Using the constant-growth DCF (discounted cashflow) formula, the Price-to-Book ratio can be expressed where BVPS is the book value per share, ROE is the return on equity, r is the capitalization rate and b is the plowback ratio. Which of the following statement is CORRECT?
A. When ROE > r, the Price-to-Book ratio (P0/BVPS) is larger than 1.
B. The Price-to-Book ratio (P0/BVPS) increases as ROE declines.
C. When ROE < r, the Price-to-Book ratio (P0/BVPS) is equal to 1.
D. When ROE = r, the Price-to-Book ratio (P0/BVPS) is smaller than 1.