20-90 Which ratio shows degree of discrepancy between the market value of an FI's equity capital as perceived by investors in the stock market and the book value of capital on its balance sheet?

Question

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The market to book ratio compares the market value of an FI's equity capital to its book value of capital on the balance sheet. This ratio shows how much investors are willing to pay for each dollar of book value of capital. A value greater than 1 indicates that investors perceive the company’s assets to be worth more than their stated book value, and a value less than 1 indicates that investors perceive the company’s assets to be worth less than their stated book value. Therefore, this ratio shows the degree of discrepancy between the market value of an FI's equity capital as perceived by investors and its book value of capital.

20-90 Which Ratio Shows Degree of Discrepancy Between the Market