Final answer:
Book value is based on a company's net assets, not its stock trading price, and market value is based on the current market trading price, not the IPO issue price.
Step-by-step explanation:
The student's statement regarding book value and market value of common stock is incorrect. Book value refers to the value of equity as it appears on the company's balance sheet, which is calculated from the company's assets minus its liabilities. It has no direct correlation with the current trading price of the stock. On the other hand, the market value of common stock reflects the current trading price in the market, which can differ substantially from the book value and is influenced by investor perceptions, the company’s performance, and broader market conditions. The issue price at the time of an IPO can be very different from the current market price of a stock, which can fluctuate over time.