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sovereign risk

 - 2 dictionary results
Financial Dictionary

Sovereign Risk

The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts.

Investopedia Commentary

This is one of the many risks that an investor faces when holding forex contracts. Additionally an investor is exposed to interest-rate risk, price risk and liquidity risk amongst others.

Related Links

What Fuels The National Debt?
A Primer On The Forex Market
Getting Started In Forex
Using Options Tools to Trade Foreign-Exchange Spot

See also: Country Risk, Default, Interest-Rate Risk, Liquidity Risk, Political Risk, Price Risk, Systematic Risk, Unsystematic Risk

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Financial Dictionary

sovereign risk

The risk of owning the security of an issuer in a country other than the one in which the investor lives. For example, an investor residing in the United States incurs sovereign risk in purchasing a bond issued by the government of Brazil. This risk stems from the fact that a foreign country may nationalize its private businesses, stop paying interest, or repudiate its debt.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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