DEFINITION of 'Country Basket'

A selection of countries that are grouped together in order to provide insight into the effect of changing economic conditions. A country basket may track the economies and markets of countries that have similar economic characteristics, such as being part of the G8, that have particular trade characteristics, such as being export-lead, or that rely on the production of certain goods, such as oil.


A country basket can also refer to a basket of securities that track the performance of the overall economy of a given nation. The selected securities would include companies of ranging market caps and sectors.

BREAKING DOWN 'Country Basket'

Country baskets are used by investors in the creation of derivatives, such as those that track emerging markets. Rather than buy individual securities that track the indexes of each country, investors can purchase a security that tracks the performance of a country basket of indexes. The index may be weighted according to the size of each country's economy. Economists use country baskets to determine how changes to the world economy, such as a recession, may affect developing nations.

RELATED TERMS
  1. Market Basket

    A subset of products or securities that is designed to mimic ...
  2. Basket Of Goods

    A relatively fixed set of consumer products and services valued ...
  3. Basket

    A single unit of at least 15 stocks that are used in program ...
  4. Burst Basket

    A burst basket refers to a particular type of stock transaction ...
  5. Basket Trade

    An order to buy or sell a group of securities simultaneously. ...
  6. Income Basket

    Categories for which various sources of income are allocated ...
Related Articles
  1. Insights

    Purchasing Power Parity (PPP)

    Purchasing Power Parity (PPP) compares different countries' currencies through a market "basket of goods" approach. Two currencies are in PPP when a market basket of goods (taking into account ...
  2. Managing Wealth

    Evaluating Country Risk For International Investing

    Investing overseas begins with determining the risk of the country's investment climate.
  3. Insights

    5 Economic Effects Of Country Liberalization

    Liberalization provides new opportunities for diversification and profit.
  4. Insights

    The Consumer Price Index

    Find out how this economic measure can help you make key financial decisions.
  5. Insights

    The Balance Of Trade

    The balance of trade is the difference between a country’s imports and exports. A trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. ...
  6. Investing

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  7. Small Business

    What is Globalization?

    As a business term, globalization refers to the tendency of international trade, investments, information technology and outsourced manufacturing to weave the economies of diverse countries together.
  8. Investing

    What does Current Account mean?

    The current account reflects the difference between a country’s savings and investments.
  9. Trading

    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.
  10. Insights

    3 Ways You Can Evaluate Country Risk

    Diversifying your portfolio includes looking beyond your borders. Here are a few ways to analyze risk when investing abroad.
RELATED FAQS
  1. How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are ... Read Answer >>
  2. What economic indicators are most used when forecasting an exchange rate?

    Discover what economic indicators are most widely used to forecast a country’s exchange rate and how various factors influence ... Read Answer >>
  3. How is the basket of goods selected for the Consumer Price Index?

    Read about alterations in the market basket for the consumer price index, a measure of approximate consumer price changes ... Read Answer >>
  4. What is foreign exchange?

    Foreign exchange, or Forex, is the conversion of one country's currency into that of another. In a free economy, a country's ... Read Answer >>
  5. What is a country ETF?

    Learn about the operational basics of exchange-traded funds (ETFs) and the foreign investment opportunities and advantages ... Read Answer >>
  6. Is it possible for a country to have a comparative advantage in everything?

    Learn whether one country can have a comparative advantage in everything and what the difference between comparative advantage ... Read Answer >>
Hot Definitions
  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  2. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  3. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  4. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  5. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  6. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
Trading Center