Q. Which of the following statements is least accurate in describing a company’s market value?
- Management’s decisions do not influence the company’s market value.
- Increases in book value may not be reflected in the company’s market value.
- Market value reflects the collective and differing expectations of investors.
Solution
A is correct. A company’s market value is affected by management’s decisions. Management’s decisions can directly affect the company’s book value, which can then affect its market value.
