A bank has book value of assets equal to $800 million and market value of assets equal to $1,100 million. The bank has book value of liabilities of $700 million and market value of liabilities equal to $850 million. The bank's market-to-book ratio is

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Quizplus · Accepted Answer

The market-to-book ratio is calculated as market value of assets divided by book value of assets or market value of liabilities divided by book value of liabilities. In this case, the market value of assets is $1,100 million and book value of assets is $800 million, so the market-to-book ratio is 1,100/800 = 2.5.

A Bank Has Book Value of Assets Equal to $800