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Explanation:
In the context of country risk (Damodaran), political risks—such as the potential for a sudden regime change in a country governed by an unelected leader—are typically classified as discontinuous risks. Unlike continuous economic cycles, discontinuous risks manifest as sudden, abrupt market shocks (e.g., nationalization, coup, sweeping regulatory changes). Additionally, the Euromoney Country Risk score evaluates economic and political risks on a 0-100 scale by heavily relying on qualitative surveys and aggregating the views of over 400 economists and experts worldwide.
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24.9.1. Stan is evaluating an investment in a small country island country named Ibit. The nation is governed by a robust unelected leader who has held power for the past 15 years. A publication rated Ibit as a 44 after surveying 400 economists.
Given the information provided, what potential concern(s) should an investor be wary of and what publication most likely rated Ibit?
A
Continuous risk, Euromoney
B
Discontinuous risk, Euromoney
C
Continuous risk, The Economist
D
Discontinuous risk, The Economist