The common stock book value model ignores the 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 the company's assets and liabilities, and ignores factors such as the company's future earnings potential and market conditions. Therefore, it may not be an accurate reflection of the company's true value in the marketplace.

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