Question

Why market value is more important than book value? Select one: a. Manager is responsible to...

Why market value is more important than book value?
Select one:
a. Manager is responsible to increase the market value
b. Book value is more important than market value
c. All are true
d. Market value provide the real value of firm’s asset
e. Market value determines firm’s ability to pay their debt

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer-

The correct option is d. Market value provide the real value of firm’s asset.

Market value is the value of the assets that we will receive if we plan to sell it today and it provides the real value of firm's assets.

Book value is the net assets value of the company and is calculated as the sum of total assets minus the amount of intangible assets.

The Other options a,b,c and e are incorrect.

Option a, managers good investments may increase the market value but managers are note responsible.
Option b is not a justified statement as both book value and market value has their own significance.
Option e is incorrect as market value gives market capitalization not the ability to pay off debt.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following about market value and book value is/are CORRECT? Select one or more:...
Which of the following about market value and book value is/are CORRECT? Select one or more: a. Except in cases of extreme credit risk shocks or interest rate risk shocks, the book value of equity is equal to the economic or market value of equity. b. More frequent regulatory examinations and stricter regulator standards will cause greater discrepancies in book value of equity and the market value of equity. c. Book value accounting systems recognise the impact of interest rate...
5.1.c - book value vs market value: For purposes of valuation, ... ... book values are...
5.1.c - book value vs market value: For purposes of valuation, ... ... book values are more important than market values because market values represent the opinions of investors who are not necessarily 'rational' as assumed in most models of capital markets and asset pricing. ... market values are more important than book values because market values represent financial claims holders' assessment of the value of free cash flows from the firm to which they have rights of ownership. ......
The most important function of a financial market is: Select one: a. To provide information about...
The most important function of a financial market is: Select one: a. To provide information about shares. b. To provide a market for shares. c. To facilitate the flow of funds between lenders and borrowers. d. To secure profits for brokers and agents. e. To provide information about an issuing company's financial situation.
5.A short sale involves: Select one: a. hedging against an increase in an asset price b....
5.A short sale involves: Select one: a. hedging against an increase in an asset price b. speculating that an asset price will increase c. hedging against a drop in an asset price d. speculating that an asset price will decrease e. selling an asset that the investor owns 13.Securities traded in the external market are distinguished by: Select one: a. Being accessible only to foreign investors. b. Being offered simultaneously to investors in a number of countries. c. Being issued...
1. Why don’t banks hold more capital than they do? 2. What are some of the...
1. Why don’t banks hold more capital than they do? 2. What are some of the problems with using the book value of capital? 3. What determines the market-to-book ratio (difference between market and book values) of capital?
The company has the following market values of debt and equity: Market value of debt: $50...
The company has the following market values of debt and equity: Market value of debt: $50 Market value of equity: $50 Therefore, the total market value of the assets is $100. The firm has 10 shares outstanding; therefore, the current price per share is $5. The managers are considering an investment project with an initial cost of 30. They believe that the project should be worth $40. The company announces that it will issue new common stocks to obtain $30....
#1) What are telomeres, and why are they important in health? Select one: a. Telomeres are...
#1) What are telomeres, and why are they important in health? Select one: a. Telomeres are the ends of chromosomes and their shortening can limit the body's renewal and repair capacity. b. Telomeres are the areas in the chromosome that are linked to chromatid separation, and if they get damaged, mitosis would not properly proceed, thus affecting the renewal and repair capacity of tissues c. Telomeres are the ends of linear chromosomes and they contain important health related genes d....
If the NPV of an independent project is higher than zero, this means that: Select one:...
If the NPV of an independent project is higher than zero, this means that: Select one: a. The project should be accepted. b. Not accepting the project decreases the value of the firm. c. The cash flows of the project provide a lower return than the required. d. The project is not acceptable on a risk adjusted basis. e. The firm’s stock price and consequently the wealth of its shareholders will decrease.
Which of the following represent differences between cyanobacteria and plant cells? (may select more than one)...
Which of the following represent differences between cyanobacteria and plant cells? (may select more than one) a. Presence of ribosomes b. Presence of mitochondria c. The composition of the cell membrane d. Ability to photosynthesize e. Shape of DNA f. Presence of DNA g. Composition of the cell wall
Why do bonds with lower seniority have higher yields than equivalent bonds with higher​ seniority? (Select...
Why do bonds with lower seniority have higher yields than equivalent bonds with higher​ seniority? (Select all that Apply) A. Debentures and notes are unsecured. Because more than one debenture might be​ outstanding, the​ bondholders' priority in claiming assets in the event of​ default, known as the​ bond's seniority is important. B. Most debenture issues contain clauses restricting the company from issuing new debt with equal or higher priority than existing debt. C. Because holders of higher seniority debt are...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT