Definition
Country risk encompasses political, economic, and regulatory risks specific to investing in a nation. Factors include political stability, property rights, corruption, economic policy, and capital controls. Higher country risk generally requires higher expected returns to compensate. It's particularly relevant for emerging and frontier markets.
Example
Argentina's history of defaults and currency crises represents high country risk, requiring premium returns to attract investors.
FAQ
What is Country Risk?
The risk associated with investing in a particular country.
Why is Country Risk important?
Country Risk helps investors evaluate international and make more informed decisions.