Book value per share may not approximate market value per share because:
A)the book value is after tax.
B)book values are based on replacement costs rather than market values.
C)book value is related to book figures and market value is related to the future potential as seen by investors.
D)investors do not understand book value.
E)book value is not related to dividends.

Question

Quizplus · Accepted Answer

Book value is based on past accounting figures, while market value is influenced by the investors' perception of the company's future potential, growth, and earnings. Therefore, the book value per share may not necessarily match market value per share.

Book Value Per Share May Not Approximate Market Value Per