Question
A company has a market-to-book ratio that is greater than 1.0. If this company uses book values to determine its WACC, it will derive a
A company has a market-to-book ratio that is greater than 1.0. If this company uses book values to determine its WACC, it will derive a value that is ________ the market based WACC because ________
Question 13 options:
| Greater than; the ratio of debt to equity will be greater than if the ratio was based on market values. |
| Equivalent to; the ratio of debt to equity is the same whether book values or market values are used. |
| Greater than; the ratio of debt to equity will be less than if the ratio was based on market values. |
| Less than; the ratio of debt to equity will be less than if the ratio was based on market values. |
| Less than; the ratio of debt to equity will be greater than if the ratio was based on market values. |
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