The market/book (M/B)ratio tells us how much investors are willing to pay for a dollar of accounting book value.In general,investors regard companies with higher M/B ratios as being less risky and/or more likely to enjoy higher growth in the future.

Question

Quizplus · Accepted Answer

This statement is true. A higher M/B ratio indicates that investors are willing to pay more for each dollar of accounting book value, suggesting that they perceive the company as less risky and/or having higher growth potential in the future.

The Market/book (M/B)ratio Tells Us How Much Investors Are Willing