115.060.04.06 Equity Investments - Reading 39 - 6. Equity Securities and Company Value
6. Equity Securities and Company Value
f. explain the role of equity securities in the financing of a company's assets;
g. distinguish between the market value and book value of equity securities;
h. compare a company's cost of equity, its (accounting) return on equity, and investors' required rates of return.
What is accounting return on equity (ROE)?
ROE is net income (available to common shares) divided by the total book value of equity (common shares).