The correct answer is: A. low market to book ratio
A low market-to-book ratio indicates that a company’s stock is undervalued by the market. This can be due to a number of factors, such as the company being in a cyclical industry, the company being a turnaround story, or the company being a small-cap stock. When a stock is undervalued, it has the potential to generate higher returns than stocks that are more expensive.
A high market-to-book ratio, on the other hand, indicates that a company’s stock is overvalued by the market. This can be due to a number of factors, such as the company being in a growth industry, the company being a leader in its industry, or the company being a large-cap stock. When a stock is overvalued, it has the potential to generate lower returns than stocks that are less expensive.
Book value is a measure of a company’s assets minus its liabilities. It is a measure of the company’s net worth. Market value is the price of a company’s stock on the stock market. The market-to-book ratio is a measure of how expensive a company’s stock is relative to its book value. A low market-to-book ratio indicates that a company’s stock is undervalued by the market. A high market-to-book ratio indicates that a company’s stock is overvalued by the market.