Q701
Stocks which has lower book for market ratio are considered as
A.
optimistic
B.
more risky
C.
less risky
AnswerD.
pessimistic
Answer: Option C
Solution
Answer: Option C
Solution:
Stocks which has lower book for market ratio are considered as less risky. A company whose stock is trading at a discount on its book value is not necessarily cheap. In particular, you should expect companies that have low returns on equity, high risk and low growth potential to trade at low price to book ratios.