Financial economist prefer to use market values when measuring debt ratios because:
A) market values are more stable than book values.
B) Market values are a better reflection of current value than historical value.
C) Market values are readily available and do not have to be calculated like book values.
D) Market values are more difficult to calculate which makes financial economists more valuable.

Question

Quizplus · Accepted Answer

Market values are more reflective of current value than historical value, as they take into account current market conditions and investor perception. Book values, on the other hand, are based on historical costs and do not always reflect current market values.

Financial Economist Prefer to Use Market Values When Measuring Debt