How A Share Price Is Calculated
|Money : Stocks And Shares|
A share price for a company seems like a mysterious value. It can be large or small, stay at a steady rate or fluctuate rapidly. So what decides the share price?
Well, it is set by the market capitalisation, the value of the company, divided by the number of shares in issue for the company - this makes sense.
Therefore the more shares in issue, the lower the share price would be for company x that is of the same market capitalisation as company y.
The P/E ratio itself is the measure of the share price divided by earnings per share.
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