SIE practice questionmediumBook Value
Which statement is TRUE regarding book value per share?
- AIt is based on a company’s net tangible assets✓ Correct answer
- BIt equals the current market price
- CIt indicates guaranteed future returns
- DIt is typically higher than market value
Explanation
Why A — It is based on a company’s net tangible assets
Book value per share is calculated based on net tangible assets. It does not guarantee returns, usually differs from market value, and may be lower or higher.
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