--%>
Assignment Help - homework help

Is book value the excellent proxy to the value of shares

Is book value the excellent proxy to the value of the shares?

E

Expert

Verified

No. This would be a miracle when the number which appears in the Shareholders’ Equity had anything to do along with the value of the shares. While we have a look at the relation among the market value and the book value of all the Spanish companies into the continuous market, we enter at several conclusions:

a) In February 2005 and December 2006 where there was no company that market value equalled its book value;

b) The average in February 2005 was 4.1 and in December 2006 it was 4.6 and

c) There was just one company in December 2006 which market value was lower than its book value. If we repeat similar exercise for the companies involved in the S and P 500, we can see that, in February 2005 and in December 2006, there was no company whose market value equaled its book value; the average was 3.8 in 2005 as well as 4.5 in 2006.

   Related Questions in Corporate Finance

  • Q : What is Financial Analysis Financial

    Financial Analysis: It is the investigation and interpretation of financial statements and associated financial reports. Trained and certified accountants generally complete this kind of analysis. The role of a financial analyst is to

    		•
  • Q : Explain breakthroughs on

    Explain breakthroughs on low-discrepancy sequences.

    		•
  • Q : Explain value of shares is Is this

    Is this correct that the value of the shares is, the “value of the results’ capitalization” that, as per to the Institute of Accounting and Auditing (ICAC) shows “the sum of the expected future results of the company throughout a certain period

    		•
  • Q : Bank assignment You have just been

    You have just been hired as the branch manager for a big bank in XYZ. You were told that the bank is going to open a new branch at Island Learning Centre of the Open University of XYZ. The management of the bank is much concerned that the new branch might not be able

    		•
  • Q : Finc . A&B Enterprises is trying to

    . A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow: Year A B C D 1 $10,000 $50,000 $25,000 $ 0 2 20,000 40,000 25,000 0 3 30,000 30,000 25,000 45,0

    		•
  • Q : What is the Free Cash Flow Is the Free

    Is the Free Cash Flow (FCF) the sum of the debt cash flow and the equity cash flow?

    		•
  • Q : Strategy of Bull Spread State when

    State when market is expected to go up then what is the Strategy of Bull Spread?

    		•
  • Q : How much confidence can an investor

    I heard conversation of the Earnings Yield Gap ratio, that is the difference among the inverse of the PER and the TIR on 10-year-bonds. This is said that if this ratio is positive then this is more advantageous to invest in equity. How much confidence can an investor

    		•
  • Q : Is cash flow is a flow of cash to

    The often known as "cash flow" that is net income plus depreciation, is a flow of cash, but is this a flow to the company or to the shareholders?

    		•
  • Q : Types of Corporate Bonds What are the

    What are the various types of Corporate Bonds?

    		•