The Highlight Company Has a Book Value of $56

question 34

Multiple Choice

The Highlight Company has a book value of $56.50 per share, and is currently trading at a price of $59.00 per share. You are interested in investing in Highlight, and have just used a present-value based stock valuation model to calculate a present (intrinsic) value of $55.00 per share for Highlight's stock. Assuming that your calculations are correct you should

• A) buy the stock, because the current market price per share is higher than the present value.
• B) buy the stock, because the book value per share is greater than the present value.
• C) not buy the stock, because the present value is less than the market price per share.
• D) buy the stock, because the book value and the current trading price are very close to one another in value.

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Definitions:

Planning Budget

A budget created for a particular level of activity, it helps in setting goals and objectives for future financial plans.

Containers Refurbished

The process of cleaning, repairing, and restoring containers to a like-new condition for reuse or resale.

Employee Salaries And Wages

Compensation paid to employees for their labor or services, typically expressed as a periodic payment such as hourly, weekly, or monthly.

Containers Refurbished

Used or old containers that have been restored or repaired to a usable condition.