Sovereign risk involves the inability of a foreign corporation to repay the principal or interest on a loan because of stipulations by the foreign government that are out of the control of the foreign corporation.

Question

Quizplus · Accepted Answer

Sovereign risk is the risk that a foreign government will default on its financial obligations, which can impact the ability of a foreign corporation to repay its loans. This can occur due to political or economic circumstances beyond the control of the corporation.

Sovereign Risk Involves the Inability of a Foreign Corporation to Repay