The common stock book value model ignores a firm's expected earnings potential and generally lacks any true relationship to the firm's value in the marketplace.

Question

Quizplus · Accepted Answer

The common stock book value model only considers the value of a company's assets and liabilities, without taking into account its earnings potential or market value. As a result, it may not accurately reflect the true value of a company in the marketplace.

The Common Stock Book Value Model Ignores a Firm's Expected