Final answer:
The book value of a share can be equal to, less than, or more than the market value. Book value reflects a company's worth on paper, while market value is what investors are willing to pay based on various factors. Last option is correct answer.
Step-by-step explanation:
The book value of a share of stock can be equal to, less than, or more than the market value of the stock. Essentially, the book value is what the company is worth on paper, which is its assets minus its liabilities, divided by the number of outstanding shares.
Market value, on the other hand, is determined by the price that investors are willing to pay for the stock in the open market, which can vary greatly based on a multitude of factors including company performance, investor sentiment, and broader market conditions.
For example, a financial investor might buy a share of stock in Wal-Mart for $45 and later sell that share for $60, realizing a capital gain of $15. This gain is one form of the expected rate of return for the investor, aside from dividends that the firm might pay. Hence, the market value can fluctuate and diverge from the book value due to these expected yields and the highly competitive and dynamic nature of the stock market.
Ultimately, determining whether the book value is equal to, less, or more than the market value depends on the unique circumstances per stock, influenced by market forces and individual company actions.