AB Industries is an all-equity ﬁrm that has $10 per share in cash and a book value per share of $12. At which one of the following market prices would you know with absolute certainty that the stock
Was mispriced?
A) $9
B) $10
C) $11
D) $12
E) $13

Question

Quizplus · Accepted Answer

If the stock is priced at $9, it is mispriced because the cash alone is worth $10 per share, which means the stock should be valued at least at $10, not considering any other assets or business value.

AB Industries Is an All-Equity ﬁRm That Has $10 Per