Which one of the following is more likely to be responsible for a firm having a low PVGO?
A) ROE exceeds required return.
B) Plowback is very high.
C) Market value of equity is close to book value.
D) Book value of equity is low.

Question

Quizplus · Accepted Answer

A low PVGO (Present Value of Growth Opportunities) suggests that the market does not expect significant growth from the firm. When the market value of equity is close to the book value, it indicates that investors do not anticipate substantial future growth, hence a low PVGO.

Which One of the Following Is More Likely to Be