NISM Certifications · NISM-Series-XV: Research Analyst · Terminology in Equity and Debt Markets
A stock has a book value of Rs 250 per share and trades at Rs 400. Its price-to-book ratio is:
The price-to-book ratio is 1.6. It is calculated by dividing the market price of Rs 400 by the book value per share of Rs 250. A ratio above 1 means the market values the share above its accounting net worth per share.
- A0.63
- B1.50
- C1.60Correct
- D2.50
Explanation
P/B = market price / book value per share = 400 / 250 = 1.6. The value 0.63 results from inverting the ratio (250/400).
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