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Natasha_Volkova [10]
3 years ago
11

A firm has a debt-to-equity ratio of .5 and a market-to-book ratio of 2. What is the ratio of the book value of debt to the mark

et value of equity
Business
1 answer:
ahrayia [7]3 years ago
5 0

Answer: 0.25

Explanation:

The The debt-to-equity ratio is calculated when the total liabilities of w company is divided a by the shareholder equity while the book-to-market ratio is used to know a company's value by comparing the book value of the company to its market value.

Since the firm has a debt-to-equity ratio of .5 and a market-to-book ratio of 2. The ratio of the book value of debt to the market value of equity will be:

= 0.5/2

= 0.25

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