Economics Stock Market Questions
The price-to-book (P/B) ratio is a financial metric used to evaluate a company's market value relative to its book value. It is calculated by dividing the market price per share by the book value per share. The P/B ratio provides insights into how the market values a company's assets and can be used to assess whether a stock is overvalued or undervalued. A higher P/B ratio suggests that investors have higher expectations for the company's future growth and profitability, while a lower P/B ratio may indicate that the stock is undervalued.