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There may be many other reasons for the increase in the MV of shares of a company,but the P/E ratio is the thing we consider for increase in FM syllabus. Similarly what is the reason for change in the MV of loan notes ?
The PE ratio is certainly not the only thing we consider for reasons for an increase in the MV of shares. The PE ratio changes because the MV changes, not the other way round !!!!!
With regard to loan notes, the MV depends on the investors required rate of return and so if required returns change then so too does the market value. Also, of course, if the loan notes are redeemable at a premium, the the market value will change over time given that it is the present value of future receipts discounted at the investors required rate of return.
I do suggest you watch ny free lectures on both of these.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
(If you have any further questions that you want me to answer, then ask in the Ask the Tutor Forum. This forum is for students to help each other 🙂 )
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