Company a and Company B Operate in the Same Industry

Company A and Company B operate in the same industry. Company B has a price-to-book ratio that is much higher than A's. Both companies have price-to-book ratios greater than one. Which of the following could explain this difference, all else equal?

A) A uses less conservative accounting methods.
B) A has lower expected future dividend payout ratio.
C) A has higher expected growth.
D) A has many more shares outstanding.

Correct Answer:

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