Why firms have dramatically different market to book ratio

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The stock of Jenkins Corporation, a major steel producer, is currently selling for $50 per share. The book value per share is $125.

In contrast, the price per share of Dataquest's stock is $40, compared to a book value per share of $10. Dataquest, a leading software developer, has a copyright on the best-selling database management program. Why do these two firms have such dramatically different market-to-book ratios?

Reference no: EM131339967

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