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CAPITAL INVESTMENT APPRAISAL
Country risk
• Pereiro (2002) adds that country risk is relevant where
investment is not diversified geographically, either through
practical limitations, due to countries restraining investors
from entering and exiting (for example, South African
exchange control partially restrains investors in this regard),
or willingly, where investors choose to invest only in a single
country and therefore effectively choose not to diversify
geographically.
• Next we consider ways of adjusting for the effects of
country risk as part of foreign investment appraisal.
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