15-8 Sovereign risk involves restrictions placed on borrowers and investors regarding the movement of funds into and out of a foreign country.

Question

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Sovereign risk refers to the risk of restrictions imposed by a foreign government on the movement of funds into or out of the country, which can affect investors' and borrowers' ability to fulfill their financial obligations. Examples of sovereign risk include currency restrictions, capital controls, or nationalization of assets.

15-8 Sovereign Risk Involves Restrictions Placed on Borrowers and Investors