The correct answer is: C. low market to book ratio.
The market-to-book ratio (MB) is a valuation ratio that compares a company’s market capitalization to its book value. It is calculated by dividing the market price per share of a company’s stock by its book value per share. A high MB ratio indicates that investors are willing to pay a premium for a company’s stock, while a low MB ratio indicates that investors are not willing to pay a premium for a company’s stock.
A low MB ratio can be caused by a number of factors, including:
- A company’s stock is undervalued by the market.
- A company has a lot of debt.
- A company is not profitable.
- A company is in a cyclical industry.
A low MB ratio can be a good opportunity for investors, as it can indicate that a company’s stock is undervalued. However, it is important to remember that there are a number of factors that can affect a company’s MB ratio, and it is important to do your own research before investing in any company.
Here is a brief explanation of each option:
- A. high market to book ratio. A high MB ratio indicates that investors are willing to pay a premium for a company’s stock. This can be because the company is seen as being a good investment, or because the market is expecting the company to do well in the future.
- B. low book to market ratio. A low book to market ratio indicates that investors are not willing to pay a premium for a company’s stock. This can be because the company is seen as being a risky investment, or because the market is expecting the company to do poorly in the future.
- C. low market to book ratio. This is the correct answer. A low MB ratio can be caused by a number of factors, including the company being undervalued, having a lot of debt, not being profitable, or being in a cyclical industry.
- D. high book to market ratio. A high book to market ratio indicates that a company’s book value is high relative to its market value. This can be because the company has a lot of assets, or because its assets are undervalued by the market.