79. Which of the following is the least accurate rationale to justify the use of price-to-
book value (P/B) ratio as a measure of relative valuation of companies or
common stocks?
A. P/B is a useful measure of value for firms that are not expected to continue as
a going concern.
B. Compared to P/E, the P/B ratio is not influenced by such accounting effects as
expensing a capital investment as opposed to capitalizing it.
C. P/B is particularly appropriate to value companies primarily composed of
liquid assets, for example, those in the financial services industry.
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