Final answer:
The statement is true; book value represents the theoretical residual assets stockholders are entitled to in a liquidation event, based on the company's financial records.
Step-by-step explanation:
The statement that book value indicates the rights that stockholders have, based on recorded values, to the net assets in the event of liquidation is True. Book value is calculated by taking a company's total assets and subtracting its total liabilities. This value represents the residual assets that the shareholders would theoretically receive if the company were liquidated. In the context of stock, the rate of return for investors comes in two forms. One is the dividend, a direct payment to shareholders. The other is the capital gain, which is the increase in the value of the stock from the purchase price to the selling price. Although book value provides a snapshot based on historical cost, actual values received in liquidation can be influenced by market conditions and may differ from the book value.