In this Price to Book Value Ratio - Interpretation and Derivation lesson, you’ll learn about the relationship between Price to Book Value (PBV), Return on Equity (ROE), and Cost of Equity (Ke) for commercial banks, including how you can derive a formula for PBV that links these key variables, plus Net Income Growth, together. You’ll also learn how you can use this information to determine if a bank might be overvalued or undervalued.