Book Value vs Market Value
This should be a pretty basic concept, but I’m getting conflicting information.
In schweser book 4 page 265 it states “The primary goal of firm management is to increase the book value of the firm’s equity and thereby increase the market value of its equity”
On page 186 of the CFAI curriculum for equities, question 18 states:
Which of the following statements is most accurate in describing a company’s book value?
A Book value increases when a company retains its net income.
B Book value is usually equal to the company’s market value.
C The ultimate goal of management is to maximize book value.
The answer they give is A.
Any clarification would be helpful!
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