--%>
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 : Explain the Monte Carlo evaluation of

    Explain the Monte Carlo evaluation of integrals.

    		•
  • Q : Who explained market-neutral delta

    Who explained market-neutral delta hedging?

    		•
  • 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 : APR of Loan When you take out an $8,000

    When you take out an $8,000 car loan that calls for 48 monthly payments of $225 each, then what is the APR of loan?

    		•
  • Q : Benefits of working capital requirement

    Benefits of working capital requirement estimation: • Helps to judge the efficiency of utilization of working capital in generation of sales • Cost of capital aspect

    		•
  • Q : Calculating Beta when market

    A company with a market capitalization of $100 million has no debt and a beta of 0.8. What will its beta be after it borrows $50 million (giving that there are no other changes and no taxes)?

    		•
  • Q : What is Money Spreads Money Spreads :

    Money Spreads: Option trading strategies can be classified into various types like those pertaining to combination of one option with another option or set of options, other derivative contracts, stocks, etc. This paper focuses mainly on money spreads

    		•
  • Q : Relation between book value of shares

    Is the relation in between book value of shares or capitalization a good guide to investments?

    		•
  • Q : Efficient Market Hypotheses Write

    Write Efficient Market Hypotheses in brief?

    		•
  • Q : Problem on stock market John Wong is a

    John Wong is a fresh graduate and has a limited amount of funds for investments. He expects that the Hong Kong stock market will fall soon but he is not familiar with derivatives. In order to gain more money to buy a car, he explores engaging in Hang Seng Index (HSI)

    		•