NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A stock trades at a price of Rs 450 and its book value per share is Rs 150. What is its price-to-book value ratio?
The price-to-book ratio is 3 times. It is calculated by dividing the market price of Rs 450 by the book value per share of Rs 150, meaning the market values the equity at three times its accounting net worth.
- A0.33 times
- B3 timesCorrect
- C4.5 times
- D300 times
Explanation
P/B = Market price / Book value per share = 450 / 150 = 3 times. The 0.33 option inverts the ratio. Checking: 3 x 150 = 450.
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