Book to market ratio is higher

Assignment Help Financial Management

Reference no: EM132032619

Google is a big stock and LinkedIN is a small stock, but at the same time Google has a higher book-to-market ratio than LindedIN. According to the size effect, Google should have lower return than LinkedIN because its size is bigger; but according to the value effect, Google should have higher return than LinkedIN because its book to market ratio is higher. Is the above statement correct? Why?

Reference no: EM132032619

Questions Cloud

Value of share of gamma corporation common stock : What is the value of a share of Gamma Corporation common stock to an investor who requires a 24 percent return on her investment?

What is the effective interest rate on the loan for one year : During this time period the dollar falls 11 percent against the euro. What is the effective interest rate on the loan for one year?

Should everly replace the flange-lipper : What is the NPV of this project? Should Everly replace the flange-lipper?

Period of depressed earnings performance : Excel Corporation has recently witnessed a period of depressed earnings performance. what is the value of one share of this stock to you today?

Book to market ratio is higher : Google should have higher return than LinkedIN because its book to market ratio is higher. Is the above statement correct? Why?

Case study on managing an investment portfolio : As a recently hired CFA financial analyst for Horizon Investments you have been asked to make portfolio recommendation

Are taxes necessary for the cost of debt financing : Are taxes necessary for the cost of debt financing to be less than the cost of equity financing?

Outperform small-stock indexes-most other small cap funds : DFA's small-stock funds managed to outperform small-stock indexes and most other small cap funds.

What was the ytm on pennington bonds : What was the YTM on Pennington’s bonds when they were issued?

User Account

All Pages