Q727
Stock issued by company have higher rate of return because of
A.
low market to book ratio
B.
high book to market ratio
AnswerC.
high market to book ratio
D.
low book to market ratio
Answer: Option B
Solution
Answer: Option B
Solution:
Stock issued by company have higher rate of return because of high book to market ratio. A high ratio is preferred by value managers who interpret it to mean that the company is a value stock, that is, it is trading cheaply in the market compared to its book value.