Stocks which has high book for market ratio are considered as_____________?
Correct answer: A. More risky
- A. More risky
- B. Less risky
- C. Pessimistic
- D. Optimistic
Explanation
A high book-to-market ratio usually identifies value or distressed stocks, whose weaker market valuation is associated with greater perceived risk. Therefore, these stocks are considered more risky.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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