The correct answer is: D. L portfolio.
A stock portfolio with the lowest book-to-market ratio is considered to be a value portfolio. Value stocks are stocks that are trading at a price that is below their intrinsic value. This means that they are undervalued by the market. Value investors believe that these stocks are good investments because they have the potential to increase in value over time.
A book-to-market ratio is a financial ratio that compares a company’s book value to its market value. The book value of a company is the value of its assets minus the value of its liabilities. The market value of a company is the price of its shares on the stock market.
A low book-to-market ratio indicates that a company is undervalued by the market. This is because the market value of the company is less than its book value. Value investors believe that these stocks are good investments because they have the potential to increase in value over time.
The other options are incorrect because they do not accurately describe a stock portfolio with the lowest book-to-market ratio.
- Option A: S portfolio. This is not a commonly used term in finance. It is possible that it is a typo for “value portfolio”, but there is no way to know for sure without more information.
- Option B: B to M portfolio. This is also not a commonly used term in finance. It is possible that it is a typo for “growth portfolio”, but there is no way to know for sure without more information.
- Option C: H portfolio. This is also not a commonly used term in finance. It is possible that it is a typo for “growth portfolio”, but there is no way to know for sure without more information.