What is a 'Country Risk Premium  CRP'
A country risk premium (CRP) is the additional risk associated with investing in an international company rather than the domestic market. Macroeconomic factors such as political instability, volatile exchange rates and economic turmoil causes investors to be wary of overseas investment opportunities and thus require a premium for investing. The country risk premium (CRP) is higher for developing markets than for developed nations.
BREAKING DOWN 'Country Risk Premium  CRP'
The CAPM can be adjusted to reflect the additional risks of international investing by adjusting the model for the CRP.
R_{e} = R_{f} + Î²(R_{m} â€“ R_{f} + CRP)
As expected by general financial theory, investors seeking to invest into a region such as Zimbabwe must be compensated with greater expected returns.

Equity Risk Premium
The excess return that investing in the stock market provides ... 
International Capital Asset Pricing ...
A financial model that extends the concept of the capital asset ... 
Net Premium
The expected present value of a policyâ€™s benefits less the expected ... 
Developed To Net Premiums Earned
The ratio of developed premiums to net premiums earned over a ... 
Earned Premium
The amount of total premiums collected by an insurance company ... 
Written Premium
An accounting term in the insurance business used to describe ...

Options & Futures
Evaluating Country Risk For International Investing
Investing overseas begins with determining the risk of the country's investment climate. 
Economics
How to Invest In Developing Markets
Developing markets can be attractive additions to many investor's portfolios, but carry additional risks that must be considered. 
Investing
Understanding Market Risk Premium
Market risk premium is equal to the expected return on an investment minus the riskfree rate. The riskfree rate is the minimum rate investors could expect to receive on an investment if it ... 
Investing
Impact Investing Funds: What are the Risks?
Impact investing funds can carry risks unique to this asset class, including political risk, currency risk and exit risk. 
Mutual Funds & ETFs
4 Ways to Get International Exposure in Your Portfolio
International investing provides diversification, which is needed these days. When it comes to investing in foreign stocks, there are lots of options. 
Fundamental Analysis
The Capital Asset Pricing Model: An Overview
CAPM helps you determine what return you deserve for putting your money at risk. 
Investing
The Capital Asset Pricing (CAPM) Model: Pros and Cons
CAPM, while criticized for its unrealistic assumptions, provides a more useful outcome than either the DDM or WACC in many situations. 
Forex
Main Factors That Influence Exchange Rates
The exchange rate is one of the most important determinants of a country's relative level of economic health, and can impact your returns. 
Investing Basics
How to Calculate Risk Premium
Think of a risk premium as a form of hazard pay for risky investments. 
Forex Education
Forex Tutorial: Economic Theories, Models, Feeds & Data
There is a great deal of academic theory revolving around currencies. While often not applicable directly to daytoday trading, it is helpful to understand the overarching ideas behind the ...

What is the historical market risk premium?
Learn what the historical market risk premium is and the different figures that result from an analyst's choice of calculations ... Read Answer >> 
What is the difference between market risk and country risk?
Learn about market risk and country risk, some examples of each and the main difference between these two types of risks. Read Answer >> 
According to the CAPM, the expected return on a stock, that is part of a portfolio, ...
A. the covariance between the stock and the market. B. the variance of the market. C. the market risk premium. D. ... Read Answer >> 
How accurate is the equity risk premium in evaluating a stock?
Learn about the drawbacks of using the equity risk premium to evaluate a stock, and understand how it is calculated using ... Read Answer >> 
What risks do organizations face when engaging in international finance activities?
When an organization decides to engage in international financing activities, they also take on additional risk as well as ... Read Answer >> 
What is the formula for calculating the capital asset pricing model (CAPM)?
Learn about the capital asset pricing model, or CAPM, and how this formula is used to determine the expected rate of return ... Read Answer >>