The Above Diagram Shows a Balance Sheet for a Certain

question 7

Multiple Choice

The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. If the company has 5 million shares outstanding, and these shares are trading at a price of $6.39 per share, what does this tell you about how investors view this firm's book value?

• A) Investors consider that the firm's market value is worth very much less than its book value.
• B) Investors consider that the firm's market value is worth less than its book value.
• C) Investors consider that the firm's market value and its book value are roughly equivalent.
• D) Investors consider that the firm's market value is worth more than its book value.

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