The risk that a foreign government will suspend debt service payments is known as:

Question

Quizplus · Accepted Answer

Sovereign risk refers to the risk that a foreign government will default on its debt obligations, including suspending debt service payments. The other options, such as LC risk (letter of credit risk) and euro risk, do not specifically capture the risk of a government default. Country risk and foreign exchange risk can encompass the risk of government default, but they are broader terms that also encompass other risks such as political instability and fluctuations in currency values.

The Risk That a Foreign Government Will Suspend Debt Service