Which statement is true in relation to the book-to-market ratio:

A) value shares have a low book to market ratio
B) a book-to-market ratio of (1) would mean that the book value in the balance sheet equals the current market value
C) the calculation is the number of shares multiplied by the market value of equity divided by 100
D) if the book value in the balance sheet equals the current market value then this would be known as a company of growth shares.

Question

Which statement is true in relation to the book-to-market ratio:

A) value shares have a low book to market ratio
B) a book-to-market ratio of (1) would mean that the book value in the balance sheet equals the current market value
C) the calculation is the number of shares multiplied by the market value of equity divided by 100
D) if the book value in the balance sheet equals the current market value then this would be known as a company of growth shares.

Quizplus · Accepted Answer

The book-to-market ratio is: BV/MV = (book value of equity)/(market value of equity).If the measure of book value in the balance sheet equals the current market value,then the book-to-market ratio is one.If the measure of book value in the balance sheet is less (greater)than the current market value,then the book-to-market ratio will be less (greater)than one.

Which Statement Is True in Relation to the Book-To-Market Ratio