A firm has a total book value of equity of $2 million, a market to book ratio of 2, and a book value per share of $5.00. What is the total market value of the firm's equity?
A) $10
B) $500,000
C) $2 million
D) $4 million
E) $20 million

Question

Quizplus · Accepted Answer

The total market value of the firm's equity is calculated by multiplying the total book value of equity ($2 million) by the market to book ratio (2), resulting in $4 million.

A Firm Has a Total Book Value of Equity of $2