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Why might the market value of a software firm be higher than its book value?
  1. The market is placing value on the firm’s intellectual assets.
  2. Software is often priced incorrectly.
  3. Tech firms use different accounting procedures than traditional firms.
  4. There is no reason for the market value to be higher.
Explanation
Answer: A - The market value might be higher because the market is pricing based on the firm’s intellectual assets. Even if there are no major products being sold, the market might trust that a talented group of software engineers will produce a winning program soon.
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