请老师详细解答一下，谢谢

问题如下：

All else being equal, an increase in which of the following most likely increases a company's enterprise value?

选项：

A.Book value of debt B.Market value of investments C.Market value of preferred stock

解释：

Solution

1. Incorrect because enterprise value is most frequently determined as market capitalization plus market value of preferred stock plus market value of debt minus cash and investments (cash equivalents and short-term investments). Enterprise value increases with an increase in the market value, not book value, of debt.

2. Incorrect because enterprise value is most frequently determined as market capitalization plus market value of preferred stock plus market value of debt minus cash and investments (cash equivalents and short-term investments). Enterprise value increases with a decrease, not increase, in the market value of cash and investments.

3. Correct because enterprise value is most frequently determined as market capitalization plus market value of preferred stock plus market value of debt minus cash and investments (cash equivalents and short-term investments). Therefore, enterprise value increases with an increase in the market value of preferred stock.

Equity Valuation: Concepts and Basic Tools

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