Two equivalent companies, A and B, have the same stock price and the same amount of tangible assets. The two companies have also the same amount of R&D expenditures. For Company A, R&D is at the research phase and therefore expensed, whereas for Company B, R&D is at the development stage and therefore capitalized. Which of the following statements is correct?

1. Under market efficiency, the P/B ratio of the two companies will be the same.

2. The P/B of Company A will be lower than the P/B of Company B

3. The P/E of Company A will be lower than the P/E of Company B

4. The P/E valuation approach using Company B as a comparable will underestimate the

   intrinsic value of Company A.