Question

The practice of country risk assessment is an exercise in understanding the local environment.

a. True
b. False

Answer 1

The correct answer is option b, the statement is true. The practice of country risk assessment is an exercise in understanding the local environment. Each country has a "country risk" rate, that represents the risk that the country has of going to default its currency. The risk rate is measured as a consequence of economic and sociopolitical volatility, both circumstances that will make the rate increase. It is used to understand the local environment of each country so that investors from around the world get an idea of the national market before making a decision.

Answer 2

The answer is true. It is because a country risk assessment is about having to assess the transfer of currency and in the same time, it is trying to differentiate the circumstances in factors in which we could tell through understanding the local environment.