CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

When a company repurchases shares at a price higher than the current book value per share, it will make the stock appear ______on a P/B basis than it would appear if historical levels of P/B were used.

A. more expensive.
B. cheaper.
C. the practice has no impact on P/B.
Correct Answer: A

This is because the practice lowers the over book value per share for the company.

User Contributed Comments 1

User Comment
quanttrader when company repurchases shares, common shareholder equity will decrease -- ie lower BV which will inflate P/bv making the stock appear more expensive
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