Sovereign risk can be effectively controlled through the foreign exchange market.

Question

Quizplus · Accepted Answer

Sovereign risk refers to the possibility of a government defaulting on its debt or facing other financial difficulties, which can have negative impacts on the economy and investments. While the foreign exchange market can be a tool for managing currency risk in international investments, it cannot fully control sovereign risk as it is influenced by various factors such as political stability, economic conditions, and government policies.

Sovereign Risk Can Be Effectively Controlled Through the Foreign Exchange