Which of the following is correct with regard to market capitalization?
A) There is considerable stability in the market capitalization of companies from year to year.
B) Market capitalization is computed by dividing owners' equity by the number of outstanding shares.
C) In Canada, most of the companies with the highest market capitalization are financial institutions or resource companies.
D) There is general agreement that market capitalization really doesn't tell us very much about the real value of a company.
E) All of these are correct.

Question

Quizplus · Accepted Answer

This statement is correct according to the textbook. In Canada, financial institutions and resource companies tend to have the highest market capitalizations. The other statements are incorrect. A) Market capitalization can fluctuate greatly from year to year. B) Market capitalization is computed by multiplying the number of outstanding shares by the market price per share, not by dividing owners' equity. D) Market capitalization can provide valuable information about a company's size and value to investors.

Which of the Following Is Correct with Regard to Market