5. An equity analyst gathered the following industry and market data. Industry earnings retention rate 45% Industry beta Industry return on equity 18% 1.2 Government bond yield 4% 7% Market risk premium (a) Compute the price-to-earnings (Po/E) ratio for the industry. (b) Consider the following two countries. Determine whether each of these fundamental factors would cause P/E ratios to be generally higher for Country A or Country B. Fundamental Factors Forecast growth in real GDP Government bond yield Market risk premium Country A Country B 4% 2% 6% 4% 7% 5% Cont.