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Would the market-value debt ratio tend to be higher than the book-value debt ratio during a...

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Accounting

Would the market-value debt ratio tend to be higher than thebook-value debt ratio during a stock market boom or a recession?Explain.


Why would the WACC based on market values tend to be higher thanthe one based on book values if the stock price exceeded its bookvalue?


Which would you expect to be more stable over time, a firm’sbook-value or market-value capital structure? Explain.

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3.6 Ratings (619 Votes)
1 Market debt Ratio is tend higher than the book value during a stock market recession Market debt ratio is a solvency ratio that measures the proportion of the book value of a companys debt to sum of the book of value of its debt and the market value of its equity Market debt ratio measures the level of debt of a company    See Answer
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