Country Risk Premium Definition & Application Wiki

Country Risk Premium Definition & Application Wiki

Last Updated by WikiWealth

Short Definition

The premium required by an investor to place money in a foreign investment. The US country risk premium is 0%, but many other countries like Greece, Iceland, Ireland, and Italy have risk premium, because debt troubles in those countries make them more risky. The country risk premium affects the discount rate applied to investments in high risk countries. The higher the country risk premium, the higher the discount rate and the less desirable an investment becomes. The opposite is also true.

WikiWealth users can input the country risk premium on each of our WACC discount rate models. Click the experimental mode link to manipulate the country risk premium.

Long Description

See Dictionary Terms

Source: http://en.wikipedia.org/wiki/Risk_premium