Use Standard & Poor's Market Insight Web site (www.mhhe.com/ edumarketinsight) for this problem.

a. What was the ratio of the market value of equity to the book value of equity for Amazon.com, Inc. at year-end 2006? (From the "Excel Analytics" tools on the left of the screen, consult "Valuation Data, Profitability.")

b. What was the ratio of the market value of equity to the book value of equity for Amazon.com in 2005 and 2004? What is causing this ratio to change so drastically over the period from 2004 to 2006? What does this tell you about the inferences that can be made from market-to-book ratios?

AppendixLO1