What is default risk as it applies to bonds and other debt securities?
QUESTION
What is currency (exchange rate) risk for a United States investor in foreign securities?
QUESTION
What is political risk, and which investments are most exposed to it?
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ANSWER
Risk political instability harms value; common in foreign investments. Instability such as government changes or geopolitical events can lead to asset expropriation or value erosion, particularly in emerging markets.