Asked by
Verified
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.
Book Value per Share
The equity available to common shareholders divided by the number of outstanding shares, indicating the value of a company’s equity on a per-share basis.
Market Price
The current price at which an asset or service can be bought or sold in the marketplace.
Common Share
Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company’s profits through dividends.
- Evaluate the consequences of specific financial choices on working capital, book value per share, and market ratios.
Verified Answer
Learning Objectives
- Evaluate the consequences of specific financial choices on working capital, book value per share, and market ratios.
Related questions
Earnings Per Share Is Computed by Multiplying Net Income by ...
Selling Used Equipment at Book Value for Cash Will ...
All Other Things the Same, If the Company Purchases Equipment ...
Purchasing Inventory on Credit Increases the Book Value Per Share ...
In Determining Whether a Company's Financial Condition Is Improving or ...