Accounting / July 19, 2018 / Collins Barber
In the world of investments, the letters PE stand for PriceEarnings. The priceearnings ratio is a measure of the current share price of a company as compared to per-share earnings (market value per share divided by earnings per share). The higher the ratio, the greater the amount that an investor is willing to pay for $1 of current earnings. So a stock with a high PE is generally expected to increase in value. A stock with a low PE may already be doing well, or it may simply be undervalued.
There’s one catch, however: in the rare event the issuer goes into bankruptcy, investors in convertible bonds have a lower priority to claim to the company’s assets than investors in straight, non-convertible debt.
We Also Think You’ll Like