A higher dependence on a single commodity makes a country's overall economy more vulnerable to changes in demand or prices of that commodity. Which of the following statements about country risk is correct?

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A higher dependence on a single commodity makes a country's overall economy more vulnerable to changes in demand or prices of that commodity.

A legal system that provides for lawsuits against firms and their management increases country risk.

Firms prefer to invest in countries where the legal system is biased or subject to government interference.

Declining credit spreads signal credit quality deterioration.

Financial Risk Manager Part 1