Stock issued by company have lower rate of return because of

high market to book ratio
low book to market ratio
low market to book ratio
high book to market ratio

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.
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