would you recommend that someone investbin s stock with a high PE ratio or a low...
Homework Answers
Solutions:
PE Ratio may be defined as the Price Earning ratio which indicates that how many times the market price per share(MPS) is more than the earning per share ( EPS).
i.e. PE Ratio = (MPS/EPS)
If any company's has the Market price per share is more than the Earning per share that means the company market capitalisation is more.
Therefore, stock having high PE Ratio much better than the stock having low PE Ratio as it indicates the company is performing very well in the market.
And for long-term perspective also stock having high PE Ratio is much better than the stock having low PE Ratio.
Decision: As i will suggest to opt for the stock having high PE Ratio, as it indicates the more market capitalisation than the stock having Low PE Ratio.
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