ARTICLE

DOI: 10.3232/GCG.2008.V2.N3.03

A Practical Approach for Quantifying Country Risk .  Jaime Sabal -  [ Application ]

In most emerging market valuations a “country risk premium” is added to the CAPM discount rate of an equivalent investment in a developed market. However, this is not only a flawed procedure but also it is extremely difficult to gauge how country risk might affect the discount rate. In this paper a practical method is proposed to appraise country risk mainly through its impact on projected cash flows, leaving its possible effect on the discount rate as a secondary consideration

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