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1. The practice of fixing the exchange rate of a currency to the value of another currency. Most countries that peg their currencies do so to the U.S. dollar, though some peg to currency baskets. See also: Fixed exchange rate.

2. The act of buying a security in a large quantity to drive up the price. Writers of put options (and holders of short positions) practice pegging when the expiration date is approaching and it appears that the option will be exercised such that it puts the writer at a disadvantage. The idea behind pegging is to cause the price to rise so the option is not exercised and the writer can profit from the premium.

Price/Earnings-to-Growth Ratio

A ratio of a stock's valuation, that is, how expensive a stock is relative to its earnings and expected growth. It is calculated as:

PEG = Price/Earnings/Annual Earnings Growth per Share

A lower ratio indicates a less expensive stock with higher earnings and growth, while a higher ratio indicates the opposite. According to Peter Lynch, who popularized the ratio, a fairly priced stock has a ratio of 1.


1. To fix the price of a new security issue during the issuance period through buying and selling it in the open market in order to ensure that the price in the secondary market will not fall below the offering price. Also called holding the market, price stabilization, stabilize. See also stabilization period.
2. To fix the rate at which foreign currencies exchange with one another.

Price/earnings-to-growth ratio (PEG).

To find a stock's PEG ratio, you divide the stock's price-to-earnings ratio (P/E) by its projected annual earnings per share (EPS) growth. The result is a rule-of-thumb assessment of whether the stock is overvalued or undervalued.

In brief, if a stock has a PEG ratio of 1, you conclude that investors are paying what the stock is worth based on its P/E and growth potential. If it is higher than 1 -- say 1.55 -- you conclude that investors are paying more than the growth projection justifies. If it is less than 1, you conclude that the stock may be poised to appreciate in value and so a wise purchase.

However, a PEG ratio, by itself, does not provide an adequate basis for an investment decision, any more than a P/E does, because it doesn't take company fundamentals into account. For example, an under-priced stock may be a good buy, but it may also be the sign of a company in poor financial shape or an industry in trouble.

The potentially greater problem is that growth projections, even when they are the consensus finds of professional analysts, are just estimates. That is especially true of estimates that look out five or more years, since there is no way to anticipate the shifting marketplace with real precision. Yet projections based on a single-year's results are notoriously inaccurate.

In short, a PEG ration can be a valuable addition to an investor's toolkit, provided you understand the assumptions on which its components and results are based.

References in periodicals archive ?
Nicky Bevan was two pegs away and second with 149lb and Karl Guerra, from Newport, third with 127lb.
Also at Saxon Mill, Alan Narbeth (Gloucester) was fourth with perch on chopped worm for 8-8-0, ahead of Bill Danes (Warwick Select), who took caster-fed roach worth 7-6-0 from Avon Street, where he was five pegs away from the winner.
Martin Challenger, from Cwmbran, was two pegs away and second with 26lb 6oz and Bargoed angler Chris Murphy third with 22lb.
Four pegs away, Evesham's Alan Cooper (Bait Box) targeted skimmers to 12oz using squatt for his second-placed 7-14-4.
Zac Williams was two pegs away and runner-up with 56lb and after him came Gafyn Jones with 42lb.
Goole's Richard O'Connor (Van den Eynde) took silver medal from three pegs away wirth 13-9-0 using similar tactics.
Blackwood member Ian Exall was three pegs away and runner up with 71lb of carp caught on luncheon meat while Frank Davies, from Tredegar, finished third with 68lb 11oz.