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Difference between book value and market value per share of common stock

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What is the difference between book value per share of common stock and market value per share? Why does this disparity occur?

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Solution Summary

In two paragraphs, the response clearly explains the difference between book and market value. and also explains how to arrive at the two different amounts.

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First of all, book value per share represents the accounting value of a share of common stock but not necessarily market value. We can determine this value by dividing the company's net worth by the number of shares that are circulating (or outstanding).

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