Question : The market value of equity shares is determined by:
Option 1: Face value
Option 2: Book value
Option 3: Earnings per share
Option 4: Demand and supply factors
Correct Answer: Demand and supply factors
Solution : The correct answer is (d) Demand and supply factors
The market value of equity shares is primarily determined by demand and supply factors in the stock market. It is influenced by various factors that impact investor sentiment and perception of the company's value. The interaction between buyers (demand) and sellers (supply) of equity shares in the market ultimately determines the prevailing market price.
Question : What is the significance of the book value per share?
Option 1: It determines the market value of the shares
Option 2: It represents the face value of the shares
Option 3: It indicates the value of a share as per the company's books
Option 4: It determines the dividend payout ratio
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