The next value investment criterion to look at is the price-to-book ratio of the components. Replacing the earnings component with the book values has the potential to result in a larger difference between the concepts. As expected, the value-based concept achieves a significant reduction in the average price-to-book ratio from 2.87 in the base portfolio to 1.84 in the value portfolio. Distributions again prove that higher ratios are effectively eliminated from the portfolio by the selection process. Following the previous methodology, we next look at the same values for the dividend strategy; again, the dividend mechanism does not disappoint. The average price-to-book is even lower at 1.66, further suggesting that dividend yield provides an adequate proxy for many value investment criteria. In addition, analysis of the distribution shows that the quality of the stock selection is almost identical. However, it is notable that the value index distribution is more concentrated in the lower end but does show a small number of outliers in the higher end of the values; this does not occur in the dividend index distribution. Figures 13-15 show the respective distributions.