What is the market price of a share of stock for a firm with 100,000 shares outstanding,a book value of equity of $3,000,000,and a market/book ratio of 3.0?
A) $8.57
B) $30.00
C) $90.00
D) $105.00

Question

Quizplus · Accepted Answer

Market value of equity = Book value of equity * Market/book ratio
Market value of equity = $3,000,000 * 3 = $9,000,000
Price per share = Market value of equity / Number of shares outstanding
Price per share = $9,000,000 / 100,000 = $90.00

What Is the Market Price of a Share of Stock