A is corrent. Book value per common share is defined as total common equity less the portion allocable to preferred stock, if any, divided by the number of common shares. It is a measure of the amount of common stockholders’ equity in each share of stock.
B is incorrect. The price-earnings ratio is the price per share of common stock divided by earnings per share of common stock, and indicates how much investors are paying to obtain their return on investment.
C is incorrect. Stated value per share, like par value, is an arbitrary value assigned to common stock, typically to indicate the minimum amount at which the stock can be issued.
D is incorrect. Return on equity is found by dividing net income by average common stockholders’ equity. It is a measure of the rate of return earned by owners on their investment.
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