centered on erogenous zones.