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14-2 Market-to-Book and Value-to-Book Ratios LO 14-2 For market-to-book (MB) ratios: a. Apply a version of the residual income valuation model to compute the value-to-book

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14-2 Market-to-Book and Value-to-Book Ratios LO 14-2 For market-to-book (MB) ratios: a. Apply a version of the residual income valuation model to compute the value-to-book (VB) ratio. b. Make investment decisions by comparing the VB ratio to the MB ratio. c. Explain why VB and MB ratios differ across firms and the impact of the following factors on VB and MB ratios: (1) risk and the cost of equity capital, (2) growth, (3) differences between current and expected future earnings, and (4) alternative accounting methods

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