Country Risk Premium
CRP. An additional cost-of-equity premium added to the standard CAPM cost of equity to reflect the elevated political, economic, and currency risk of operating in a specific country relative to a developed-market benchmark (typically the US). The premium is sourced from published tables (Damodaran annually, Duff & Phelps quarterly) and applied to the foreign-revenue-weighted portion of the equity claim, not to the entire equity claim. Common ranges: under 1% for major developed markets, 3-8% for emerging markets, 8%+ for frontier markets.
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Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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