What is a Country Risk?
Country risk has to do with various factors that can impact the level of risk associated with transactions originating in different countries. The type of transactions that carry some degree of country risk include currency exchange, stocks, bonds, and the extension of credit for purchases. It is not unusual for suppliers, brokers, and others who engage in trading and general business operations to assess the degree of country risk before proceeding with a transaction. In terms of investing, country risk is often focused on the buying and selling of foreign stock. Foreign stocks are usually understood to be stock options that are associated with a corporation that is headquartered in a country other than the current home of the potential investor. Investors and brokers typically look at several different factors before determining the viability of buying shares of the stock, especially if the stock is not universally traded. Along with the usual investigations into stock performance an
