CIBC has 110 million shares outstanding,with a current share price of $94.50 per share.If the firm's market-to-book ratio is 7.85,what is the firm's book value of equity?
A)$5.6 billion
B)$0.9 billion
C)$10.4 billion
D)$1.3 billion
E)$2.75 billion

Question

Quizplus · Accepted Answer

The market value of equity is calculated as the number of shares outstanding multiplied by the current share price: 110 million shares * $94.50 = $10.395 billion. The market-to-book ratio is the market value of equity divided by the book value of equity. Rearranging the formula gives the book value of equity as the market value of equity divided by the market-to-book ratio: $10.395 billion / 7.85 = $1.325 billion, which is closest to $1.3 billion.

CIBC Has 110 Million Shares Outstanding,with a Current Share Price