QUESTION 9 You want to analyze how fundamental P/E ratios might differ between Stock A and Stock B by the following fundamental data, Stock.A and B are operating in different countries, thus have different government yields and equity risk premiums. Determine whether each of these fundamental factors would cause P/E ratios to be generally higher for Stock A or higher for Stock B, Fundamental Factors Stock A Stock B Forecast growth in Earnings 5% 4% Government bond yield 4% 3% Systematic Risk (Beta) 1.2 0.9 Equity risk premium 7% 5% Choose the WRONG statements from the following choices Stock A has a higher equity risk premium implies a lower P/E ratio. Stock A has a higher beta implies a higher P/E ratio Stock A has a higher expected growth in earnings implies a higher Perato, Stock A has a higher government band yields implies a lower P/E ratio